WALLDORF, Germany — SAP AG (NYSE: SAP) today announced its preliminary financial results for the fourth quarter ended December 31, 2012.

• 12th Consecutive Quarter of Double-Digit Growth in Non-IFRS Software and Software-Related Service Revenue
• Revenue Guidance Exceeded: At Constant Currencies, Full Year 2012 Non-IFRS Software and Software-Related Service Revenue Increased 13%
• Full Year Non-IFRS Software & Cloud Subscriptions Revenue¹ Increased 21% to €5.00 Billion (17% At Constant Currencies)
• Very Strong Software Revenue Contribution From Innovations in Full Year 2012: €392 Million from SAP HANA and €222 Million from Mobile
• Accelerating Cloud Momentum: Annual Cloud Revenue Run Rate Approaching €850 Million²
• Full Year 2012 Non-IFRS Operating Profit Increased 11% to €5.21 Billion (7% to €5.02 Billion at Constant Currencies Compared to Guidance Range of €5.05 – €5.25 Billion)

BUSINESS HIGHLIGHTS IN THE FOURTH QUARTER AND FULL YEAR 2012

SAP delivered record revenues in 2012. Non-IFRS total revenue grew 14% year-on-year and exceeded €16 billion. Non-IFRS software and software-related service revenue grew 17% year-on-year to €13.2 billion. Non-IFRS software and cloud subscriptions revenue grew 21% year-on-year to €5 billion.

SAP delivered strong overall growth in the fourth quarter. The company achieved strong software revenue performance in the APJ region. The EMEA region delivered impressive results in light of the continued uncertain market environment and the Americas region had a solid software revenue performance considering a tough year-over-year comparison. SAP delivered exceptional growth in its key innovation areas SAP HANA, Mobile and Cloud: SAP HANA had an outstanding quarter reaching nearly €200 million in software revenue in the fourth quarter and achieving almost €400 million for the full year. SAP’s mobile business contributed more than €220 million to software revenue achieving its full year revenue target.

SAP’s strong cloud momentum continued in the fourth quarter: Derived from the total revenue of SAP’s two cloud segments (Cloud Applications and Ariba) the annual cloud revenue run rate is approaching €850 million. For the SAP cloud applications segment alone 12 month new and upsell subscription billings increased nineteenfold in the fourth quarter. Even when including SuccessFactors in SAP’s 2011 numbers the growth is triple digit at 102%³. For SuccessFactors on a stand-alone basis, 12 month new and upsell subscription billings grew 95%.

“In 2012, SAP empowered best-run businesses to meet real-time consumer demands. We invested in our flagship innovation SAP HANA and strengthened the industry’s best portfolio in the cloud. We delivered industry-specific solutions, accessible anywhere on the mobile device,” said SAP Co-CEOs Bill McDermott and Jim Hagemann Snabe. “Our momentum has never been stronger. We are very well positioned to achieve our 2015 goals.”

“We achieved €5 billion in full year non-IFRS software and cloud subscription revenue, an increase of 21%. We saw very strong revenue contribution from our key innovations SAP HANA and Cloud. We are confident we will continue our double-digit growth momentum in 2013 and further improve our profitability,” said SAP CFO Werner Brandt.

¹Starting with the reporting for the fourth quarter and full year 2012, SAP has introduced, in the revenue section of its income statement, a new line item “Software & Cloud Subscriptions Revenue” which is the subtotal of the existing line items ‘Software Revenue’ and ‘Cloud Subscriptions and Support Revenue’. The content of the line items included in the subtotal as well as of all other line items in the income statements remain unchanged.

²The annual revenue run rate is derived from the total revenue of SAP’s two cloud segments (Cloud Applications and Ariba) in the fourth quarter of 2012 and includes Ariba (before any future growth). The annual run rate is calculated by taking the fourth quarter cloud division total revenue and multiplying it by 4.

³Q4 2012 year-over-year growth rate in 12 month new and upsell subscription billings which relates to SAP cloud applications business (excluding Ariba). The growth rate is a pro forma growth rate assuming that the acquisition of SuccessFactors was completed as of January 1, 2011. For more information on our non-IFRS billings see Explanation of Non-IFRS Measures online.

FINANCIAL RESULTS IN DETAIL

FINANCIAL HIGHLIGHTS – Fourth Quarter 2012

Fourth Quarter 2012 1)
	IFRS			Non-IFRS2)
€ million, unless otherwise stated	Q4 2012	Q4 2011	% change	Q4 2012	Q4 2011	% change	% change const. curr.
Software	1,937	1,779	9	1,937	1,779	9	8
Cloud subscriptions and support	126	6	2,000	159	6	2,691	2,608
Software & cloud subscriptions	2,063	1,785	16	2,096	1,785	17	16
Support	2,165	1,936	12	2,170	1,937	12	10
Software and software-related service revenue	4,227	3,721	14	4,265	3,722	15	13
Total revenue	5,022	4,499	12	5,061	4,500	12	11
Total operating expenses	−3,431	−2,831	21	−3,096	−2,719	14	12
– thereof TomorrowNow litigation	2	6	-67	0	0	0
Operating profit	1,591	1,668	−5	1,964	1,781	10	9
Operating margin (%)	31.7	37.1	−5.4pp	38.8	39.6	−0.8pp	−0.6pp
Profit after tax	1,104	1,197	−8	1,359	1,277	6
Basic earnings per share (€)	0.93	1.01	−8	1.14	1.07	7
Number of employees (FTE)	64,422	55,765	16	N/A	N/A	N/A	N/A
1) All figures are preliminary and 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 page F8 in the appendix to this press release.

IFRS software revenue was €1,937 million (2011: €1,779 million), an increase of 9% (8% at constant currencies). IFRS software & cloud subscriptions revenue was €2.06 billion (2011: €1.79 billion), an increase of 16%. Non IFRS software & cloud subscriptions revenue was €2.10 billion (2011: €1.79 billion), an increase of 17% (16% at constant currencies). IFRS software and software-related service revenue was €4.23 billion (2011: €3.72 billion), an increase of 14%. Non-IFRS software and software-related service revenue was €4.27 billion (2011: €3.72 billion), an increase of 15% (13% at constant currencies). IFRS total revenue was €5.02 billion (2011: €4.50 billion), an increase of 12%. Non-IFRS total revenue was €5.06 billion (2011: €4.50 billion), an increase of 12% (11% at constant currencies).

IFRS operating profit was €1.59 billion (2011: €1.67 billion), a decrease of 5%. Non-IFRS operating profit was €1.96 billion (2011: €1.78 billion), an increase of 10% (9% at constant currencies). IFRS operating margin was 31.7% (2011: 37.1%), a decrease of 5.4 percentage points. Non-IFRS operating margin was 38.8% (2011: 39.6%), or 39.0% at constant currencies, a decrease of 0.8 percentage points (a decrease of 0.6 percentage points at constant currencies).

IFRS operating profit and IFRS operating margin for the fourth quarter 2012 were impacted by share-based compensation expense of €185 million (2011: €1 million) and acquisition-related charges of €151 million (2011: €116 million). Share-based compensation expenses significantly increased primarily due to the implementation of new share-based compensation plans as well as the strong performance of SAP’s share price in 2012.

Total headcount for the group grew in the fourth quarter by 304 FTEs organically and by almost 3,100 FTEs in total (including acquisition of Ariba) compared to the previous quarter.

IFRS profit after tax was €1.10 billion (2011: €1.20 billion), a decrease of 8%. Non-IFRS profit after tax was €1,359 million (2011: €1,277 million), an increase of 6%. IFRS basic earnings per share was €0.93 (2011: €1.01), a decrease of 8%. Non-IFRS basic earnings per share was €1.14 (2011: €1.07), an increase of 7%. The IFRS and non-IFRS effective tax rates in the fourth quarter of 2012 were 27.7% (2011: 26.3%) and 28.5% (2011: 26.4%), respectively.

FINANCIAL HIGHLIGHTS – Full Year 2012

Full Year 20121)
	IFRS			Non-IFRS2)
€ million, unless otherwise stated	FY 2012	FY 2011	% change	FY 2012	FY 2011	% change	% change const. curr.
Software	4,658	4,107	13	4,658	4,107	13	10
Cloud subscriptions and support	270	18	1,400	342	18	1,839	1,717
Software & cloud subscriptions	4,928	4,125	19	5,000	4,125	21	17
Support	8,236	7,194	14	8,244	7,221	14	10
Software and software-related service revenue	13,164	11,319	16	13,245	11,346	17	13
Total revenue	16,222	14,233	14	16,303	14,260	14	10
Total operating expenses	−12,158	−9,352	30	−11,094	−9,550	16	12
– thereof TomorrowNow litigation	0	717	-100	0	0	0
Operating profit	4,064	4,881	−17	5,209	4,710	11	7
Operating margin (%)	25.1	34.3	−9.2pp	32.0	33.0	−1.0pp	−1.1pp
Profit after tax	2,826	3,439	−18	3,608	3,367	7
Basic earnings per share (€)	2.37	2.89	−18	3.03	2.83	7
Number of employees (FTE)	64,422	55,765	16	N/A	N/A	N/A	N/A
1) All figures are preliminary and 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 page F8 in the appendix to this press release.

IFRS software revenue was €4.66 billion (2011: €4.11 billion), an increase of 13% (10% at constant currencies). IFRS software & cloud subscriptions revenue was €4.93 billion (2011: €4.13 billion), an increase of 19%. Non IFRS software & cloud subscriptions revenue was €5.00 billion (2011: €4.13 billion), an increase of 21% (17% at constant currencies). IFRS software and software-related service revenue was €13.16 billion (2011: €11.32 billion), an increase of 16%. Non-IFRS software and software-related service revenue was €13.25 billion (2011: €11.35 billion), an increase of 17% (13% at constant currencies). This exceeded SAP’s non-IFRS software and software-related service revenue guidance which was the high end of the 10.5 – 12.5% range at constant currencies. IFRS total revenue was €16.22 billion (2011: €14.23 billion), an increase of 14%. Non-IFRS total revenue was €16.30 billion (2011: €14.26 billion), an increase of 14% (10% at constant currencies).

IFRS operating profit was €4.06 billion (2011: €4.88 billion), a decrease of 17%. Non-IFRS operating profit was €5.21 billion (2011: €4.71 billion), an increase of 11% (€5.02 billion at constant currencies, an increase of 7%). This was slightly below SAP’s non-IFRS operating profit guidance (which was in a range of €5.05 – €5.25 billion at constant currencies) due to the company’s continued investments in key innovations as well as the expansion of SAP’s global go-to-market activities. IFRS operating margin was 25.1% (2011: 34.3%), a decrease of 9.2 percentage points. Non-IFRS operating margin was 32.0% (2011: 33.0%), or 31.9% at constant currencies, a decrease of 1.0 percentage points (a decrease of 1.1 percentage points at constant currencies).

IFRS operating profit and IFRS operating margin for the full year 2012 were impacted by share-based compensation expense of €519 million (2011: €68 million) and acquisition-related charges of €537 million (2011: €448 million). Share-based compensation expenses significantly increased primarily due to the implementation of new share-based compensation plans as well as the strong performance of SAP’s share price in 2012. Additionally, for the full year 2011, the reduction of the provision for the TomorrowNow litigation resulted in a significant profit from the discontinued TomorrowNow activities. This had a 5.1 percentage point positive influence on the SAP’s full year 2011 IFRS operating margin. For this reason the 2012 and 2011 IFRS profit and margin numbers are not fully comparable.

Operating profit and operating margin for the full year 2012 were impacted by SAP’s continued investments in its global go-to-market activities and its cloud business. Total headcount for the group grew year-over-year by almost 8,700 FTEs (thereof more than 4,800 FTEs from acquisitions).

IFRS profit after tax was €2.83 billion (2011: €3.44 billion), a decrease of 18%. Non-IFRS profit after tax was €3.61 billion (2011: €3.37 billion), an increase of 7%. IFRS basic earnings per share was €2.37 (2011: €2.89), a decrease of 18%. Non-IFRS basic earnings per share was €3.03 (2011: €2.83), an increase of 7%. The IFRS and non-IFRS effective tax rates in the full year  2012 were 26.1% (2011: 27.9%) and 27.4% (2011: 26.6%), respectively.

Operating cash flow was €3.65 billion (2011: €3.78 billion), a decrease of 3%. Free cash flow was €3.11 billion (2011: €3.33 billion), a decrease of 7%. Free cash flow was 19% of total revenue (2011: 23%). At December 31, 2012, SAP had a total group liquidity of €2.49 billion (December 31, 2011: €5.60 billion), which includes cash and cash equivalents and short term investments. Net liquidity at December 31, 2012 was -€2.50 billion compared to €1.64 billion at December 31, 2011. This decrease in net liquidity was primarily the result of the annual shareholder dividend payment and the acquisition of SuccessFactors and Ariba in 2012.

BUSINESS OUTLOOK

SAP is providing the following outlook for the full year 2013:

• The Company expects full year 2013 non-IFRS software & cloud subscriptions revenue to increase in a range of 14% – 20% at constant currencies (2012: €5.00 billion). The full year 2013 non-IFRS cloud subscription and support revenue contributing to this growth is expected to be around €750 million at constant currencies (2012: €342 million).
• The Company expects full-year 2013 non-IFRS software and software-related service revenue to increase in a range of 11% – 13% at constant currencies (2012: €13.25 billion).
• The Company expects full-year 2013 non-IFRS operating profit to be in a range of €5.85 billion – €5.95 billion at constant currencies (2012: €5.21 billion).
• The Company projects a full-year 2013 IFRS effective tax rate of 25.5% – 26.5% (2012: 26.1%) and a non-IFRS effective tax rate of 27.0% – 28.0% (2012: 27.4%).
  

Additional Information
The financial information presented above reflects the results of the acquisitions of SuccessFactors starting on February 21, 2012 and Ariba starting on October 1, 2012. Except as described in Explanation of Non-IFRS Measures, no amounts have been reflected in SAP’s results in respect of either company prior to the date of acquisition.

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.

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2012 Integrated Report and Annual Report
SAP’s 2012 Integrated Report, SAP’s 2012 Annual Report to Shareholders (a subset of SAP’s 2012 Integrated Report) and SAP’s 2012 Annual Report on Form 20-F are scheduled to be published on March 22, 2013, and will be available for download at www.sap.com/investor.

Webcast
SAP senior management will host a press conference in Walldorf today at 10:00 AM (CET) / 9:00 AM (GMT) / 4:00 AM (Eastern) / 1:00 AM (Pacific), followed by a financial analyst call at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00 AM (Eastern) / 5:00 AM (Pacific). Both conferences will be web cast live on the Company’s website at www.sap.com/investor and will be available for replay. Supplementary financial information pertaining to the full-year and quarterly results and the 2013 outlook 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 232,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.

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Appendix – Financial Information