Cloud Revenue Up 116% – Non-IFRS Operating Profit Up 19%
- Strong Growth in New Cloud Bookings: Up 102%
- Non-IFRS Cloud and Software Revenue Up 19% to €4.12 Billion
- HANA Continues to Soar – SAP S/4HANA Customer Count Exceeds 1,300
- Non-IFRS Operating Profit Increased 19% to €1.62 Billion, Non-IFRS Earnings per Share Increased 16% to €0.98
- Reiterates Full Year 2015 Outlook
WALLDORF — SAP SE today announced its financial results for the third quarter and nine months ended September 30, 2015.
SAP again delivered strong growth in the cloud, outpacing most pure cloud competitors even without the contribution from the Concur acquisition. Third quarter non-IFRS cloud subscriptions and support revenue grew 116% year-over-year (90% at constant currencies) to €600 million.[1] New cloud bookings, the key measure for SAP’s sales success in the cloud, increased 102% in the third quarter to €216 million.[2]
The Company had very strong top and bottom line growth in the third quarter. Non-IFRS cloud and software revenue increased 19% (12% at constant currencies) to €4.12 billion. Non-IFRS operating profit increased 19% (15% at constant currencies) to €1.62 billion.
“SAP is enabling companies to Run Simple,” said SAP CEO Bill McDermott. “Whether it’s optimizing the customer experience, collaborating with partners across a digital network, engaging your workforce or managing your core operations with S/4HANA – we are helping our customers go digital. The HANA database and platform are the foundation for a ‘live system strategy’ enabling companies to capture the immense Internet of Things opportunity. This new architecture defeats complexity and radically increases speed so businesses can execute their mission in real-time. Our strong Q3 results are the latest validation of our strategy.”
“What I am particularly pleased about is that our operating profit grew even faster than our revenue. This reflects the positive impact of our business transformation and our continued focus on operating excellence across all of our lines of business, as shown in particular by an almost 9 percentage point year-over-year increase in our cloud gross margin,” said SAP CFO Luka Mucic. “In addition, we continued to increase our operating and free cash flow. In fact, we exceeded €3.2 billion for the first nine months in operating cash flow, while free cash flow marked an 8% increase year-over-year.”
BUSINESS HIGHLIGHTS IN THE THIRD QUARTER 2015
Continued Momentum in Human Capital Management and Customer Engagement and Commerce
Customers continue to turn to SAP to manage their global workforce, both permanent and flexible. SuccessFactors Employee Central, which is the core of our Human Capital Management offerings, is localized for 73 countries and the number of customers has increased 79% to more than 800 in just 12 months. SAP is increasingly winning against its key HCM competitors, especially in markets outside of the United States.
SAP saw excellent growth in its Customer Engagement and Commerce solutions. SAP helps businesses manage the shift from traditional CRM to real-time customer engagement where the lines between marketing, sales, service, and commerce are fading. SAP is unique in that it can help businesses connect the front-office and back-office in real-time and fulfill ecommerce in one end to end value chain. New cloud bookings for Customer Engagement and Commerce saw strong double-digit growth.
Exceptional SAP S/4HANA Traction
Customer adoption of SAP HANA continues to surge on the back of high demand for our new digital core solution SAP S/4HANA. SAP S/4HANA’s robust early traction continues with more than 1,300 SAP S/4HANA customers by the end of the third quarter across all industries and regions. SAP S/4HANA enabled strong growth across our portfolio and allows customers to turn insight into action by seamlessly connecting their entire value chain in real time.
Strong Business Network Momentum – Triple Digit Growth, Concur Accelerates
SAP is digitizing ecosystem collaborations with its Business Network solutions. Total revenue in the SAP Business Network segment was €412 million (€358 million at constant currencies) in the third quarter, a year-over-year increase of 159% (125% at constant currencies). Concur’s new business momentum has seen a significant increase since the acquisition with further acceleration of bookings in the third quarter 2015.
Approximately 1.9 million connected companies trade over $730 billion of commerce[3] on the Ariba network, approximately 30 million end users process travel and expenses with Concur annually and customers are managing 1.7 million flexible workers with the Fieldglass platform annually.
Regional Performance
The EMEA region had an outstanding performance in the third quarter, with a 13% increase in non-IFRS cloud and software revenue. Non-IFRS cloud subscriptions and support revenue grew by 67% with high double-digit growth in new cloud bookings. Highlights in the region include strong software license performance in Germany and France.
The Americas region had strong double-digit growth, with non-IFRS cloud and software revenue rising 32%. Cloud subscriptions and support revenue in the region grew 139% with new cloud bookings growing by triple-digits. An improved performance in Latin America which stabilized amid macroeconomic challenges contributed to this growth.
In the APJ region, non-IFRS cloud subscriptions and support revenue grew 88%, driving non-IFRS cloud and software revenue up 8%. New cloud bookings grew by double-digits. In the APJ region SAP had strong growth in India and South Korea across cloud and software.
FINANCIAL RESULTS IN DETAIL
FINANCIAL RESULTS IN THE THIRD QUARTER 2015
Third Quarter 20151) |
|||||||
| IFRS | Non-IFRS2) | ||||||
| € million, unless otherwise stated | Q3 2015 | Q3 2014 | % change | Q3 2015 | Q3 2014 | % change | % change const. curr. |
| Cloud subscriptions and support | 599 | 277 | 116 | 600 | 278 | 116 | 90 |
| Software licenses and support | 3,523 | 3,184 | 11 | 3,524 | 3,185 | 11 | 6 |
| Cloud and software | 4,122 | 3,461 | 19 | 4,124 | 3,463 | 19 | 12 |
| Total revenue | 4,985 | 4,254 | 17 | 4,987 | 4,256 | 17 | 10 |
| Operating profit | 1,214 | 1,157 | 5 | 1,616 | 1,355 | 19 | 15 |
| Profit after tax | 895 | 881 | 2 | 1,173 | 1,010 | 16 | |
| Basic earnings per share (€) | 0.75 | 0.74 | 2 | 0.98 | 0.84 | 16 | |
| Number of employees (FTE) | 75,643 | 68,835 | 10 | 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 page F7 in the appendix to this press release.
IFRS cloud subscriptions and support revenue was €599 million (2014: €277 million), an increase of 116%. Non-IFRS cloud subscriptions and support revenue was €600 million (2014: €278 million), an increase of 116% (90% at constant currencies). IFRS software licenses revenue was €1.01 billion (2014: €951 million), an increase of 7%. Non-IFRS software licenses revenue was €1.02 billion (2014: €952 million), an increase of 7% (4% at constant currencies). IFRS software licenses and support revenue was €3.52 billion (2014: €3.18 billion), an increase of 11%. Non-IFRS software licenses and support revenue was €3.52 billion (2014: €3.18 billion), an increase of 11% (6% at constant currencies). IFRS cloud and software revenue was €4.12 billion (2014: €3.46 billion), an increase of 19%. Non-IFRS cloud and software revenue was €4.12 billion (2014: €3.46 billion), an increase of 19% (12% at constant currencies). IFRS total revenue was €4.98 billion (2014: €4.25 billion), an increase of 17%. Non-IFRS total revenue was €4.99 billion (2014: €4.26 billion), an increase of 17% (10% at constant currencies).
IFRS operating profit was €1.21 billion (2014: €1.16 billion), an increase of 5%. Non-IFRS operating profit was €1.62 billion (2014: €1.36 billion), an increase of 19% (15% at constant currencies). IFRS operating margin was 24.3% (2014: 27.2%), a decrease of 2.9 percentage points. Non-IFRS operating margin was 32.4% (2014: 31.8%), an increase of 0.6 percentage points (1.3 percentage points at constant currencies).
IFRS profit after tax was €895 million (2014: €881 million), an increase of 2%. Non-IFRS profit after tax was €1.17 billion (2014: €1.01 billion), an increase of 16%. IFRS basic earnings per share was €0.75 (2014: €0.74), an increase of 2%. Non-IFRS basic earnings per share was €0.98 (2014: €0.84), an increase of 16%. The IFRS and non-IFRS effective tax rates in the third quarter of 2015 were 27.1% (2014: 26.5%) and 28.0% (2014: 27.7%), respectively.
FINANCIAL RESULTS IN THE FIRST NINE MONTHS 2015
Nine Months 20151) |
|||||||
| IFRS | Non-IFRS2) | ||||||
| € million, unless otherwise stated | 9M 2015 | 9M 2014 | % change | 9M 2015 | 9M 2014 | % change | % change const. curr. |
| Cloud subscriptions and support | 1,654 | 738 | 124 | 1,664 | 741 | 124 | 92 |
| Software licenses and support | 10,183 | 9,019 | 13 | 10,184 | 9,023 | 13 | 4 |
| Cloud and software | 11,837 | 9,757 | 21 | 11,848 | 9,764 | 21 | 11 |
| Total revenue | 14,451 | 12,103 | 19 | 14,462 | 12,110 | 19 | 9 |
| Operating profit | 2,552 | 2,578 | –1 | 4,066 | 3,510 | 16 | 5 |
| Profit after tax | 1,778 | 1,971 | –10 | 2,831 | 2,615 | 8 | |
| Basic earnings per share (€) | 1.49 | 1.65 | –10 | 2.37 | 2.19 | 8 | |
| Number of employees (FTE) | 75,643 | 68,835 | 10 | 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 page F7 in the appendix to this press release.
IFRS cloud subscriptions and support revenue was €1.65 billion (2014: €738 million), an increase of 124%. Non-IFRS cloud subscriptions and support revenue was €1.66 billion (2014: €741 million), an increase of 124% (92% at constant currencies). IFRS software licenses revenue was €2.69 billion (2014: €2.53 billion), an increase of 6%. Non-IFRS software licenses revenue was €2.69 billion (2014: €2.53 billion), an increase of 6% (a decrease of 1% at constant currencies). IFRS software licenses and support revenue was €10.18 billion (2014: €9.02 billion), an increase of 13%. Non-IFRS software licenses and support revenue was €10.18 billion (2014: €9.02 billion), an increase of 13% (4% at constant currencies). IFRS cloud and software revenue was €11.84 billion (2014: €9.76 billion), an increase of 21%. Non-IFRS cloud and software revenue was €11.85 billion (2014: €9.76 billion), an increase of 21% (11% at constant currencies). IFRS total revenue was €14.45 billion (2014: €12.10 billion), an increase of 19%. Non-IFRS total revenue was €14.46 billion (2014: €12.11 billion), an increase of 19% (9% at constant currencies).
IFRS operating profit was €2.55 billion (2014: €2.58 billion), a decrease of 1%. Non-IFRS operating profit was €4.07 billion (2014: €3.51 billion), an increase of 16% (5% at constant currencies). IFRS operating margin was 17.7% (2014: 21.3%), a decrease of 3.6 percentage points. Non-IFRS operating margin was 28.1% (2014: 29.0%), a decrease of 0.9 percentage points (1.0 percentage points at constant currencies).
IFRS profit after tax was €1.78 billion (2014: €1.97 billion), a decrease of 10%. Non-IFRS profit after tax was €2.83 billion (2014: €2.61 billion), an increase of 8%. IFRS basic earnings per share was €1.49 (2014: €1.65), a decrease of 10%. Non-IFRS basic earnings per share was €2.37 (2014: €2.19), an increase of 8%. The IFRS and non-IFRS effective tax rates for the first nine months of 2015 were 24.2% (2014: 24.8%) and 26.6% (2014: 26.4%), respectively.
Operating cash flow was €3.24 billion (2014: €3.08 billion), an increase of 5% year-over-year. Free cash flow increased slightly year-over-year to €2.82 billion (2014: €2.61 billion). Free cash flow was 19% of total revenue (2014: 22%). At September 30, 2015, SAP had a total group liquidity of €4.61 billion (December 31, 2014: €3.42 billion), which includes cash and cash equivalents and current investments. Net liquidity 2 at September 30, 2015 was -€5.82 billion compared to -€7.67 billion at December 31, 2014.
BUSINESS OUTLOOK 2015
The Company reiterates the following full year 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 September 2015 average rates for the rest of the year, the Company expects its non-IFRS cloud and software revenue growth rate as well as its non-IFRS operating profit growth rate to experience a currency benefit in a range of 7 to 9 percentage points for the full-year 2015 (2 to 4 percentage points for the fourth 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 our constant currency and free cash flow figures see Explanation of Non-IFRS Measures online.
Third Quarter 2015 Interim Report
SAP’s third quarter 2015 Interim Report was published today and is available for download at www.sap.com/investor.
Webcast
SAP earnings conference call for financial analysts will take place on Tuesday, October 20th 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 www.sap.com/investor and will be available for replay.
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 296,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.
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Appendix – Financial Information to Follow
[1] For the third quarter 2015, Concur contributed €149 million to SAP’s Non-IFRS cloud subscriptions and support revenue at constant currencies.
[2] New cloud bookings consist of all order entry of a given period that is expected to be classified as cloud subscription and support revenue and results from purchases by new customers and from incremental purchases by existing customers. The order amount must be contractually committed (i.e. variable amounts from pay-per-use and similar arrangements are not included). Consequently, due to their uncommitted pay-per-use nature Ariba and Fieldglass transaction-based fees are not reflected in the new cloud bookings metric. Amounts included in the measure are annualized. Concur contributed €59 million to SAP’s new cloud bookings in the third quarter.
[3] Network spend volume is the total value of purchase orders transacted on the Ariba Network in the trailing 12 months. In previous quarters this also included Concur and Fieldglass for which as of the third quarter 2015 separate more relevant metrics are disclosed.
