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SAP Announces First Quarter 2013 Results – Non-IFRS Software and Cloud Subscription Revenue Increased 25% at Constant Currencies

SAP AG (NYSE: SAP) today announced its financial results for the first quarter ended March 31, 2013.

WALLDORF, Germany -

  • First Quarter 2013 Non-IFRS Software and Cloud Subscription Revenue Increased 23% to €824 Million (25% at Constant Currencies)
  • First Quarter 2013 Non-IFRS Software and Software-Related Service Revenue Increased 12% to €2.94 Billion (14% at Constant Currencies)
  • 13th Consecutive Quarter of Double-Digit Growth in Non-IFRS Software and Software-Related Service Revenue
  • Exceptional Growth for SAP HANA: SAP’s Flagship In-Memory Platform Tripled Software Revenue Year-Over-Year
  • Strong Cloud Momentum: Annual Cloud Revenue Run Rate Approaching €900 Million
  • First Quarter 2013 Non-IFRS Operating Profit Increased 8% to €901 Million (11% at Constant Currencies)
  • First Quarter Non-IFRS EPS Increased 18% to €0.58
  • SAP Reiterates Full Year 2013 Outlook

BUSINESS HIGHLIGHTS IN THE FIRST QUARTER 2013

SAP had a solid start to 2013 with 23% (25% at constant currencies) growth in non-IFRS software and cloud subscription revenue. SAP achieved €824 million in non-IFRS software and cloud subscription revenue in the first quarter.

The Americas region delivered a strong first quarter, with non-IFRS software and cloud subscription revenue growing by 49% (51% at constant currencies), driven by excellent software revenue performance in Latin America and strong cloud subscription and support revenue growth in North America. The EMEA region saw solid growth of 13% (15% at constant currencies) in non-IFRS software and cloud subscription revenue, which is impressive in light of continued market uncertainty. Strong year-on-year software revenue growth rates in many markets including Russia, Switzerland, and the UK contributed to this performance. Non-IFRS software and cloud subscription revenue in the Asia Pacific Japan (APJ) region declined, as several markets in APJ started more slowly in 2013 after a record fourth quarter in 2012 and new leadership in some markets. The company expects the APJ region to be back on track in the second quarter.

SAP HANA continues to be a major growth engine for SAP. SAP HANA software revenue tripled year-on-year, contributing €86 million to software revenue this quarter. The company also continues to expand its market leadership with strong double-digit growth in its mobile business.

The Company sees continued strong growth in the cloud. With the most comprehensive portfolio of cloud solutions, SAP’s annual cloud revenue run rate is approaching €900 million1. First quarter 2013 Non-IFRS cloud subscription and support revenue was €167 million, up 380% year-over-year. Non-IFRS deferred cloud subscription and support revenue2 was €377 million as of March 31, 2013, which is a year-over-year increase of 95%. The Company’s cloud subscription and support backlog3 as of December 31, 2012 was €800 million. SAP’s cloud applications total subscribers now exceed 24 million. For the Ariba segment the trailing twelve month network spend volume4 was approximately $460 billion. More than 1 million companies are connected through the Ariba network, the world’s largest Web-based business trading community.

“Our industry is at a fundamental transformation point, driven by the convergence of mobile, cloud and big data. SAP’s 25% growth shows that we are not only leading this change but also gaining significant worldwide market share,” said SAP Co-CEOs Bill McDermott and Jim Hagemann Snabe. “Customers continue to choose our innovations to help them run better, and SAP HANA is the next-generation platform for all companies to innovate their business, drive speed across the entire enterprise and reduce costs. SAP’s pipeline is strong, and we are confident that we will achieve our full-year outlook.”

“Non-IFRS software and cloud subscription revenue exceeded €800 million for the first time in a first quarter. We saw very strong revenue contribution from SAP HANA and continued growth in the cloud. The solid top line performance and continued cost discipline resulted in double-digit growth in Non-IFRS operating profit at constant currencies,” said Werner Brandt, CFO of SAP. “We are on track to deliver on our 2015 goals and our overall financial objective of profitable growth over the long term.”

1) The annual revenue run rate is the first quarter 2013 cloud division revenue multiplied by 4.

2) Starting this quarter SAP is disclosing 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) Cloud subscription and support backlog represents expected future cloud subscription and support revenue that is contracted but not yet invoiced and thus not recorded in deferred revenue.

4) Network spend volume is the total value of purchase orders transacted on the Ariba Network in the trailing 12 months.

FINANCIAL RESULTS IN DETAIL

FINANCIAL HIGHLIGHTS – First Quarter 2013

First Quarter 2013 1)

IFRS

Non-IFRS2)

€ million, unless otherwise stated

Q1 2013

Q1 2012

% change

Q1 2013

Q1 2012

% change

% change
const. curr.

Software

657

637

3

657

637

3

5

Cloud subscriptions and support

137

29

373

167

35

380

385

Software and cloud subscriptions

794

666

19

824

672

23

25

Support

2,109

1,953

8

2,113

1,954

8

10

Software and software-related service revenue

2,903

2,619

11

2,937

2,626

12

14

Total revenue

3,601

3,350

7

3,636

3,357

8

10

Total operating expenses

−2,955

−2,719

9

−2,734

−2,523

8

10

- thereof TomorrowNow litigation

0

7

−97

0

0

0

N/A

Operating profit

646

631

2

901

834

8

11

Operating margin (%)

17.9

18.8

−0.9pp

24.8

24.8

0.0pp

0.3pp

Profit after tax

520

444

17

689

583

18

Basic earnings per share (€)

0.44

0.37

19

0.58

0.49

18

Deferred cloud subscription and support revenue (as of March 31)

344

120

>100

377

193

95

N/A

Number of employees (FTE)

64,598

59,420

9

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 F6 in the appendix to this press release.

IFRS and non-IFRS software revenue was €657 million (2012: €637 million), an increase of 3% (5% at constant currencies). IFRS software and cloud subscription revenue was €794 million (2012: €666 million), an increase of 19%. Non-IFRS software and cloud subscription revenue was €824 million (2012: €672million), an increase of 23% (25% at constant currencies). IFRS software and software-related service revenue was €2.90 billion (2012: €2.62 billion), an increase of 11%. Non-IFRS software and software-related service revenue was €2.94 billion (2012: €2.63 billion), an increase of 12% (14% at constant currencies). IFRS total revenue was €3.60 billion (2012: €3.35 billion), an increase of 7%. Non-IFRS total revenue was €3.64 billion (2012: €3.36 billion), an increase of 8% (10% at constant currencies).

IFRS operating profit was €646 million (2012: €631 million), an increase of 2%. Non-IFRS operating profit was €901 million (2012: €834 million), an increase of 8% (11% at constant currencies). IFRS operating margin was 17.9% (2012: 18.8%), a decrease of 0.9 percentage points, mainly due to acquisitions. Non-IFRS operating margin was 24.8% (2012: 24.8%). Non-IFRS operating margin was 25.1% at constant currencies, an increase of 0.3 percentage points. Non-IFRS operating profit and operating margin for the first quarter 2013 were affected by the acquisition of SuccessFactors and Ariba, which impacted the operating margin by approximately 80 basis points. The organic margin performance demonstrates that efficiency in SAP’s core business has improved further.

IFRS profit after tax was €520 million (2012: €444 million), an increase of 17%. Non-IFRS profit after tax was €689 million (2012: €583 million), an increase of 18%. IFRS basic earnings per share was €0.44 (2012: €0.37), an increase of 19%. Non-IFRS basic earnings per share was €0.58 (2012: €0.49), an increase of 18%. The IFRS and non-IFRS effective tax rates were 16.3% (2012: 26.9%) and 21.4% (2012: 28.1%), respectively. The year-over-year decrease in the effective tax rate in the first quarter mainly results from the regional allocation of income, from taxes for prior years and from tax effects on changes in foreign currency exchange rates.

Operating cash flow was €2.16 billion (2012: €2.07 billion), an increase of 4%. Free cash flow was €2.05 billion (2012: €1.96 billion), an increase of 5%. Free cash flow was 57% of total revenue (2012: 58%). At March 31, 2013, SAP had a total group liquidity of €4.61 billion (December 31, 2012: €2.49 billion), which includes cash and cash equivalents and short term investments. Net liquidity at March 31, 2013 was
-€0.45 billion compared to -€2.50 billion at December 31, 2012. The improvement of our net liquidity in the first quarter was primarily due to the strong operating cash flow in the first three months of 2013.

BUSINESS OUTLOOK

SAP reiterates the outlook for the full year 2013, which remains unchanged from the outlook provided on January 23, 2013:

  • The Company expects full year 2013 non-IFRS software and cloud subscription 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: €343 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: 26.2%) and a non-IFRS effective tax rate of 27.0% – 28.0% (2012: 27.5%).

Additional Information

2013 revenue and profit figures include the revenue and profit from SuccessFactors and Ariba. The comparative first quarter numbers for 2012 only include SuccessFactors starting on February 21, 2012 and do not include Ariba as the acquisition did not occur until October 1, 2012.

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 2013 Interim Report
SAP’s first quarter 2013 Interim Report was published today and is available for download at www.sap.com/investor. The interim report includes an update on SAP’s sustainability performance.

Webcast
SAP senior management will host a conference call for financial analysts and media on Friday, April 19th 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.

2012 Integrated Report, Annual Report, and Annual Report on Form 20-F
SAP’s 2012 Integrated Report, Annual Report and Annual Report on Form 20-F were published on March 22, 2013, and are available for download 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 238,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.

# # #

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

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Appendix – Financial Information

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