SAP Announces First Quarter 2015 Results

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Cloud Revenue up 131%, SAP Business Network Revenue up 207%. HANA Soars, Driving Cloud and Software Revenue up 24%

  • Strong Growth in New Cloud Bookings: Up 121%
  • Strong Topline Performance: Non-IFRS Cloud and Software Revenue Increased 24% to €3.66 Billion – All Regions Show Double-Digit Growth
  • Fast Start for SAP S/4HANA: Over 370 Customers Already
  • Non-IFRS Operating Profit Increased 15% to €1.06 Billion
  • Reiterates Full Year 2015 Outlook

SAP today announced its financial results for the first quarter ending March 31, 2015.

BUSINESS HIGHLIGHTS IN THE FIRST QUARTER 2015

SAP again delivered exceptionally strong growth in the cloud. First quarter non-IFRS cloud subscriptions and support revenue grew 131% year-over-year (95% at constant currencies).[1] New cloud bookings, the key measure for SAP’s sales success in the cloud, increased 121% in the first quarter to €120 million.[2]

The Company had a very strong cloud and software revenue performance with 24% growth in non-IFRS cloud and software revenue (12% at constant currencies) to €3.66 billion.

Non-IFRS operating profit increased 15% (decrease of 2% at constant currencies) to €1.06 billion.

We are pleased to report triple-digit growth in both cloud and our business network segment which started on a high note,” said Bill McDermott, CEO of SAP.

“SAP S/4HANA saw robust early traction and is catalyzing momentum across SAP. We are a strong growth company with every region growing in double digits in cloud and software revenue this quarter. We remain ever focused on seamless execution of our consistent, customer-driven strategy.

Luka Mucic, CFO of SAP said,

SAP’s customer centricity and commitment to investing in innovation are paying off,”

“We grew our cloud and software revenue by 24% and increased our operating profit by 15% surpassing €1 billion in a first quarter for the first time as currency shifted to a tailwind.

SAP HANA continues to be a major growth driver for the Company. This quarter the number of HANA customers surpassed 6,400, almost doubling from just one year ago. SAP S/4HANA’s robust early traction – more than 370 SAP S/4HANA customers year-to-date – was a major catalyst in HANA’s broader market adoption across all industries and regions.

SAP HANA also continues to evolve as a development platform. The HANA Cloud Platform, our Platform as a Service offering, enables organizations to extend and customize SAP applications quickly and easily in the cloud. This new offering is building significant momentum and has already attracted approximately 1,400 customers in a short period of time.

SAP Business Network is the world’s largest network of its kind. Total revenue in the SAP Business Network segment was €368 million (€308 million at constant currencies) in the first quarter, a year-over-year increase of 207% (157% at constant currencies). 1.8 million connected companies trade over $750 billion of frictionless commerce[3] on this network. SAP Business Network brings together Ariba, Concur and Fieldglass into one operating unit which is reported as a separate business segment.

First Quarter 2015 Regional Revenue

SAP showed a strong performance in the EMEA region in both the core and the cloud business. Cloud traction was exceptional with cloud subscriptions and support revenue growing by 114% driven by a very strong performance in the UK. As expected the macro and political environment continued to weigh on SAP’s business in Russia and Ukraine but double-digit software licenses revenue growth in Germany pushed EMEA to a 13% increase in non-IFRS cloud and software revenue.

In the Americas region, non-IFRS cloud subscriptions and support revenue grew by 136%. Non-IFRS cloud and software revenue increased 34% year-over-year, driven by triple-digit growth in cloud subscriptions and support revenue in the United States. Brazil bounced back with strong double-digit software license revenue growth.

The Company had an exceptional quarter in APJ. Non-IFRS cloud subscriptions and support revenue grew by 137% driven by a very strong quarter in India. Non-IFRS cloud and software revenue increased by 38%. Japan stood out with strong double-digit growth in software licenses revenue.

FINANCIAL RESULTS IN DETAIL
[table style=”table-striped”]

FINANCIAL HIGHLIGHTS – First Quarter 2015
First Quarter 20151)
IFRSNon-IFRS2)
€ million, unless otherwise statedQ1 2015Q1 2014% changeQ1 2015Q1 2014% change% change const. curr.
Cloud subscriptions and support50321912950922113195
Software licenses69662312696623121
Software support2,4542,097172,4542,098177
Software licenses and support3,1502,720163,1502,722165
Cloud and software3,6532,939243,6592,9422412
Total revenue4,4973,698224,5023,7012210
Total operating expenses–3,859–2,97530–3,446–2,7822413
Operating profit638723–121,05691915–2
Operating margin (%)14.219.5–5.4pp23.524.8–1.4pp–2.6pp
Profit after tax413534–236976675
Basic earnings per share (€)0.350.45–230.580.565
Number of employees (FTE)74,55166,75012N/AN/AN/AN/A

[/table]

1) All figures are unaudited.
2) For a detailed description of SAP’s non-IFRS measures see Explanation of Non-IFRS Measures online.

IFRS cloud subscriptions and support revenue was €503 million (2014: €219 million), an increase of 129%. Non-IFRS cloud subscriptions and support revenue was €509 million (2014: €221 million), an increase of 131% (95% at constant currencies). IFRS software licenses and support revenue was €3.15 billion (2014: €2.72 billion), an increase of 16%. Non-IFRS software licenses and support revenue was €3.15 billion (2014: €2.72 billion), an increase of 16% (5% at constant currencies). IFRS cloud and software revenue was €3.65 billion (2014: €2.94 billion), an increase of 24%. Non-IFRS cloud and software revenue was €3.66 billion (2014: €2.94 billion), an increase of 24% (12% at constant currencies). IFRS total revenue was €4.50 billion (2014: €3.70 billion), an increase of 22%. Non-IFRS total revenue was €4.50 billion (2014: €3.70 billion), an increase of 22% (10% at constant currencies).

IFRS operating profit was €638 million (2014: €723 million), a decrease of 12%. Non-IFRS operating profit was €1.06 billion (2014: €919 million), an increase of 15% (a decrease of 2% at constant currencies). IFRS operating margin was 14.2% (2014: 19.5%), a decrease of 5.4 percentage points. Non-IFRS operating margin was 23.5% (2014: 24.8%), a decrease of 1.4 percentage points (2.6 percentage points at constant currencies).

IFRS profit after tax was €413 million (2014: €534 million), a decrease of 23%. Non-IFRS profit after tax was €697 million (2014: €667 million), an increase of 5%. IFRS basic earnings per share was €0.35 (2014: €0.45), a decrease of 23%. Non-IFRS basic earnings per share was €0.58 (2014: €0.56), an increase of 5%. The IFRS and non-IFRS effective tax rates in the first quarter of 2015 were 13.6% (2014: 24.1%) and 22.3% (2014: 25.9%), respectively.

Cash Flow – Three Months 2015

Operating cash flow was €2.37 billion (2014: €2.35 billion), an increase of 1% year-over-year. Free cash flow increased slightly year-over-year to €2.23 billion (2014: €2.22 billion). Free cash flow was 50% of total revenue (2014: 60%). At March 31, 2015, SAP had a total group liquidity of €5.33 billion (December 31, 2014: €3.42 billion), which includes cash and cash equivalents and short term investments. Net liquidity at March 31, 2015 was -€5.19 billion compared to -€7.67 billion at December 31, 2014.

BUSINESS OUTLOOK 2015

The Company reiterates the following 2015 outlook:

  • Based on the strong momentum in SAP’s cloud business the Company expects full-year 2015 non-IFRS cloud subscriptions and support revenue to be in a range of €1.95 – €2.05 billion at constant currencies (2014: €1.10 billion). The upper end of this range represents a growth rate of 86% at constant currencies. Concur and Fieldglass are expected to contribute approximately 50 percentage points to this growth.
  • The Company expects full year 2015 non-IFRS cloud and software revenue to increase by 8% – 10% at constant currencies (2014: €14.33 billion).
  • The Company expects full-year 2015 non-IFRS operating profit to be in a range of €5.6 billion – €5.9 billion at constant currencies (2014: €5.64 billion).

While the Company’s full-year 2015 business outlook is at constant currencies, actual currency reported figures are expected to continue to be impacted by currency exchange rate fluctuations. If exchange rates remain at the March 2015 average rates for the rest of the year, the Company expects its non-IFRS cloud and software revenue growth rate to experience a currency benefit in a range of 8 to 11 percentage points for the full-year 2015 (10 to 13 percentage points for the second quarter 2015) and its non-IFRS operating profit growth rate at actual currencies to experience a currency benefit in a range of 10 to 13 percentage points for the full-year 2015 (12 to 15 percentage points for the second quarter 2015).

Additional Information
2015 revenue and profit figures include the full revenue and profit from Concur and Fieldglass. The comparative numbers for 2014 include Concur and Fieldglass starting December 4 and May 2, respectively.

For a more detailed description of all of SAP’s non-IFRS measures and their limitations as well as constant currency and free cash flow figures see Explanation of Non-IFRS Measures online.

First Quarter 2015 Interim Report
SAP’s first quarter 2015 Interim Report was published today and is available for download at sap.com/investor.

Webcast
SAP senior management will host a conference call for financial analysts on Tuesday, April 21st at 2:00 PM (CEST) / 1:00 PM (GMT) / 8:00 AM (EDT) / 5:00 AM (PDT). The conference call will be web cast live on the Company’s website at sap.com/investor and will be available for replay.
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