(Bloomberg) -- SAP SE shares dropped as much as 21%, the biggest intra-day drop since 1999, after the Walldorf, Germany-based company cut its revenue forecast for the full year and said it expects a fresh wave of lockdowns to hurt demand through the first half of 2021.In a test for Christian Klein, who became sole chief executive officer in April, the pandemic will delay SAP’s goals for cloud revenue, overall sales and operating profit by one or two years, especially in hard-hit industries, the German software company said in a statement on Sunday.Given an acceleration of the cloud transition, the company said it expects limited growth and margin improvement in 2021 and 2022. Furthermore, the company moved its 2023 strategy out to 2025. Klein said on a call Monday he expects a conservative recovery into the first half of next year.The previous outlook “assumed economies would reopen and population lockdowns would ease, leading to a gradually improving demand environment in the third and fourth quarters,” SAP said in the statement. “Lockdowns have been recently re-introduced in some regions and demand recovery has been more muted than expected.”The company now expects adjusted revenue of 27.2 billion euros to 27.8 billion euros ($32.2 billion to $32.9 billion) at constant currencies in 2020, lower than the earlier guidance of 27.8 billion euros to 28.5 billion euros. SAP also said it no longer sees a boost from business-travel related revenue this year in its Concur business.Nicholas David, analyst at Oddo BHF wrote in a note that it was difficult to find some positive news from the results.“The warning on the mid-term ambitions was expected/feared by the market but the new ambitions are lower than the most pessimistic expectations,” he said.Qualtrics IPOSAP said it is in the advanced stages of a listing for its Qualtrics software unit.“We are well advanced in the preparations of the Qualtrics IPO”, Chief Financial Officer Luka Mucic said on a call Monday. “Qualtrics has had a strong quarter which will set it up for further growth into next year”.The Walldorf, Germany-based company announced the decision in July to list the unit less than two years after buying the company for a record sum in a surprise u-turn signaling a strategic shift under Klein.New OutlookAdjusted cloud revenue is expected to be 8 billion euros to 8.2 billion euros in 2020, down from a previous estimate of 8.3 billion euros to 8.7 billion euros.Operating profit will be 8.1 billion euros to 8.5 billion euros this year, down from expectations of as much as 8.7 billion euros.SAP updated its mid-term ambition for total revenue to more than 36 billion euros in 2025 compared to its previous estimate of 35 billion euros in 2023.The company sees more than 22 billion euros in cloud revenue and over 11.5 billion euros in operating profit by 2025.Third QuarterThird quarter non-IFRS operating profit decreased by 12% year over year to 2.07 billion euros. That compared to the 2.15 billion-euro average estimate from analysts in a Bloomberg survey.Revenue in the period declined 4% to 6.54 billion euros compared to analysts’ average 6.89 billion euro estimate.Market ReactionSAP shares have gained 3.8% this year through Friday compared with a 5.5% decline in Germany’s DAX index.Get MoreRead the full statement here.After Losing Co-Pilot, SAP CEO Plots Solo Path Through PandemicU.K.’s CMA to Start Antitrust Probe on Sinch, SAP Unit DealSAP Is Said to Tap Morgan Stanley, JPMorgan for Qualtrics IPO(Updates with shares, additional context)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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