WALLDORF, Germany, July 19, 2018 /PRNewswire/ -- SAP SE (NYSE: SAP)
today announced its financial results for the second quarter ended
June 30, 2018.
"The 4th generation of enterprise applications has taken another
major step forward with C/4HANA. Together with S/4HANA, SAP
customers are finally able to focus their entire business on
delivering a personalized experience to their customers. The
intelligent enterprise is the elixir to bridge silos inside
fractured businesses and beyond so CEOs get a single view of the
customer. SAP is presenting a clear strategy, customers are already
validating it in Q2 and we are increasing guidance as a signal that
a new wave of growth has been unleashed." - Bill McDermott, CEO
"This quarter is exemplary for the road we have chosen: rapidly
transforming the company to the cloud while substantially growing
profits and margins. I am very confident that this momentum will
continue to expand. That's why we raised our 2018 outlook and 2020
ambition." - Luka Mucic, CFO
Business Highlights
Financial Highlights
Second Quarter 2018
New cloud bookings1 grew 24% (29% at constant
currencies) in the second quarter and reached €421 million. Cloud
subscriptions and support revenue grew 30% year over year to €1.21
billion (IFRS), up 40% (non-IFRS at constant
currencies).2 Software revenue was down 9%
year over year to €996 million (IFRS), down 5% (non-IFRS at
constant currencies). New cloud and software license order
entry3 grew 12% at constant currencies year over year in
the second quarter. Cloud and software revenue grew 4% year over
year to €4.94 billion (IFRS), up 10% (non-IFRS at constant
currencies). Total revenue grew 4% year over year to €6.00 billion
(IFRS), up 10% (non-IFRS at constant currencies).
SAP's rapidly expanding cloud business together with solid
growth in support revenue continued to drive the share of more
predictable revenue. The total of cloud subscriptions & support
revenue and software support revenue as a percentage of total
revenue grew 2 percentage points year-over-year to 66% in the
second quarter.
Second quarter operating profit was up 13% year over year to
€1.04 billion (IFRS), up 12% (non-IFRS at constant currencies). As
announced in January 2018, the
Company expects a positive revenue and profit impact from the
adoption of IFRS 15 in 2018. In the second quarter, this positive
impact on SAP's operating profit was around €54 million. Earnings
per share increased 8% to €0.60 (IFRS) and increased 5% to €0.98
(non-IFRS).
Operating cash flow for the first six months was €2.99 billion,
down 15% year over year. The decrease in operating cash flow was
mainly due to timing of stock based compensation payments, currency
headwinds as well as higher tax and insurance payments. Free cash
flow decreased 25% year over year to €2.17 billion. Free cash flow
was also lower due to the previously announced additional CapEx for
2018. At the end of the second quarter, net liquidity was -€2.97
billion.
SAP S/4HANA
With SAP's next generation ERP S/4HANA, customers can massively
simplify their IT landscape, turn real-time data into actions and
reinvent their business models for the digital economy across every
industry.
S/4HANA adoption grew to more than 8,900 customers, up 41% year
over year. In the second quarter, approximately 600 additional
customers signed up of which approximately 40% were net new.
S/4HANA continues to be selected by world-class global
companies, including McDonalds (China) in the quarter. A growing
number of companies are now adopting S/4HANA in the Cloud.
TechnipFMC, China Sports Lemon, and
Spirit Airlines chose S/4HANA Cloud.
SAP C/4HANA (Customer Experience)
SAP's C/4HANA solutions serve a wide range of industries across
both B2C and B2B and enable businesses to manage their entire front
office: marketing, sales, commerce, service, customer data cloud –
seamlessly and in real-time.
In the second quarter, SAP's C/4HANA customer experience
solutions achieved high double-digit year-over-year growth in new
cloud bookings and total revenue in the SAP Customer Experience
segment was up 65% to €242 million at constant currencies.
Whirlpool, Deutsche Telekom, and Novartis were among those that
chose SAP's C/4HANA solutions this quarter.
Human Capital Management
With SAP SuccessFactors and SAP Fieldglass, SAP delivers total
workforce management across both permanent and contingent labor.
The SAP SuccessFactors suite is localized for 92 countries and 42
languages.
SAP SuccessFactors Employee Central, which is the flagship of
SAP's HCM offering, ended the quarter with more than 2,600
customers and scored numerous competitive wins including BMW,
Telecom Argentina, Shiseido, and MG Motors India.
SAP Leonardo
With SAP Leonardo SAP delivers powerful innovation by bringing
together deep process and industry expertise, advanced design
thinking methodology and cutting edge software capabilities such as
IoT, Big Data, Machine Learning, Analytics, and Blockchain. All of
this is integrated on the SAP Cloud Platform with new
technologies easily added as they emerge.
Toyota and Porsche are among many others that adopted SAP
Leonardo solutions in the second quarter.
Business Networks
With the SAP Business Networks SAP provides collaborative
commerce capabilities (Ariba), flexible workforce management
(Fieldglass) and effortless travel and expense processing (Concur).
SAP Business Network is the largest commerce platform in the world
with approximately $2.4
trillion4 in global commerce annually transacted
in more than 180 countries.
In the second quarter, total revenue in the SAP Business Network
segment was up 21% to €688 million at constant currencies year over
year. Bosch-Siemens Hausgeräte, and Avianca chose SAP's Business
Network Solutions in the second quarter.
Regional Revenue Performance in the Second Quarter 2018
SAP had a very strong performance in the EMEA region with cloud
and software revenue increasing 10% (IFRS) and 12% (non-IFRS at
constant currencies). Cloud subscriptions and support revenue was
strong and grew by 40% (IFRS) and 46% (non-IFRS at constant
currencies) with Germany and the
UK being highlights. In addition, SAP had strong double-digit
software revenue growth in the UK, and the Middle East and Germany had another strong software revenue
quarter with solid single digit growth.
The Company had a solid performance in the Americas region with
a significant currency headwind. Cloud and software revenue
decreased by 3% (IFRS) and increased by 8% (non-IFRS at constant
currencies). Cloud subscriptions and support revenue increased by
24% (IFRS) and 35% (non-IFRS at constant currencies) with
Brazil being a highlight.
In the APJ region, SAP had a strong performance. Cloud and
software revenue was up by 4% (IFRS) and grew by 11% (non-IFRS at
constant currencies). Cloud subscriptions and support revenue was
exceptional and grew by 42% (IFRS) and 52% (non-IFRS at constant
currencies) with China and Japan
being highlights. For software revenue, Australia, China and India had impressive quarters and grew by
double digits.
Financial Results at a Glance
Second Quarter
20181)
|
|
IFRS
|
Non-IFRS2)
|
€ million, unless
otherwise stated
|
Q2 2018
|
Q2 2017
|
∆ in %
|
Q2 2018
|
Q2 2017
|
∆ in %
|
∆ in %
const.
curr.
|
New Cloud
Bookings3)
|
N/A
|
N/A
|
N/A
|
421
|
340
|
24
|
29
|
Cloud subscriptions
and support revenue
|
1,213
|
932
|
30
|
1,227
|
932
|
32
|
40
|
Software licenses and
support revenue
|
3,731
|
3,826
|
–2
|
3,731
|
3,826
|
–2
|
3
|
Cloud and software
revenue
|
4,944
|
4,757
|
4
|
4,959
|
4,758
|
4
|
10
|
Total
revenue
|
5,999
|
5,782
|
4
|
6,014
|
5,782
|
4
|
10
|
Share of predictable
revenue (in %)
|
66
|
63
|
2pp
|
66
|
63
|
2pp
|
|
Operating
profit
|
1,044
|
926
|
13
|
1,640
|
1,570
|
4
|
12
|
Profit after
tax
|
720
|
666
|
8
|
1,173
|
1,120
|
5
|
|
Basic earnings per
share (€)
|
0.60
|
0.56
|
8
|
0.98
|
0.94
|
5
|
|
Number of employees
(FTE, June 30)
|
93,846
|
87,114
|
8
|
N/A
|
N/A
|
N/A
|
N/A
|
Six months ended June
20181)
|
|
IFRS
|
Non-IFRS2)
|
€ million, unless
otherwise stated
|
Q1–Q2
2018
|
Q1–Q2
2017
|
∆ in %
|
Q1–Q2
2018
|
Q1–Q2
2017
|
∆ in %
|
∆ in %
const. curr.
|
New Cloud
Bookings3)
|
N/A
|
N/A
|
N/A
|
667
|
555
|
20
|
28
|
Cloud subscriptions
and support revenue
|
2,283
|
1,837
|
24
|
2,299
|
1,837
|
25
|
36
|
Software licenses and
support revenue
|
7,012
|
7,248
|
–3
|
7,012
|
7,248
|
–3
|
3
|
Cloud and software
revenue
|
9,295
|
9,085
|
2
|
9,311
|
9,085
|
2
|
10
|
Total
revenue
|
11,260
|
11,066
|
2
|
11,276
|
11,067
|
2
|
10
|
Share of predictable
revenue (in %)
|
68
|
66
|
2pp
|
68
|
66
|
2pp
|
|
Operating
profit
|
2,069
|
1,599
|
29
|
2,876
|
2,768
|
4
|
13
|
Profit after
tax
|
1,428
|
1,197
|
19
|
2,041
|
2,006
|
2
|
|
Basic earnings per
share (€)
|
1.20
|
0.99
|
21
|
1.71
|
1.67
|
3
|
|
Number of employees
(FTE, December 31)
|
93,846
|
87,114
|
8
|
N/A
|
N/A
|
N/A
|
N/A
|
|
1) All
figures are unaudited.
|
|
2) For a
detailed description of SAP's non-IFRS measures see
Explanation of Non-IFRS Measures online. For a breakdown of the
individual adjustments see table "Non-IFRS Adjustments by
Functional Areas" in this Quarterly Statement.
|
|
3) As this
is an order entry metric, there is no IFRS equivalent.
|
|
Due to rounding,
numbers may not add up precisely.
|
Business Outlook 2018
Due to the strong momentum in SAP's cloud business the Company
is raising its outlook for the full year 2018:
- Non-IFRS cloud subscriptions and support revenue is now
expected to be in a range of €5.050 billion − €5.200 billion at
constant currencies (2017: €3.77 billion), up 34.0% – 38.0% at
constant currencies. The previous range was €4.95 billion − €5.15
billion at constant currencies.
- Non-IFRS cloud and software revenue is now expected to be in a
range of €21.025 – €21.250 billion at constant currencies (2017:
€19.55 billion), up 7.5% – 8.5% at constant currencies. The
previous range was €20.85 – €21.25 billion at constant
currencies.
- Non-IFRS total revenue is now expected to be in a range of
€24.975 billion − €25.300 billion at constant currencies (2017:
€23.46 billion), up 6.0% – 7.5% at constant currencies. The
previous range was €24.80 billion − €25.30 billion at constant
currencies.
- Non-IFRS operating profit is now expected to be in a range of
€7.400 billion − €7.500 billion at constant currencies (2017: €6.77
billion), up 9.0% – 11.0% at constant currencies. The previous
range was €7.35 billion − €7.50 billion at constant
currencies.
While SAP's full-year 2018 business outlook is at constant
currencies, actual currency reported figures are expected to be
impacted by currency exchange rate fluctuations as the Company
progresses through the year. See the table below for the Q3 and FY
2018 expected currency impacts.
Expected Currency
Impact Based on June 2018 Level for the Rest of the Year
|
In percentage
points
|
Q3
|
FY
|
Cloud subscriptions
and support
|
1 to -1pp
|
-4 to -6pp
|
Cloud and
software
|
1 to -1pp
|
-2 to -4pp
|
Operating
profit
|
1 to -1pp
|
-2 to -4pp
|
IFRS 15 Impact
As of January 1, 2018, SAP changed
several of its accounting policies to adopt IFRS 15 'Revenue from
Contracts with Customers'. Under the IFRS 15 adoption method chosen
by SAP prior years are not restated to conform to the new policies.
Consequently, the year-over-year growth of revenue and profit in
2018 will be impacted by the new policies.
As already announced in SAP's Q4 2017 Quarterly Statement, the
Company expects the full year 2018 impact of the policy
change5 on revenue, operating expenses and profit to be
as follows:
- Revenues are expected to experience a benefit of substantially
less than €0.1 billion with most of the difference resulting from
exercises of customer software purchase options granted in prior
years which result in software revenue.
- Operating expenses are expected to benefit, in cost of sales
and marketing, in the amount of approximately €0.2 billion from
higher capitalization of sales commissions. Other policy changes
will weigh on operating expenses with an additional cost of revenue
of substantially less than €0.1 billion.
- The above-mentioned effects will result in a net positive
impact on operating profit of approximately €0.2 billion.
The new revenue recognition policies are described in our Half
Year Report. Details regarding the IFRS 15 impact in the second
quarter and first six months can be found in the section 'Impact of
Changes in Accounting Policies' in this Quarterly Statement.
Ambition 2020
Looking beyond 2018, SAP is updating its 2020 ambition. This
update reflects the strong momentum in SAP's cloud business, the
acquisition of Callidus Software as well as a more challenging
currency environment compared to 2017.
SAP now expects 2020 non-IFRS cloud subscriptions and support
revenue in a range of €8.2 − €8.7 billion (previously: €8.0 – €8.5
billion).
SAP continues to expect:
- €28 − €29 billion non-IFRS total revenue
- €8.5 − €9.0 billion non-IFRS operating profit
- The share of more predictable revenue (defined as the total of
cloud subscriptions & support revenue and software support
revenue) in a range of 70% − 75%.
The updated ambition is based on estimated average 2018
currencies, assuming the current foreign exchange environment
prevails until year-end. The previous ambition was based on average
2017 currencies. The change in currency assumptions negatively
impacts the cloud subscriptions and support revenue ambition by
approximately -€0.35 billion, the total revenue ambition by
approximately -€1.0 billion and the operating profit ambition by
approximately -€0.4 billion. These negative impacts are now
included in the updated 2020 ambition.
The full Q2 2018 Quarterly Statement can be downloaded from
http://www.sap.com/investors/sap-2018-q2-statement
Additional Information
On April 5, 2018, SAP acquired
Callidus Software Inc. and changed the structure of the
Applications, Technology & Services segment. The Callidus
business was combined with our existing customer experience
activities into a new business unit called 'SAP Customer
Experience'. This new unit, which qualifies as an operating segment
(called 'Customer Experience'), comprises on premise and
cloud-based products that run front office functions across the
customer experience. The company has retrospectively adjusted its
revenue and results for the Applications, Technology & Services
segment to reflect these changes. For further information regarding
changes in SAP's segment structure, see Note 14 in our consolidated
Half-Year Report.
All numbers for the SAP group and the Customer Experience
segment include Callidus revenues and profits from April 5, 2018 onwards. Numbers for periods before
the acquisition do not include Callidus' revenues or profits.
For a more detailed description of all of SAP's non-IFRS
measures and their limitations as well as our constant currency and
free cash flow figures see Explanation of Non-IFRS Measures
online.
Webcast
SAP senior management will host a financial analyst conference call
at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00
AM (Eastern) / 5:00 AM
(Pacific). The call will be webcast live on the Company's website
at www.sap.com/investor and will be available for replay.
Supplementary financial information pertaining to the second
quarter results can be found at www.sap.com/investor.
About SAP
As market leader in enterprise application software, SAP (NYSE:
SAP) helps companies of all sizes and industries run better. From
back office to boardroom, warehouse to storefront, desktop to
mobile device – SAP empowers people and organizations to work
together more efficiently and use business insight more effectively
to stay ahead of the competition. SAP applications and services
enable more than 404,000 business and public sector customers to
operate profitably, adapt continuously, and grow sustainably. For
more information, visit www.sap.com.
For more information,
financial community only:
|
Stefan
Gruber
|
+49 (6227)
7-44872
|
investor@sap.com,
CET
|
Follow SAP Investor
Relations on Twitter at @sapinvestor.
|
|
|
|
For more information,
press only:
|
Rajiv
Sekhri
|
+49 (6227)
7-74871
|
rajiv.sekhri@sap.com,
CET
|
Daniel
Reinhardt
|
+49 (6227)
7-40201
|
daniel.reinhardt@sap.com, CET
|
|
|
|
For customers
interested in learning more about SAP products:
|
Global Customer
Center:
|
+49 180
534-34-24
|
|
United States
Only:
|
+1 (800) 872-1SAP
(+1-800-872-1727)
|
|
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1 New
cloud bookings is the total of all orders received in a given
period the revenue from which is expected to be classified as cloud
subscription and support revenue and that result from purchases by
new customers and from incremental purchases by existing customers.
Consequently, orders to renew existing contracts are not included
in this metric. The order amount must be committed. Consequently,
due to their pay-per-use nature, business network transaction fees
which do not include a committed minimum consumption are not
reflected in the bookings metric (e.g. SAP Ariba and SAP Fieldglass
transaction-based fees). Amounts included in the measures are
generally annualized (annualized contract value ACV).
|
2 For the
second quarter 2018, Callidus contributed €50 million to SAP's
Non-IFRS cloud subscriptions and support revenue at constant
currencies. The Callidus acquisition was closed on April 5th
2018.
|
3 New
cloud and software license order entry is the total of new cloud
order entry and software license order entry. The new cloud order
entry metric is identical to the new cloud bookings metric defined
above except that it considers the total contract value (TCV) of
the orders where the new cloud bookings metric considers the
orders' annualized contract value (ACV). Software license order
entry is the total of all orders received in a given period the
revenue from which is expected to be classified as software license
revenue. The support services commonly sold with the software
licenses are not included in the software license order entry
metric.
|
4 SAP
Business Network commerce is the total commerce transacted on the
Ariba, Concur and Fieldglass Networks in the trailing 12 months.
Ariba commerce includes procurement and sourcing spend. Previously
we only included the total commerce transacted on the Ariba Network
in this metric.
|
5 "Impact
of the accounting policy change" means the difference between a
revenue and profit measure determined under SAP's new IFRS 15-based
policies and the respective measure as it would stand had our
previous accounting policies continued to apply.
|
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