Last week, SAP (SAP) reported results of its fourth quarter, which beat analyst expectations. The results were driven by strong cloud bookings.

SAP’s Financials

SAP’s fourth-quarter revenues grew 8% to €8.04 billion ($8.9 billion) in-line with estimates. Adjusted profit grew by 21% to €1.81 per share, ahead of analyst estimates. Non-IFRS gross margin was 75.3%.

During the quarter, Cloud and software revenue grew 8% to €6.85 billion. Cloud revenue increased 35% to €1.89 billion while Software license and support revenue grew 1% to €4.95 billion.

By segment, SAP’s Intelligent Spend Group revenue was up 15% to €830 million. Revenue from the Qualtrics segment was €156 million. Applications, Technology & Services revenue grew 5% to €6.97 billion.

For the full year 2019, SAP delivered on its outlook for the fifth year in a row. Total revenue grew 12% to €27.5 billion ($30.51 billion). Cloud revenue grew 39% to €6.93 billion. Cloud and software revenue grew 12% to €23 billion. Non-IFRS operating profit was up 15% to €8.2 billion.

Regionally, SAP had a solid year with cloud revenue growing 47% in EMEA, 34% in Americas, and 43% in APJ.

Based on its strong performance, for 2020, SAP now expects €8.7 – €9 billion non-IFRS cloud revenue and €29.2 – €29.7 billion ($32.4-$32.95 billion) non-IFRS total revenue, which is below the average analyst forecast of $33.05 billion. Non-IFRS operating profit is expected to be in a range of €8.9 – €9.3 billion.

SAP reiterated its 2023 targets. It expects to more than triple non-IFRS cloud revenue from €5.03 billion in 2018 and to grow to more than €35 billion ($38.83 billion) in non-IFRS total revenue. It also expects to reach a non IFRS cloud gross margin of 75%.

SAP’s Offerings

SAP S/4HANA, the core of the Intelligent Enterprise, is the market-leading intelligent ERP that embeds analytics, simulation, prediction, and decision support to run LIVE business. SAP launched S/4HANA cloud platform in May last year. It has already attracted more than 2,300 customers. The platform also generated a run-rate of more than $500 million in revenues. Approximately 1,200 SAP S/4HANA customers were added in the quarter, taking total customer count to over 13,800 customers, up 24%. In Q4, world-class organizations such as Ford Motor Group, Zalando, die Autobahn GmbH, Decathlon, E.ON, Lockheed Martin, MINTH Group, and Roche selected SAP S/4HANA.

SAP’s business technology platform represents a combination of SAP’s leading technologies such as SAP HANA, SAP Cloud Platform, SAP Data Warehouse Cloud, SAP Analytics Cloud, SAP Data Intelligence and SAP Intelligent Robotic Process Automation bundled into one single reference architecture. It supports cloud, on-premise, and hybrid customer landscapes. Barclaycard, Telecom Italia, GetYourGuide and Allegiant Travel Company were major wins in Q4.

The SAP SuccessFactors Human Experience Management (HXM) Suite provides powerful solutions for core HR and payroll, talent management, employee experience management and people analytics to empower employees while enabling HR leaders to accelerate business growth. SAP SuccessFactors HXM solutions leverage Qualtrics to help customers gain real-time insight into which behaviors are trending across the organization and the sentiment behind them. More than 450 customers have selected these solutions since their launch in May 2019. During the fourth quarter, Landesbank Baden-Württemberg, Genting Hong Kong, and Universal Beijing Resort were some major wins.

Qulatrics and experience management have become new growth engines for SAP. The Qualtrics XM™ Platform has over 11,450 customers. Volkswagen Group Australia, JPMorgan Chase, Allianz SE, Alaska Airlines, ExxonMobil, Santander, Samsung Group, and the Hearst Corporation were major wins in Q4.

SAP’s stock is trading at $132.64 with a market capitalization of $161.9 billion. It hit a 52-week high of $140.67 last month and had fallen to a 52-week low of $102.31 a year ago.