OREANDA-NEWS. SAP SE (NYSE: SAP) today announced its financial results for the second quarter and first half ended June 30, 2015.

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 €555 million. New cloud bookings, the key measure for SAP’s sales success in the cloud, increased 162% in the second quarter to €203 million.

The Company had a very strong non-IFRS cloud and software revenue performance with 21% growth (9% at constant currencies) to €4.06 billion. Non-IFRS operating profit increased 13% (1% at constant currencies) to €1.39 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 €400 million (€333 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)
€ 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 (€)	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 €552 million (2014: €241 million), an increase of 129%. Non-IFRS cloud subscriptions and support revenue was €555 million (2014: €242 million), an increase of 129% (92% at constant currencies). IFRS software licenses revenue was €979 million (2014: €957 million), an increase of 2%. Non-IFRS software licenses revenue was €979 million (2014: €957 million), an increase of 2% (a decrease of 7% at constant currencies). IFRS software licenses and support revenue was €3.51 billion (2014: €3.12 billion), an increase of 13%. Non-IFRS software licenses and support revenue was €3.51 billion (2014: €3.12 billion), an increase of 13% (3% at constant currencies). IFRS cloud and software revenue was €4.06 billion (2014: €3.36 billion), an increase of 21%. Non-IFRS cloud and software revenue was €4.06 billion (2014: €3.36 billion), an increase of 21% (9% at constant currencies). IFRS total revenue was €4.97 billion (2014: €4.15 billion), an increase of 20%. Non-IFRS total revenue was €4.97 billion (2014: €4.15 billion), an increase of 20% (8% at constant currencies).

IFRS operating profit was €701 million (2014: €698 million), an increase of 1%. Non-IFRS operating profit was €1.39 billion (2014: €1.24 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 €469 million (2014: €556 million), a decrease of 16%. Non-IFRS profit after tax was €960 million (2014: €938 million), an increase of 2%. IFRS basic earnings per share was €0.39 (2014: €0.47), a decrease of 16%. Non-IFRS basic earnings per share was €0.80 (2014: €0.79), 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)
€ 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 (€)	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 €1.06 billion (2014: €460 million), an increase of 129%. Non-IFRS cloud subscriptions and support revenue was €1.06 billion (2014: €463 million), an increase of 130% (93% at constant currencies). IFRS software licenses revenue was €1.67 billion (2014: €1.58 billion), an increase of 6%. Non-IFRS software licenses revenue was €1.67 billion (2014: €1.58 billion), an increase of 6% (a decrease of 4% at constant currencies). IFRS software licenses and support revenue was €6.66 billion (2014: €5.84 billion), an increase of 14%. Non-IFRS software licenses and support revenue was €6.66 billion (2014: €5.84 billion), an increase of 14% (4% at constant currencies). IFRS cloud and software revenue was €7.72 billion (2014: €6.30 billion), an increase of 23%. Non-IFRS cloud and software revenue was €7.72 billion (2014: €6.30 billion), an increase of 23% (10% at constant currencies). IFRS total revenue was €9.47 billion (2014: €7.85 billion), an increase of 21%. Non-IFRS total revenue was €9.47 billion (2014: €7.85 billion), an increase of 21% (9% at constant currencies).

IFRS operating profit was €1.34 billion (2014: €1.42 billion), a decrease of 6%. Non-IFRS operating profit was €2.45 billion (2014: €2.16 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 €882 million (2014: €1.09 billion), a decrease of 19%. Non-IFRS profit after tax was €1.66 billion (2014: €1.60 billion), an increase of 3%. IFRS basic earnings per share was €0.74 (2014: €0.91), a decrease of 19%. Non-IFRS basic earnings per share was €1.39 (2014: €1.34), 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 €2.78 billion (2014: €2.58 billion), an increase of 8% year-over-year. Free cash flow increased slightly year-over-year to €2.50 billion (2014: €2.27 billion). Free cash flow was 26% of total revenue (2014: 29%). At June 30, 2015, SAP had a total group liquidity of €4.18 billion (December, 2014: €3.42 billion), which includes cash and cash equivalents and current investments. Net liquidity 2 at June 30, 2015 was -€6.25 billion compared to -€7.67 billion at December 31, 2014.

About SAP

As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 293,500 customers to operate profitably, adapt continuously, and grow sustainably.