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SAP SE Interim / Quarterly Report 2022
365_ip_2022-07-21_2014041f-02b9-4d9a-891a-55ef796c9313.pdf
Interim / Quarterly Report
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Second Quarter 2022 Results
Christian Klein, CEO Luka Mucic, CFO
2022 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC
Safe Harbor Statement
During this presentation we will make forward-looking statements which are predictions, projections, or other statements about future events. These statements are based on current expectations, forecasts, and assumptions that are subject to risks and uncertainties that could cause actual results and outcomes to materially differ. Additional information regarding these risks and uncertainties may be found in our filings with the Securities and Exchange Commission, including but not limited to the risk factors section of SAP's 2021 Annual Report on Form 20-F.
Luka Mucic CFO
2022 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC
SAP Q2 2022 Financial Results
in € millions, unless otherwise stated
| Total revenue | Cloud & Software revenue |
Cloud revenue | S/4HANA cloud revenue | |
|---|---|---|---|---|
| 7,517 ▲ +13% (+5% @cc) |
6,459 ▲ +12% (+5% @cc) |
3,056 ▲ +34% (+24% @cc) |
472 ▲ +84% (+72% @cc) |
|
| Share of more predictable revenue | Current cloud backlog | S/4HANA current cloud backlog | ||
| 80% ▲ +4pp |
10,403 ▲ +34% (+25% @cc) |
2,258 ▲ +100% (+87% @cc) |
||
| Gross profit (Gross margin in %) |
Cloud gross profit (Cloud gross margin in %) |
Operating profit | Earnings per Share (in €) |
|
| IFRS | IFRS | IFRS | IFRS basic | |
| 5,318 (70.7%) |
2,132 (69.8%) |
673 | 0.29 | |
| ▲ +13% |
▲ +39% |
▼ -32% |
▼ -75% |
|
| Non-IFRS | Non-IFRS | Non-IFRS | diluted | Non-IFRS basic |
| 5,496 (73.1%) |
2,196 (71.9%) |
1,680 | 0.28 | 0.96 |
| ▲ +12% (+5% @cc) |
▲ +38% (+28% @cc) |
▼ -13% (-16% @cc) |
▼ -75% ▼ |
-45% |
Financial Highlights Regional Performance Gross Margin Development Tax Rate, EPS & Cash Flow Outlook and Ambition
Strong cloud revenue performance across all regions
Revenues calculated based on customer location; All numbers are Non-IFRS unless otherwise stated; Individual country highlights are based on Non-IFRS at constant currencies
Gross Margin Development
in € millions, unless otherwise stated
| Revenue | Gross Margin % (Gross profit) | |||||||
|---|---|---|---|---|---|---|---|---|
| Non-IFRS | Q2/22 | ∆ in % | ∆ in % @cc | Q2/22 | ∆ in % | ∆ in % @cc | ||
| Cloud | 3,056 | 34 | 24 | 71.9 (2,196) |
1.8 | 2.3 | ||
| SaaS | 2,409 | 35 | 24 | 75.2 (1,813) |
2.6 | 2.6 | ||
| PaaS | 389 | 49 | 40 | 79.6 (310) |
-1.2 | 0.5 | ||
| IaaS | 257 | 14 | 7 | 28.5 (73) |
-8.2 | -4.6 | ||
| Software licenses and support | 3,403 | -2 | -7 | 88.5 (3,012) |
1.2pp | 0.8pp | ||
| Cloud and software | 6,459 | 12 | 5 | 80.6 (5,208) |
0.1pp | 0.3pp | ||
| Services | 1,057 | 15 | 7 | 27.3 (289) |
-1.9pp | -2.8pp | ||
| Total | 7,517 | 13 | 5 | 73.1 (5,496) |
-0.3pp | -0.3pp |
Financial Highlights Regional Performance Gross Margin Development Tax Rate, EPS & Cash Flow Outlook and Ambition
Tax rate, EPS & Cash flow
The year-over-year effective tax rate increase mainly resulted from changes in tax exempt income and non-deductible expenses. For non-IFRS, the changes in non-deductible expenses do not apply due to respective adjustments of pre-tax figures.
The year-over-year decline of earnings per share reflects a contribution to financial income by Sapphire Ventures that, due to current market conditions, was lower than over the same period last year.
The decrease of free cash flow versus last year is mainly attributable to the development of profitability and impacts from working capital due to SAP's continuing move to the cloud.
Business Outlook 2022
in € billions, unless otherwise stated
FY 2022 Guidance
FY 2022 Non-Financial Outlook
| Cloud revenue |
Cloud & Software revenue |
Operating profit |
Employee engagement in % |
|---|---|---|---|
| @cc 11.55 – 11.85 |
@cc 25.0 – 25.5 |
Non-IFRS @cc 7.6 – 7.9 |
80 – 84 ► -3 to 1pp 2021: 83 |
| ▲ +23% to 26% 2021: 9.42 |
▲ +4% to 6% 2021: 24.08 |
▼ -8% to -4% 2021: 8.23 |
Customer Net Promoter Score in points |
| Share of more predictable revenue |
Free cash flow | Effective tax rate in % IFRS |
11 – 15 2021: 10 |
| in % | 34.0 – 38.0 2021: 21.5% |
Carbon emissions in kilotons |
|
| ~78 | above 4.5 | Non-IFRS | 70 |
| ▲ +3pp 2021: 75% |
2021: 5.01 | 23.0 – 27.0 2021: 20.0% |
▼ -40 kt 2021: 110 |
Financial Highlights Regional Performance Gross Margin Development Tax Rate, EPS & Cash Flow Outlook and Ambition
2022 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC
2022 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC
Income statement: Second quarter 2022
| IFRS | ||||||||
|---|---|---|---|---|---|---|---|---|
| € millions, unless otherwise stated |
Q2/22 | Q2/21 | ∆ % | Q2/22 | Q2/21 | ∆ % | ∆ % at cc | |
| Cloud | 3,056 | 2,276 | 34 | 3,056 | 2,276 | 34 | 24 | |
| Software licenses | 426 | 650 | -34 | 426 | 650 | -34 | -38 | |
| Software support | 2,977 | 2,823 | 5 | 2,977 | 2,823 | 5 | 0 | |
| Software licenses and support |
3,403 | 3,474 | -2 | 3,403 | 3,474 | -2 | -7 | |
| Cloud and software | 6,459 | 5,750 | 12 | 6,459 | 5,750 | 12 | 5 | |
| Services | 1,057 | 920 | 15 | 1,057 | 920 | 15 | 7 | |
| Total revenue | 7,517 | 6,669 | 13 | 7,517 | 6,669 | 13 | 5 | |
| Total operating expenses |
-6,844 | -5,685 | 20 | -5,836 | -4,748 | 23 | 14 | |
| Operating profit (loss) |
673 | 984 | -32 | 1,680 | 1,922 | -13 | -16 | |
| Financial income, net | -118 | 853 | <-100 | -118 | 853 | <-100 | ||
| Profit (loss) before tax |
538 | 1,804 | -70 | 1,546 | 2,741 | -44 | ||
| Income tax expense |
-335 | -355 | -6 | -453 | -528 | -14 | ||
| Profit (loss) after tax | 203 | 1,449 | -86 | 1,093 | 2,214 | -51 | ||
| Operating margin (in %) |
8.9 | 14.8 | -5.8pp | 22.4 | 28.8 | -6.5pp | -5.8pp | |
| Earnings per share, basic (in €) | 0.29 | 1.15 | -75 | 0.96 | 1.75 | -45 |
Income statement: First six months 2022
| IFRS | ||||||||
|---|---|---|---|---|---|---|---|---|
| € millions, unless otherwise stated |
Q1-Q2/22 | Q1-Q2/21 | ∆ % | Q1-Q2/22 | Q1-Q2/21 | ∆ % | ∆ % at cc | |
| Cloud | 5,876 | 4,421 | 33 | 5,876 | 4,421 | 33 | 25 | |
| Software licenses | 743 | 1,133 | -34 | 743 | 1,133 | -34 | -38 | |
| Software support | 5,900 | 5,624 | 5 | 5,900 | 5,624 | 5 | 0 | |
| Software licenses and support |
6,643 | 6,757 | -2 | 6,643 | 6,757 | -2 | -6 | |
| Cloud and software | 12,519 | 11,178 | 12 | 12,519 | 11,178 | 12 | 6 | |
| Services | 2,075 | 1,839 | 13 | 2,075 | 1,839 | 13 | 7 | |
| Total revenue | 14,594 | 13,017 | 12 | 14,594 | 13,017 | 12 | 6 | |
| Total operating expenses |
-12,868 | -11,073 | 16 | -11,236 | -9,357 | 20 | 13 | |
| Operating profit (loss) |
1,726 | 1,944 | -11 | 3,358 | 3,660 | -8 | -12 | |
| Financial income, net | -174 | 1,168 | <-100 | -174 | 1,168 | <-100 | ||
| Profit (loss) before tax |
1,483 | 3,141 | -53 | 3,115 | 4,856 | -36 | ||
| Income tax expense |
-648 | -622 | 4 | -856 | -922 | -7 | ||
| Profit (loss) after tax | 835 | 2,519 | -67 | 2,259 | 3,934 | -43 | ||
| Operating margin (in %) |
11.8 | 14.9 | -3.1pp | 23.0 | 28.1 | -5.1pp | -4.8pp | |
| Earnings per share, basic (in €) | 0.92 | 2.03 | -55 | 1.96 | 3.14 | -37 |
Gross margin development
| Non-IFRS, in percent as reported | FY/20 | Q1/21 | Q2/21 | Q3/21 | Q4/21 | FY/21 | Q1/22 | Q2/22 | |
|---|---|---|---|---|---|---|---|---|---|
| Cloud | 69.7 | 69.5 | 70.0 | 69.4 | 69.0 | 69.5 | 70.0 | 71.9 | 69.4 |
| SaaS | 72.8 | 72.5 | 72.6 | 72.4 | 72.3 | 72.6 | 73.3 | 75.2 | 69.4 |
| PaaS | 81.1 | 80.7 | 80.8 | 78.8 | 78.0 | 80.0 | 77.8 | 79.6 | 69.4 |
| IaaS | 34.9 | 33.3 | 36.8 | 34.7 | 28.8 | 33.6 | 27.6 | 28.5 | 69.4 |
| Software Licenses & Support | 87.4 | 86.3 | 87.3 | 87.8 | 88.5 | 87.6 | 87.5 | 88.5 | 69.4 |
| Cloud & Software | 81.2 | 79.7 | 80.5 | 80.4 | 81.2 | 80.5 | 79.4 | 80.6 | 69.4 |
| Services | 27.0 | 28.5 | 29.2 | 31.0 | 31.6 | 30.1 | 28.0 | 27.3 | 69.4 |
| Total Gross Margin | 73.1 | 72.3 | 73.4 | 73.6 | 75.1 | 73.7 | 72.0 | 73.1 | 69.4 |
Cost ratios: Second quarter 2022
€7.5bn Total revenue
Cost ratios: First six months 2022
€14.6bn Total revenue
All numbers are Non-IFRS unless otherwise stated.
*Non-IFRS at constant currencies
Balance sheet condensed: June 30, 2022 – IFRS
Assets
| € millions | 06/30/22 | 12/31/21 |
|---|---|---|
| Cash, cash equivalents and other financial assets | 8,479 | 11,656 |
| Trade and other receivables |
8,674 | 6,352 |
| Other current assets |
2,968 | 2,036 |
| Total current assets |
20,121 | 20,044 |
| Goodwill | 33,913 | 31,090 |
| Intangible assets |
4,295 | 3,965 |
| Property, plant, and equipment |
4,996 | 4,977 |
| Other non-current assets | 12,251 | 11,093 |
| Total non-current assets |
55,454 | 51,125 |
| Total assets | 75,575 | 71,169 |
Equity and liabilities
| € millions | 06/30/22 | 12/31/21 |
|---|---|---|
| Trade and other payables |
1,939 | 1,580 |
| Provisions | 148 | 89 |
| Other liabilities | 11,925 | 10,035 |
| Contract liabilities, current |
6,883 | 4,431 |
| Total current liabilities |
20,894 | 16,136 |
| Financial liabilities | 9,515 | 11,042 |
| Provisions | 382 | 355 |
| Contract liabilities, non-current |
33 | 13 |
| Other non-current liabilities |
1,963 | 2,100 |
| Total non-current liabilities | 11,894 | 13,510 |
| Total liabilities | 32,788 | 29,645 |
| Total equity | 42,787 | 41,523 |
| Total equity and liabilities |
75,575 | 71,169 |
Due to rounding, numbers may not add up precisely
Cash flow development
| € millions, unless otherwise stated | HY1/22 | HY1/21 | ∆ |
|---|---|---|---|
| Operating cash flow |
2,750 | 3,771 | -27% |
| – Capital expenditure |
-456 | -344 | +33% |
| – Payments of lease liabilities |
-215 | -176 | +22% |
| Free cash flow |
2,079 | 3,251 | -36% |
| Free cash flow in percent of total revenue | 14 | 25 | -11pp |
| Free cash flow conversion rate | 0.76 | 0.86 | -0.11 |
Due to rounding, numbers may not add up precisely
Net debt
Net Debt = cash and cash equivalent plus current time deposits and debt securities minus financial debt Other = mainly purchase and sales of equity or debt instruments of other entities, proceeds from sales of non-current assets, and effects of foreign currency rates on cash and cash equivalents - for more information see our 2021 integrated report
Additional outlook information and Non-IFRS adjustments
The Company now expects a full-year 2022 effective tax rate (IFRS) of 34.0% to 38.0% (2021: 21.5%) and an effective tax rate (non-IFRS) of 23.0% to 27.0% (2021: 20.0%).
| Non-IFRS adjustments | Actual Amounts Q2/21 |
Actual Amounts Q2/22 |
Est. Amounts FY/22 |
|---|---|---|---|
| Acquisition-related charges | €147m | €165m | €620m to €720m |
| Share-based payment expenses | €784m | €714m | €2,500m to €2,700m |
| Restructuring charges | €6m | €130m | €130m to €150m |
| Sum of all adjustments | €938m | €1,008m | €3,250m to €3,570m |
Expected currency impact 2022
Expected Currency Impact Based on June 2022 Level for the Rest of the Year
| in percentage points | Q3 2022 | FY 2022 |
|---|---|---|
| Cloud revenue growth |
+8pp to +10pp | +7pp to +9pp |
| Cloud and software revenue growth | +5pp to +7pp | +4pp to +6pp |
| Operating profit growth (non-IFRS) |
+3.5pp to +5.5pp | +2.5pp to +4.5pp |
SAP S/4HANA customer count
Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22
Key cloud metrics: Second quarter 2022
All figures are Non-IFRS and growth rates at constant currencies unless otherwise stated
| Cloud revenue | S/4HANA Cloud revenue2 |
Current cloud backlog1 |
S/4HANA Current cloud backlog2 |
Qualtrics Total segment revenue |
|---|---|---|---|---|
| +24% | +72% | +25% | +87% | +39% |
| €3,056m | €472m | €10,403m | €2,258m | €330m |
1) 'Current Cloud Backlog' – or CCB for short gives you the contractually committed cloud revenue we expect to recognize over the upcoming twelve months. The CCB is thus a subset of our Remaining Performance Obligations: Cloud only and 12 months only. Its expansion between two key dates reflects our success in both, contracting new cloud business as well as renewing existing business. So compared to New Cloud Bookings, it is a better, more holistic indicator of our cloud progress.
2) Starting in Q1 2021, SAP is expanding its financial disclosure to provide transparency on the transition of its core ERP business to the cloud. Specifically SAP is disclosing current cloud backlog and cloud revenue contributed by SAP S/4HANA Cloud, which represents SAP's cloud offering for core ERP processes. It mainly includes cloud solutions for financial management, supply chain management, engineering and manufacturing, order management and asset management, as well as associated data management, analytics, development and integration capabilities.