Earnings Release • Jul 26, 2017
Earnings Release
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July 26th, 2017
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 Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
SAP Cloud Platform is THE Digital Business Platform
Balance Sheet and Cash Flow Analysis Other Topics
Key performance metrics H1 2017
| New cloud and software license order entry4) | up >20% yoy | in Q2/17 | |
|---|---|---|---|
| Q2/17 unless otherwise stated | |||
| Cloud subscriptions and support revenue, non-IFRS (+27% at cc) |
New cloud bookings1) (+33% at cc ) |
Cloud subscriptions and support backlog2) |
Cloud applications total subscribers |
| +29% | +33% | €5.4bn | ~135m |
| yoy to €932m |
to €340m |
+47% yoy | |
| SAP Business network – | >2.8m connected | Number of end users | Flexible workers managed |
| Segment revenue, non-IFRS (€558m +19% at cc) |
companies trade on Ariba network |
processing travel & expenses with Concur |
with Fieldglass platform |
| €570m yoy +22% |
~\$1tn of commerce3) |
>49m | >3.5m annually |
| New cloud bookings – key measure for SAP's sales success in the cloud |
– | consist of order entry of a given period that is expected to be classified as cloud subscription and support revenue and results | from purchases by |
| nature, business network transaction fees which do not include a committed minimum consumption are not reflected in the bookings | new customers and from incremental purchases by existing customers. Consequently, orders to renew existing contracts are not included. The order amount must be committed. Consequently, due to their pay-per-use metric (e.g. SAP Ariba and SAP Fieldglass |
transaction-based fees). Amounts included in | |
| the measures are generally annualized. |
8% (+5% cc**)
19% (+16% cc**)
cloud subscriptions and support revenue
Solid growth in cloud and software revenue. Double-digit growth in software revenue in Canada, Mexico and Chile were highlights.
9% (+9% cc**) cloud and software revenue cloud and software revenue
48% (+48% cc**) cloud subscriptions and support revenue
EMEA with strong cloud and software performance. In Germany and Russia especially strong cloud business; Double-digit software revenue growth in Germany and MENA*** and triple-digit software revenue growth in Russia.
EMEA APJ 13% (+11% cc**) cloud and software revenue 52% (+47% cc**) cloud subscriptions
and support revenue
APJ with exceptional performance in both cloud and software revenue. China was very strong in cloud subscriptions and support revenue while Japan and Australia both had strong double-digit growth in software revenue.
*Revenues calculated based on customer location; All numbers are non-IFRS if not otherwise stated ** at constant currency; ***Middle East and North Africa
| profitable growth story continues | |||||||
|---|---|---|---|---|---|---|---|
| € millions, unless otherwise stated | IFRS | Non-IFRS | |||||
| Revenue Numbers | Q2/17 | Q2/16 | ∆% | Q2/17 | Q2/16 | ∆% | ∆% at cc |
| Cloud subscriptions and support | 932 | 720 | 29 | 932 | 721 | 29 | 27 |
| Software licenses | 1.090 | 1.040 | 5 | 1.090 | 1.042 | 5 | 4 |
| Software support | 2.736 | 2.598 | 5 | 2.736 | 2.598 | 5 | 4 |
| Software licenses and support | 3.826 | 3.639 | 5 | 3.826 | 3.640 | 5 | 4 |
| Cloud and software | 4.757 | 4.359 | 9 | 4.758 | 4.361 | 9 | 8 |
| Services | 1.024 | 878 | 17 | 1.024 | 878 | 17 | 15 |
| Total revenue | 5.782 | 5.237 | 10 | 5.782 | 5.239 | 10 | 9 |
| Operating Expense Numbers | |||||||
| Total operating expenses | -4.856 | -3.968 | 22 | -4.212 | -3.724 | 13 | 11 |
| Profit Numbers | |||||||
| Operating profit | 926 | 1.269 | -27 | 1.570 | 1.516 | 4 | 3 |
| -26 | -23 | 10 | -26 | -23 | 10 | ||
| 908 | 1.144 | -21 | 1.552 | 1.391 | 12 | ||
| Finance income, net | -27 | -432 | -412 | 5 | |||
| Profit before tax | 14 | ||||||
| Income tax expense | -242 | -331 | |||||
| Profit after tax | 666 | 813 | -18 | 1.120 | 979 | ||
| Operating margin in % Basic earnings per share, in € |
16,0 0,56 |
24,2 0,68 |
-8,2 pp -18 |
27,2 0,94 |
28,9 0,82 |
-1,8 pp 14 |
-1,5 pp |
H1 2017 – Additional outlook information and non-IFRS adjustments The company expects a full-year 2017 effective tax rate (IFRS) between 26.0% to 27.0% (2016: 25.3%) and an effective tax rate (non-IFRS) between 27.0% to 28.0% (2016: 26.8%).
| Non-IFRS adjustments | Actual Amounts H1/16 |
Actual Amounts H1/17 |
Est. Amounts for FY 2017 |
|---|---|---|---|
| Revenue adjustments | €4m | €0m | <€20m |
| Share-based payment expenses | €177m | €618m | €900m to €1,150m |
| Acquisition-related charges | €336m | €309m | €610m to €640m |
| Restructuring charges | €22m | €242m | €200m to €250m |
| Sum of all adjustments | €538m | €1,168m | €1,730m to €2,060m |
| SAP raises outlook for FY 2017* | ||||
|---|---|---|---|---|
| Cloud subscriptions and support revenue (Non-IFRS at cc) |
Cloud and software revenue (Non-IFRS at cc) |
Total revenue (Non-IFRS at cc) |
Operating profit (Non-IFRS at cc) |
|
| SAP's outlook FY 2017 |
€3.8bn to €4.0bn upper end +34% [ 2016: €2.99bn] |
+6.5% to +8.5% [ 2016: €18.43bn] |
€23.3 to 23.7bn [ 2016: €22.07bn] |
€6.8bn to €7.0bn [ 2016: €6.63bn] |
| Actual performance H1/17 |
€1.8bn +28% | +8% | €10.8bn + 9 % | €2.7bn +3% |
While the Company's full-year 2017 business outlook is at constant currencies, actual currency reported figures are expected to continue to be impacted by exchange rate fluctuations. If exchange rates remain at the June 2017 average level for the rest of the year, we expect non-IFRS cloud and software revenue and non-IFRS operating profit growth rates to experience a currency headwind in a range of -2 to 0pp in Q3 2017 (-1 to +1pp for the full year 2017).
*FY/17 Guidance (Non-IFRS at cc) provided in January 2017: Cloud and software revenue: +6 to +8% Total revenue: €23.2 to €23.6bn
Income Statement and Outlook Balance Sheet and Cash Flow Analysis Other Topics
| Balance sheet, condensed | |||||
|---|---|---|---|---|---|
| June 30, 2017, IFRS | |||||
| Assets € millions |
06/30/17 | 12/31/16 | Equity and liabilities € millions |
06/30/17 | 12/31/16 |
| Cash, cash equivalents and other | Trade and other payables | 1,142 | 1,281 | ||
| financial assets | 5,104 | 4,826 | Provisions | 369 | 183 |
| Trade and other receivables | 5,408 | 5,924 | Other liabilities | 3,909 | 5,827 |
| Other non-financial assets | 1,126 | 814 | Deferred income, current | 4,898 | 2,383 |
| Total current liabilities |
10,318 | 9.674 | |||
| Total current assets | 11,638 | 11,564 | Financial liabilities | 6,260 | 6,481 |
| Goodwill | 21,949 | 23,311 | Provisions | 235 | 217 |
| Intangible assets | 3,273 | 3,786 | Deferred income, non-current |
78 | 143 |
| Property, plant, and equipment | 2,719 | 2,580 | Other non-current liabilities | 1,485 | 1,365 |
| Total non-current liabilities |
8,058 | 8,205 | |||
| Other non-current assets | 3,322 | 3,037 | Total liabilities |
18,376 | 17,880 |
| Total non-current assets | 31,263 | 32,713 | Total equity | 24,525 | 26,397 |
| 42,900 | 44,277 | Total equity and liabilities |
42,900 | 44,277 |
| share buyback of up to €500m in the second half of the year | |||
|---|---|---|---|
| € millions, unless otherwise stated | 12/31/16 –06/30/17 |
12/31/15 –06/30/16 |
∆ |
| Operating cash flow |
3,514 | 2,921 | +20% |
| - Capital expenditure |
-610 | -406 | +51% |
| Free cash flow |
2,903 | 2,516 | +15% |
| Free cash flow as a percentage of total revenue | 26% | 25% | +1pp |
| Cash conversion rate | 2.94 | 2.11 | +39% |
| Days sales outstanding (DSO in days, June. 30) | 72 | 73 | -1 |
| Fixed/Floating mix | |
|---|---|
| Fixed 48% | |
| Float 52% | |
| USD/EUR mix* | |
| USD 23% | |
| EUR 77% | |
| Financing 2017 | |
| Eurobond €1bn paid as matured in April | |
| USPP \$443m will be paid at maturity in Oct. and Nov. | |
* Calculated in € amounts with EURUSD 1,1412
Income Statement and Outlook Balance Sheet and Cash Flow Analysis Other Topics
SAP announced up to € 500m to be invested in share buyback
Purchase in two tranches during remainder of 2017
Due to negative interest rates in Euro area, not logical to retain excess liquidity
Returning excess cash to shareholders and thus optimizing capital structure
Cash buffer maintained at all times
All borrowings, both Euro and Dollar, will continue to be repaid as maturing
M&A activity
Stefan Gruber – Head of Investor Relations SAP SE
• +49 6227 7-52727
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