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SAP Announces First Quarter 2015 Results

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

WALLDORF - SAP SE (NYSE: SAP) today announced its financial results for the first quarter ending March 31, 2015.

  • 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

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.”

“SAP’s customer centricity and commitment to investing in innovation are paying off”, said Luka Mucic, CFO of SAP. “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.

  • (1) For the first quarter 2015, Fieldglass contributed €19 million and Concur contributed €128 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 network transaction fees are not reflected in the new cloud bookings metric. Amounts included in the measure are annualized. Concur contributed €35 million to SAP’s new cloud bookings in the first quarter.
  • (3) Network spend volume is the total value of purchase orders transacted on the Ariba, Concur and Fieldglass Networks in the trailing 12 months.


FINANCIAL RESULTS IN DETAIL

FINANCIAL HIGHLIGHTS – First Quarter 2015

First Quarter 2015 (1)

IFRS

Non-IFRS (2)

€ million, unless otherwise stated

Q1 2015

Q1 2014

% change

Q1 2015

Q1 2014

% change

% change
const. curr.

Cloud subscriptions and support

503

219

129

509

221

131

95

   Software licenses

696

623

12

696

623

12

1

   Software support

2,454

2,097

17

2,454

2,098

17

7

Software licenses and support

3,150

2,720

16

3,150

2,722

16

5

Cloud and software

3,653

2,939

24

3,659

2,942

24

12

Total revenue

4,497

3,698

22

4,502

3,701

22

10

Total operating expenses

–3,859

–2,975

30

–3,446

–2,782

24

13

Operating profit

638

723

–12

1,056

919

15

–2

Operating margin (%)

14.2

19.5

–5.4 Pp

23.5

24.8

–1.4 Pp

–2.6 Pp

Profit after tax

413

534

–23

697

667

5

Basic earnings per share (€)

0.35

0.45

–23

0.58

0.56

5

Number of employees (FTE)

74,551

66,750

12

k.A

k.A.

k.A.

k.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 F5 in the appendix to this press release.

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 our 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 www.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 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 291,000 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