Cloud Revenue up 129% – SAP Business Network Revenue up 194%

Strong Growth in New Cloud Bookings: Up 162%
Non-IFRS Cloud and Software Revenue Increased 21% to €4.06 Billion
HANA Customers Doubled Year Over Year, S/4HANA Customers Up More Than 140% Quarter Over Quarter
Non-IFRS Operating Profit Increased 13% to €1.39 Billion
Reiterates Full Year 2015 Outlook
WALLDORF, Germany – July 21, 2015 – 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.[1] New cloud bookings, the key measure for SAP’s sales success in the cloud, increased 162% in the second quarter to €203 million.[2]

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
1) All figures are unaudited.

2) For a detailed description of SAP’s non-IFRS measures see Explanation of Non-IFRS Measures online. For a breakdown of the individual adjustments see page F7 in the appendix to this press release.

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
1) All figures are unaudited.

2) For a detailed description of SAP’s non-IFRS measures see Explanation of Non-IFRS Measures online. For a breakdown of the individual adjustments see page F7 in the appendix to this press release.

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.

BUSINESS OUTLOOK 2015

The Company reiterates the following 2015 outlook:

Based on the strong momentum in SAP’s cloud business the Company expects full-year 2015 non-IFRS cloud subscriptions and support revenue to be in a range of €1.95 – €2.05 billion at constant currencies (2014: €1.10 billion). The upper end of this range represents a growth rate of 86% at constant currencies. Concur and Fieldglass are expected to contribute approximately 50 percentage points to this growth.
The Company expects full year 2015 non-IFRS cloud and software revenue to increase by 8% – 10% at constant currencies (2014: €14.33 billion).
The Company expects full-year 2015 non-IFRS operating profit to be in a range of €5.6 billion – €5.9 billion at constant currencies (2014: €5.64 billion).
While the Company’s full-year 2015 business outlook is at constant currencies, actual currency reported figures are expected to continue to be impacted by currency exchange rate fluctuations. If exchange rates stay at the June 2015 average level for the rest of the year, the Company would expect approximately a 5 to 8 percentage points currency benefit on cloud and software growth and 5 to 8 percentage points currency benefit on operating profit growth for the third quarter of 2015 and 6 to 9 percentage points and 7 to 10 percentage points respectively for the full-year 2015.

Additional Information
2015 revenue and profit figures include the full revenue and profit from Concur and Fieldglass. The comparative numbers for 2014 include Concur and Fieldglass starting December 4 and May 2, respectively.

For a more detailed description of all of SAP’s non-IFRS measures and their limitations as well as our constant currency and free cash flow figures see Explanation of Non-IFRS Measures online.

Second Quarter 2015 Interim Report
SAP’s second quarter 2015 Interim Report was published today and is available for download at www.sap.com/investor.

Webcast
SAP earnings conference call for financial analysts will take place on Tuesday, July 21st at 2:00 PM (CEST) / 1:00 PM (GMT) / 8:00 AM (EDT) / 5:00 AM (PDT). The conference call will be web cast live on the Company’s website at www.sap.com/investor and will be available for replay.

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. For more information, visit www.sap.com.


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