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SAP Pre-Announces Outstanding Third Quarter Results

- New Cloud Bookings Up 38%, Software License Revenue Down 1% - Cloud Revenue Up 37% - Total Revenue Up 13% - IFRS Operating Profit Up 36%; Non-IFRS Operating Profit Up 20% - IFRS Operating Margin Up 4.2pp; Non-IFRS Operating Margin Up 1.7pp - EPS Up 28% (IFRS) and Up 14% (Non-IFRS) - Rapid Cloud Gross Margin Expansion Continues - Outlook Reiterated "The growth story at SAP continues with maximum strength. I couldn't be prouder of this very significant top line and bottom line expansion," said Bill McDermott, SAP. "The future is bright!" "We have delivered a very strong result on the bottom line based on further acceleration of our operational excellence initiative and restructuring benefits in the third quarter. In parallel we have continued to execute extremely well on our cloud transition in the first nine months - a dynamic cloud business growing at 41% combined with a stable core, leading to double digit topline growth" said Luka Mucic, SAP. "It is with great confidence that we re

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.

SAP logo

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 €1.79 billion (IFRS), up 37% (non-IFRS) and 33% (non-IFRS at constant currencies). Software licenses revenue was down 1% year over year to €0.93 billion (IFRS), down 1% (non-IFRS) and down 4% (non-IFRS at constant currencies). Cloud and software revenue grew 12% year over year to €5.63 billion (IFRS), up 13% (non-IFRS) and 10% (non-IFRS at constant currencies). Total revenue grew 13% year over year to €6.79 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 €1.68 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 €1.04 (IFRS) and up 14% to €1.30 (non-IFRS).

Financial Results at a Glance

Third Quarter 2019


IFRS

Non-IFRS1)

€ billion, unless otherwise stated

Q3 2019

Q3 2018

∆ in %

Q3 2019

Q3 2018

∆ in %

∆ 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 €)

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)

€ billion, unless otherwise stated

Q1–Q3

2019

Q1–Q3

2018

∆ in %

Q1–Q3

2019

Q1–Q3

2018

∆ in %

∆ in %
constant
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 €)

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

€ 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 €6.7 − €7.0 billion at constant currencies (2018: €5.03 billion), up 33% – 39% at constant currencies.
  • Non-IFRS cloud and software revenue to be in a range of €22.4 – €22.7 billion at constant currencies (2018: €20.66 billion), up 8.5% – 10% at constant currencies.
  • Non-IFRS operating profit to be in a range of €7.85 – €8.05 billion at constant currencies (2018: €7.16 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:

  • €8.6 − €9.1 billion non-IFRS cloud revenue
  • €28.6 − €29.2 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%
  • €8.8 – €9.1 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: €5.03 billion)
  • Grow to more than €35 billion in non-IFRS total revenue (2018: €24.74 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.

For customers interested in learning more about SAP products:

Global Customer Center: +49 180 534-34-24

United States Only: +1 (800) 872-1SAP (+1-800-872-1727)

Note to editors:

To preview and download broadcast-standard stock footage and press photos digitally, please visit www.sap.com/photos. On this platform, you can find high resolution material for your media channels. To view video stories on diverse topics, visit www.sap-tv.com. From this site, you can embed videos into your own Web pages, share video via e-mail links and subscribe to RSS feeds from SAP TV.

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.

© 2019 SAP SE. All rights reserved.

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE. The information contained herein may be changed without prior notice.

Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary.

These materials are provided by SAP SE and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective companies. Please see www.sap.com/about/legal/copyright.html for additional trademark information and notice.

Cision View original content:http://www.prnewswire.com/news-releases/sap-pre-announces-outstanding-third-quarter-results-300936931.html

SOURCE SAP AG - Headquarters

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