SAP Announces Second Quarter and First Half 2015 Results
SAP again delivered exceptionally strong growth in the cloud. Second quarter non-IFRS cloud subscriptions and support revenue grew 129% year-over-year (92% at constant currencies) to ˆ555 million. New cloud bookings, the key measure for SAP’s sales success in the cloud, increased 162% in the second quarter to ˆ203 million.
The Company had a very strong non-IFRS cloud and software revenue performance with 21% growth (9% at constant currencies) to ˆ4.06 billion. Non-IFRS operating profit increased 13% (1% at constant currencies) to ˆ1.39 billion.
“When I speak with CEOs, they are looking for a road map to digitize their business and to create new business models,” said SAP CEO Bill McDermott. “Our business is thriving because we have the most complete vision for how to make this transition to digital business a simple one. I am confident that our strategy to deliver a platform, applications and business networks is exactly what customers need from SAP.”
“Our second quarter growth in new cloud bookings was significantly higher than in the first quarter. This momentum showed across our entire cloud and business network portfolio,” said SAP CFO Luka Mucic. “Our operating profit performance is beginning to reflect the business transformation we initiated to make SAP ready for the future. We are on track to achieve our full year business outlook.”
BUSINESS HIGHLIGHTS IN THE SECOND QUARTER 2015
Strong Momentum in Human Capital Management and Customer Engagement and Commerce Drives Cloud Applications Revenue
Customers increasingly turn to us to manage the total workforce, both permanent and flexible workers, globally. Our Human Capital Management offering, SuccessFactors Employee Central, is localized for 71 countries and the number of customers has increased to more than 730 from around 390 a year ago. This represents an 87% growth in customers in just 12 months. We also saw strong growth in Customer Engagement and Commerce where SAP is helping businesses track and engage customers in real-time across all channels and seamlessly execute and fulfill ecommerce in one end-to-end value chain. New cloud bookings for Customer Engagement and Commerce once again saw strong triple digit growth.
Surge in Number of SAP S/4HANA Customers
Customer adoption confirms that SAP HANA is key to running a data-driven business in the Digital Economy. This quarter, the number of HANA customers surpassed 7,200 compared with 3,600 a year ago. S/4HANA’s robust early traction – more than 900 SAP S/4HANA customers by the end of the second quarter compared to over 370 at the end of the first quarter – is a major catalyst in SAP HANA’s broader market adoption across all industries and regions.
SAP Business Network Increases in Size, Revenue and Relevance
As the SAP Business Network grows, its value increases for all companies taking advantage of frictionless commerce in the digital economy. Total revenue in the SAP Business Network segment was ˆ400 million (ˆ333 million at constant currencies) in the second quarter, a year-over-year increase of 194% (145% at constant currencies). Approximately 1.9 million connected companies trade over \\$800 billion of commerce[3] on this network.
Regional Performance
Growth was solid in the EMEA region, with a 10% increase in non-IFRS cloud and software revenue. Non-IFRS cloud subscriptions and support revenue grew by 94% with triple-digit growth in new cloud bookings. Some highlights in the region include very strong growth across cloud and software in the Middle East and solid growth in Germany, France and the UK.
The Americas region saw strong double-digit growth, with non-IFRS cloud and software revenue growing 36%. Cloud subscriptions and support revenue in the region grew 141% with new cloud bookings nearly tripling, driven by a very strong performance in North America. The United States was a highlight with a strong performance across cloud and software. Regional macro-economic issues impacted results across Latin America.
In the APJ region, non-IFRS cloud subscriptions and support revenue grew by 138%, driving non-IFRS cloud and software revenue up 19%. New cloud bookings grew triple-digits. Japan continued its recovery with another strong quarter across cloud and software.
FINANCIAL RESULTS IN DETAIL
FINANCIAL RESULTS IN THE SECOND QUARTER 2015
| Second Quarter 20151) | |||||||
| IFRS | Non-IFRS2) | ||||||
| ˆ million, unless otherwise stated | Q2 2015 | Q2 2014 | % change | Q2 2015 | Q2 2014 | % change | % change const. curr. |
| Cloud subscriptions and support | 552 | 241 | 129 | 555 | 242 | 129 | 92 |
| Software licenses and support | 3,510 | 3,116 | 13 | 3,510 | 3,117 | 13 | 3 |
| Cloud and software | 4,062 | 3,357 | 21 | 4,065 | 3,359 | 21 | 9 |
| Total revenue | 4,970 | 4,151 | 20 | 4,972 | 4,153 | 20 | 8 |
| Operating profit | 701 | 698 | 1 | 1,394 | 1,236 | 13 | 1 |
| Profit after tax | 469 | 556 | –16 | 960 | 938 | 2 | |
| Basic earnings per share (ˆ) | 0.39 | 0.47 | –16 | 0.80 | 0.79 | 2 | |
| Number of employees (FTE) | 74,497 | 67,651 | 10 | N/A | N/A | N/A | N/A |
IFRS cloud subscriptions and support revenue was ˆ552 million (2014: ˆ241 million), an increase of 129%. Non-IFRS cloud subscriptions and support revenue was ˆ555 million (2014: ˆ242 million), an increase of 129% (92% at constant currencies). IFRS software licenses revenue was ˆ979 million (2014: ˆ957 million), an increase of 2%. Non-IFRS software licenses revenue was ˆ979 million (2014: ˆ957 million), an increase of 2% (a decrease of 7% at constant currencies). IFRS software licenses and support revenue was ˆ3.51 billion (2014: ˆ3.12 billion), an increase of 13%. Non-IFRS software licenses and support revenue was ˆ3.51 billion (2014: ˆ3.12 billion), an increase of 13% (3% at constant currencies). IFRS cloud and software revenue was ˆ4.06 billion (2014: ˆ3.36 billion), an increase of 21%. Non-IFRS cloud and software revenue was ˆ4.06 billion (2014: ˆ3.36 billion), an increase of 21% (9% at constant currencies). IFRS total revenue was ˆ4.97 billion (2014: ˆ4.15 billion), an increase of 20%. Non-IFRS total revenue was ˆ4.97 billion (2014: ˆ4.15 billion), an increase of 20% (8% at constant currencies).
IFRS operating profit was ˆ701 million (2014: ˆ698 million), an increase of 1%. Non-IFRS operating profit was ˆ1.39 billion (2014: ˆ1.24 million), an increase of 13% (1% at constant currencies). IFRS operating margin was 14.1% (2014: 16.8%), a decrease of 2.7 percentage points. Non-IFRS operating margin was 28.0% (2014: 29.8%), a decrease of 1.7 percentage points (2.0 percentage points at constant currencies).
IFRS profit after tax was ˆ469 million (2014: ˆ556 million), a decrease of 16%. Non-IFRS profit after tax was ˆ960 million (2014: ˆ938 million), an increase of 2%. IFRS basic earnings per share was ˆ0.39 (2014: ˆ0.47), a decrease of 16%. Non-IFRS basic earnings per share was ˆ0.80 (2014: ˆ0.79), an increase of 2%. The IFRS and non-IFRS effective tax rates in the second quarter of 2015 were 26.4% (2014: 22.6%) and 27.8% (2014: 25.4%), respectively.
FINANCIAL RESULTS IN THE FIRST HALF 2015
| First Half 20151) | |||||||
| IFRS | Non-IFRS2) | ||||||
| ˆ million, unless otherwise stated | 6M 2015 | 6M 2014 | % change | 6M 2015 | 6M 2014 | % change | % change const. curr. |
| Cloud subscriptions and support | 1,056 | 460 | 129 | 1,063 | 463 | 130 | 93 |
| Software licenses and support | 6,660 | 5,836 | 14 | 6,660 | 5,839 | 14 | 4 |
| Cloud and software | 7,715 | 6,296 | 23 | 7,723 | 6,301 | 23 | 10 |
| Total revenue | 9,467 | 7,849 | 21 | 9,475 | 7,854 | 21 | 9 |
| Operating profit | 1,339 | 1,421 | –6 | 2,451 | 2,155 | 14 | 0 |
| Profit after tax | 882 | 1,090 | –19 | 1,657 | 1,604 | 3 | |
| Basic earnings per share (ˆ) | 0.74 | 0.91 | –19 | 1.39 | 1.34 | 3 | |
| Number of employees (FTE) | 74,497 | 67,651 | 10 | N/A | N/A | N/A | N/A |
IFRS cloud subscriptions and support revenue was ˆ1.06 billion (2014: ˆ460 million), an increase of 129%. Non-IFRS cloud subscriptions and support revenue was ˆ1.06 billion (2014: ˆ463 million), an increase of 130% (93% at constant currencies). IFRS software licenses revenue was ˆ1.67 billion (2014: ˆ1.58 billion), an increase of 6%. Non-IFRS software licenses revenue was ˆ1.67 billion (2014: ˆ1.58 billion), an increase of 6% (a decrease of 4% at constant currencies). IFRS software licenses and support revenue was ˆ6.66 billion (2014: ˆ5.84 billion), an increase of 14%. Non-IFRS software licenses and support revenue was ˆ6.66 billion (2014: ˆ5.84 billion), an increase of 14% (4% at constant currencies). IFRS cloud and software revenue was ˆ7.72 billion (2014: ˆ6.30 billion), an increase of 23%. Non-IFRS cloud and software revenue was ˆ7.72 billion (2014: ˆ6.30 billion), an increase of 23% (10% at constant currencies). IFRS total revenue was ˆ9.47 billion (2014: ˆ7.85 billion), an increase of 21%. Non-IFRS total revenue was ˆ9.47 billion (2014: ˆ7.85 billion), an increase of 21% (9% at constant currencies).
IFRS operating profit was ˆ1.34 billion (2014: ˆ1.42 billion), a decrease of 6%. Non-IFRS operating profit was ˆ2.45 billion (2014: ˆ2.16 billion), an increase of 14% (flat at constant currencies). IFRS operating margin was 14.1% (2014: 18.1%), a decrease of 4.0 percentage points. Non-IFRS operating margin was 25.9% (2014: 27.4%), a decrease of 1.6 percentage points (2.3 percentage points at constant currencies).
IFRS profit after tax was ˆ882 million (2014: ˆ1.09 billion), a decrease of 19%. Non-IFRS profit after tax was ˆ1.66 billion (2014: ˆ1.60 billion), an increase of 3%. IFRS basic earnings per share was ˆ0.74 (2014: ˆ0.91), a decrease of 19%. Non-IFRS basic earnings per share was ˆ1.39 (2014: ˆ1.34), an increase of 3%. The IFRS and non-IFRS effective tax rates for the first half of 2015 were 20.9% (2014: 23.4%) and 25.6% (2014: 25.6%), respectively.
Operating cash flow was ˆ2.78 billion (2014: ˆ2.58 billion), an increase of 8% year-over-year. Free cash flow increased slightly year-over-year to ˆ2.50 billion (2014: ˆ2.27 billion). Free cash flow was 26% of total revenue (2014: 29%). At June 30, 2015, SAP had a total group liquidity of ˆ4.18 billion (December, 2014: ˆ3.42 billion), which includes cash and cash equivalents and current investments. Net liquidity 2 at June 30, 2015 was -ˆ6.25 billion compared to -ˆ7.67 billion at December 31, 2014.
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