SAP Pre-Announces Outstanding Third Quarter Results
WALLDORF, Germany, Oct. 10, 2019 /PRNewswire/ -- After an initial review of its third quarter 2019 performance, SAP SE (NYSE: SAP) today announced its preliminary financial results for the third quarter ended September 30, 2019. All 2019 figures in this release are approximate due to the preliminary nature of the announcement.
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Financial Highlights
In the third quarter, new cloud bookings were up 38% (33% at constant currencies) and up 50% excluding Infrastructure-as-a-Service (IaaS). A cloud deal with a major partner contributed 17 percentage points to Q3 new cloud bookings growth. The deal has a term of 3 years, with revenue recognition starting in the fourth quarter 2019.
Cloud revenue grew 37% year over year to EUR1.79 billion (IFRS), up 37% (non-IFRS) and 33% (non-IFRS at constant currencies). Software licenses revenue was down 1% year over year to EUR0.93 billion (IFRS), down 1% (non-IFRS) and down 4% (non-IFRS at constant currencies). Cloud and software revenue grew 12% year over year to EUR5.63 billion (IFRS), up 13% (non-IFRS) and 10% (non-IFRS at constant currencies). Total revenue grew 13% year over year to EUR6.79 billion (IFRS), up 13% (non-IFRS) and 10% (non-IFRS at constant currencies).
Adding more than 500 customers in the quarter, SAP S/4HANA adoption grew to more than 12,000 customers, up 25% year-over-year.
The share of more predictable revenue grew by 2 percentage points year-over-year to 69% in the third quarter.
Cloud gross margin increased 5.9 percentage points year over year to 64.5% (IFRS) and increased by 5.4 percentage points year over year to 69.0% (non-IFRS) and 5.5 percentage points to 69.0% (non-IFRS at constant currencies).
Operating profit increased 36% year over year to EUR1.68 billion (IFRS), up 20% (non-IFRS) and up 15% (non-IFRS at constant currencies). Operating margin increased 4.2 percentage points year over year to 24.7% (IFRS) and expanded by 1.7 percentage points year over year to 30.6% (non-IFRS) and 1.5 percentage points to 30.4% (non-IFRS at constant currencies).
Earnings per share was up 28% to EUR1.04 (IFRS) and up 14% to EUR1.30 (non-IFRS).
Financial Results at a Glance
Third Quarter 2019
IFRS
Non-IFRS1)
---
EUR billion, unless otherwise stated
Q3 2019
Q3 2018 Delta in %
Q3 2019
Q3 2018 Delta in % Delta in %
constant
currency
--- ---
New Cloud Bookings2)
NA
NA
NA 0.57 0.41 38 33
Cloud revenue 1.79 1.30 37 1.81 1.31 37 33
Software licenses revenue 0.93 0.94
-1 0.93 0.94
-1
-4
Software support revenue 2.91 2.76 5 2.91 2.77 5 3
Software licenses and support revenue 3.84 3.70 4 3.84 3.70 4 1
Cloud and software revenue 5.63 5.01 12 5.65 5.02 13 10
Total revenue 6.79 6.02 13 6.81 6.03 13 10
Share of more predictable revenue (in %) 69 68
2pp 69 68
2pp
Operating profit (loss) 1.68 1.24 36 2.09 1.74 20 15
Profit (loss) after tax 1.26 0.97 30 1.56 1.36 15
Operating margin (in %) 24.7 20.5
4.2pp 30.6 28.9
1.7pp
1.5pp
Basic earnings per share (in EUR) 1.04 0.81 28 1.30 1.14 14
Number of employees (FTE, September 30) 99,710 94,989 5
NA
NA
NA
NA
1) For a detailed description of SAP's non-IFRS measures see Explanation of Non-IFRS Measures online.
2) As this is an order entry metric, there is no IFRS equivalent.
All figures are preliminary and unaudited. Due to rounding, numbers may not add up precisely.
Year-to-Date 2019
IFRS
Non-IFRS1)
---
EUR billion, unless otherwise stated
Q1-Q3
Q1-Q3 Delta in %
Q1-Q3
Q1-Q3 Delta in % Delta in %
constant
2019 2018 2019 2018 currency
--- ---
New Cloud Bookings2)
NA
NA
NA 1.39 1.08 29 24
Cloud revenue 5.04 3.59 40 5.11 3.61 41 36
Software licenses revenue 2.53 2.56
-1 2.53 2.56
-1
-4
Software support revenue 8.60 8.16 5 8.60 8.16 5 3
Software licenses and support revenue 11.13 10.71 4 11.13 10.71 4 1
Cloud and software revenue 16.17 14.30 13 16.24 14.33 13 10
Total revenue 19.51 17.28 13 19.58 17.31 13 10
Share of more predictable revenue (in %) 70 68
2pp 70 68
2pp
Operating profit (loss) 2.37 3.30
-28 5.37 4.62 16 12
Profit (loss) after tax 1.73 2.40
-28 3.96 3.40 17
Operating margin (in %) 12.1 19.1
-7.0pp 27.4 26.7
0.7pp
0.5pp
Basic earnings per share (in EUR) 1.43 2.01
-29 3.29 2.85 16
Number of employees (FTE, September 30) 99,710 94,989 5
NA
NA
NA
NA
1) For a detailed description of SAP's non-IFRS measures see Explanation of Non-IFRS Measures online.
2) As this is an order entry metric, there is no IFRS equivalent.
All figures are preliminary and unaudited. Due to rounding, numbers may not add up precisely.
Non-IFRS Adjustments
EUR billion
Q1-Q3 2019
Q3 2019
Q1-Q3 2018
Q3 2018
---
Operating profit (loss) (IFRS) 2.37 1.68 3.30 1.24
---
Revenue adjustments 0.07 0.02 0.03 0.01
Adjustment for acquisition-related charges 0.52 0.17 0.42 0.14
Adjustment for share-based payment expenses 1.31 0.20 0.84 0.35
Adjustment for restructuring 1.10 0.02 0.03 0
---
Operating expense adjustments 2.93 0.39 1.29 0.50
---
Operating profit (loss) adjustments 3.00 0.41 1.31 0.51
---
Operating profit (loss) (non-IFRS) 5.37 2.09 4.62 1.74
---
Business Outlook 2019
The company reiterates its outlook for the full year 2019.
SAP continues to expect:
-- Non-IFRS cloud revenue to be in a range of EUR6.7 - EUR7.0 billion at
constant currencies (2018: EUR5.03 billion), up 33% - 39% at constant
currencies.
-- Non-IFRS cloud and software revenue to be in a range of EUR22.4 -
EUR22.7 billion at constant currencies (2018: EUR20.66 billion), up 8.5%
- 10% at constant currencies.
-- Non-IFRS operating profit to be in a range of EUR7.85 - EUR8.05 billion
at constant currencies (2018: EUR7.16 billion), up 9.5% - 12.5% at
constant currencies.
In addition, SAP expects total revenues to increase strongly, at a rate lower than operating profit.
Ambition 2020 and 2023
Ambition 2020
SAP continues to expect:
-- EUR8.6 - EUR9.1 billion non-IFRS cloud revenue
-- EUR28.6 - EUR29.2 billion non-IFRS total revenue
-- The share of more predictable revenue (defined as the total of cloud
revenue and software support revenue) in a range of 70% - 75%
-- EUR8.8 - EUR9.1 billion non-IFRS operating profit
Ambition 2023
Over the period from 2018 through 2023, SAP continues to expect to:
-- More than triple non-IFRS cloud revenue (2018: EUR5.03 billion)
-- Grow to more than EUR35 billion in non-IFRS total revenue (2018:
EUR24.74 billion)
-- Approach a share of more predictable revenue of 80%
-- Reach a Non-IFRS cloud gross margin of 75%
-- Increase the non-IFRS operating margin by one percentage point per year
on average, representing a total expansion of approximately 500 basis
points.
The Company will report its complete third quarter 2019 results on October 21st.
Additional Information
This press release and all information therein is unaudited.
The 2019 numbers include Qualtrics' revenues and profits only from the acquisition date of January 23rd. The comparative numbers for full year 2018 do not include Qualtrics revenues and profits and include Callidus revenue and profits only from the April 5th, 2018 acquisition date.
Definition of key growth metrics
New cloud bookings are the total of all orders received in a given period the revenue from which is expected to be classified as cloud revenue and that result from purchases by new customers and from incremental purchases by existing customers. Consequently, orders to renew existing contracts are not included in this metric. The order amount must be committed. Consequently, due to their pay-per-use nature, business network transaction fees which do not include a committed minimum consumption are not reflected in the bookings metric (e.g. SAP Ariba and SAP Fieldglass transaction-based fees). Amounts included in the measures are generally annualized (annualized contract value ACV).
Share of more predictable revenue is the total of non-IFRS cloud revenue and non-IFRS software support revenue as a percentage of total revenue.
Third Quarter 2019 Quarterly Statement
SAP's third quarter 2019 quarterly statement will be published on October 21, 2019 and will be available for download at www.sap.com/investor.
Webcast
SAP senior management will host a financial analyst conference call on Monday, October 21st at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00 AM (Eastern) / 5:00 AM (Pacific). The call will be webcast live on the Company's website at www.sap.com/investor and will be available for replay. Supplementary financial information pertaining to the third quarter results can be found at www.sap.com/investor.
Special Capital Markets Day
SAP will host a Special Capital Markets Day on November 12, 2019 in New York City.
About SAP
As the Experience Company powered by the Intelligent Enterprise, SAP is the market leader in enterprise application software, helping companies of all sizes and in all industries run at their best: 77% of the world's transaction revenue touches an SAP® system. Our machine learning, Internet of Things (IoT), and advanced analytics technologies help turn customers' businesses into intelligent enterprises. SAP helps give people and organizations deep business insight and fosters collaboration that helps them stay ahead of their competition. We simplify technology for companies so they can consume our software the way they want - without disruption. Our end-to-end suite of applications and services enables more than 437,000 business and public customers to operate profitably, adapt continuously, and make a difference. With a global network of customers, partners, employees, and thought leaders, SAP helps the world run better and improve people's lives. For more information, visit http://www.sap.com.
Follow SAP Investor Relations on Twitter at @sapinvestor.
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