SAP Announces Second Quarter and First Half Results 2013

Double-Digit Growth Continues in a Challenging Market – SAP Driving the Transition to the Cloud and Gaining Market Share

SAP AG (NYSE: SAP) today announced its financial results for the second quarter and first half ended June 30, 2013.

  • Three Years of Double-Digit Growth – Second Quarter 2013 Non-IFRS Software and Software-Related Service Revenue Increased 10% at Constant Currencies (7% at Actual Currencies to €3.35 Billion)
  • Second Quarter 2013 Non-IFRS Software and Cloud Subscription Revenue Increased 7% at Constant Currencies (3% at Actual Currencies to €1.17 Billion)
  • Triple-Digit Year-Over-Year Growth in Cloud Subscription and Support Revenue, Annual Cloud Revenue Run Rate Exceeded €930 Million
  • Expanding Leadership in In-Memory Computing with SAP HANA
  • Second Quarter 2013 Non-IFRS Operating Profit Reached €1.22 Billion, a 10% Increase at Constant Currencies (4% at Actual Currencies)
  • SAP Reaffirms Non-IFRS Operating Profit Outlook and Remains Committed to Be a Double-Digit Growth Company with an Increase of at Least 10% in Non-IFRS Software and Software-Related Service Revenue at Constant Currencies in 2013

Business Highlights in the Second Quarter 2013
"The industry transformation we predicted back in 2010 is now happening at full speed and our strategy of innovation for growth is paying off," said Bill McDermott and Jim Hagemann Snabe, Co-CEOs of SAP. "We continued our double-digit growth momentum, we are leading the transformation of the industry, and our market opportunity is bigger than ever. We are gaining market share in a challenging macroeconomic environment, and with the HANA Enterprise Cloud, we are resolute to capture the future as the cloud company."

"SAP had a solid overall performance in the second quarter. We remained focused on operating discipline, resulting in double-digit growth in non-IFRS operating profit at constant currencies. We improved the profitability of our core business and see good traction in the cloud on our way towards building a profitable cloud business", said Werner Brandt, CFO of SAP. "We reaffirm our full year 2013 Non-IFRS operating profit outlook and remain committed to double-digit topline growth despite a difficult macroeconomic environment, in particular in Asia Pacific Japan and the rapid transition to the cloud."

Second quarter non-IFRS cloud subscription and support revenue increased 166% (171% at constant currencies) year-over-year to €183 million. SAP’s non-IFRS cloud subscription and support revenue in the second quarter outperformed many cloud competitors on a sequential quarterly growth basis. The annual cloud revenue run rate has now reached €932 million1. With approximately 30 million cloud users, SAP has the largest subscriber base in the cloud market. Non-IFRS deferred cloud subscription and support revenue2 was €361 million as of June 30, 2013, a year-over-year increase of 68%. The Ariba business is showing accelerated synergies. For the Ariba segment the trailing twelve month network spend volume3 was approximately $465 billion, an increase of 27% year-over-year. More than 1.1 million companies are connected through the Ariba network, the world’s largest Web-based business trading community.

SAP HANA, the Company’s platform for real-time business applications, continues to be a major growth engine with €102 million software revenue contribution, growing 21% year-on-year. The Company continues to expect HANA software revenue of €650 – €700 million in 2013. Customers have already shown strong interest in SAP Business Suite powered by SAP HANA which was made generally available in May and – together with HANA Enterprise Cloud – is expected to drive adoption of the HANA platform.

SAP’s double-digit growth momentum continued in the second quarter with Non-IFRS software and software-related service revenue increasing 10% at constant currencies (7% at actual currencies to €3.35 billion). Non-IFRS software and cloud subscription revenue in the quarter increased 7% at constant currencies (3% at actual currencies to €1.17 billion). Non-IFRS operating profit reached €1.22 billion in quarter, a 10% increase at constant currencies (4% at actual currencies), resulting in a 60 basis points expansion of the non-IFRS operating margin at constant currencies despite a negative effect from the Ariba acquisition of 40 basis points. The margin performance demonstrates that the efficiency in SAP’s core business has further improved.

Regional Performance
Second Quarter 2013
The Americas region delivered a strong second quarter in non-IFRS software and cloud subscription revenue4 with 18% growth year-over-year, driven by excellent software revenue performance in Latin America – in particular Brazil – and strong cloud subscription and support revenue growth in North America. The EMEA region saw solid growth with non-IFRS software and cloud subscription revenue increasing 3% year-over-year, despite a continued difficult market environment and a tough year-over-year comparison. High single-digit software revenue growth in Germany contributed to this performance. Non-IFRS software and cloud subscription revenue in the Asia Pacific Japan (APJ) region declined 7%, mainly due to continued macroeconomic challenges. However, some markets in APJ, such as Southeast Asia and India, saw strong growth in software revenue.

1. The annual revenue run rate is the second quarter 2013 cloud division revenue of €233 million multiplied by 4.
2. Beginning in Q1 2013, SAP discloses non-IFRS deferred cloud subscription and support revenue, which is a subset of the total, non-IFRS deferred revenue number reported on the balance sheet.
3. Network spend volume is the total value of purchase orders transacted on the Ariba Network in the trailing 12 months.
4. Non-IFRS software and cloud subscription revenue in the regional paragraphs follow SAP’s management view, which is calculated as the combination of software revenue based on location of negotiation and cloud subscription and support revenue based on customer location; growth rates at constant currencies. See SAP’s second quarter and half year interim report for details.

First Half 2013
The Americas region delivered a strong first half in non-IFRS software and cloud subscription revenue with 29% growth year-over-year, driven by a very strong performance in the United States and Brazil. The EMEA region saw solid growth with non-IFRS software and cloud subscription revenue increasing 8% for the first half of 2013 which is an impressive result in light of continued market uncertainty. Non-IFRS software and cloud subscriptions revenue in the APJ region declined 7% in the first half of 2013.

For more information on the event: http://www.sap.com/corporate-en/investors/index.epx

AboutSAP
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 238,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.

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Media contacts
Claire McPeak,+971 4 330 1777,c.mcpeak@sap.com
Neil Jaques, Wallis Marketing Consultants, +971 4390 1950,sap@wallis-mc.com

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