“This paves the way for the strong growth and margin expansion we expect in 2018 and beyond,” Chief Financial Officer Luka Mucic said in a company statement.
The $140 billion business software company, which accounts for a quarter of the Stoxx Europe 600 Technology Index, has invested heavily in cloud services and hopes to see a payoff in the form of improving margins from this year on.
SAP said it expected total non-IFRS revenue of 24.6 to 25.1 billion euros ($30.43-$31.05 billion) for 2018, in line with the forecasts of analysts polled by Thomson Reuters.
But the outlook also highlighted that it expects margins to increase faster in 2018. Revenue is set to grow around 5 to 7 percent, excluding currency translation effects, it said, while operating profit is poised to grow by 8 to 11 percent.
It forecast 2018 non-IFRS operating profit of 7.3 to 7.5 billion euros, adding that the implementation of IFRS 15, a new accounting rule on revenue recognition, would add 200 million euros to profits.
Looking ahead to 2020, the final year of a five-year strategic transition to wean customers off software installed at offices and factories, SAP reiterated a forecast for non-IFRS operating profit of 8.5 to 9.0 billion euros and revenues of 28 to 29 billion.