SAP posted an early look at its latest quarterly performance that again showed strong results from its cloud operations but noted that it expects a “significant year-over-year decrease in software licenses revenue” tied to the ongoing COVID-19 virus outbreak. The vendor also lowered its full-year guidance.

In a statement, SAP noted that “business activity in the first two months of the quarter was healthy,” adding that the COVID-19 issue “rapidly intensified toward the end of the quarter” and “a significant amount of new business was postponed.”

That postponement was pointedly seen in its software license business, which posted a 31% drop in revenues compared with the first quarter of last year. However, the company’s larger cloud operations managed a 29% increase in revenues, which boosted its cloud and software revenue combination to a 7% gain.

In response to the COVID-19 outbreak, SAP said it has adopted a “virtual sales and remote implementation strategy” and slowed its hiring and spending to protect its profits. It’s also benefiting from lower travel costs due to the cancellation of a number of industry events, though it did take a $39 million charge during the first quarter tied to changing its own annual event to a virtual event and other customer event changes.

Net-net, SAP said that operating margins increased 20.7 percentage points year over year to 18.5%. SAP also confirmed that it remains on track with the broader strategic review it launched a year ago to increase its focus on its cloud business and drive further efficiencies from its operations. One of the goals of the review process was to construct a path toward a 75% cloud gross margin by 2023.

Looking ahead, SAP lowered its revenues expectations by nearly 5% and operating profits by 8%. The company said that update “assumes the current COVID-19 induced challenging demand environment deteriorates through the second quarter before gradually improving in the third and fourth quarter as economies reopen and population lockdowns end.”

Analysts were heartened by the update, noting that a number of firms have simply pulled their expectations due to the virus.

“We think investor expectations were for SAP to lower [2020] targets, and the revised guidance was within a range of outcomes that we thought were possible, if not a tad better,” noted BMO Capital Markets Analyst Keith Bachman in a research note.

The Q1 preview also comes on the heels of SAP revamping its organizational structure, which itself followed recent changes at the top of that structure.

The organizational revamp included the reassignment of operational divisions to its executive team and the trimming of its board. Those moves increased SAP’s focus on its cloud business, which showed a 35% year-over-year increase in revenues for the first quarter.

And the company is now operating under a co-CEO model that began with the sudden departure of long-time CEO Bill McDermott last October.