SAP SE : January 22, 2016SAP Announces Preliminary Fourth Quarter and Full Year 2015 Results ›

January 22, 2016| SAP - SAP Investor Relations

SAP Beats 2015 Targets - Raises 2017 Midterm Ambition

WALLDORF, Germany - SAP SE (NYSE: SAP) today announced its financial results for the fourth quarter and full year ended December 31, 2015.

• Tremendous Momentum in New Cloud Bookings - Up 103% in the Full Year
• Cloud Subscriptions and Support Backlog, A Lead Indicator for Continued Strong Cloud Growth, Increased 45%, Reaching €3.7 Billion at Year-End
• Full Year Non-IFRS Cloud Subscription and Support Revenue Up 109% to €2.30 Billion (€2.00 Billion at Constant Currencies, Achieving Company Guidance)
• Full Year Non-IFRS Cloud and Software Revenue Up 20% (12% at Constant Currencies, Beating Company Guidance)
• SAP S/4HANA Adoption Surges - More Than Doubling the Number of Customers in the Fourth Quarter, Now Exceeding 2,700 Customers
• Full Year Non-IFRS Operating Profit Up 13% to €6.35 Billion (€5.903 Billion at Constant Currencies, Beating Company Guidance)
• Targeting Up to €4.0 Billion Non-IFRS Cloud Subscriptions and Support Revenue By 2017

SAP had exceptional momentum in the fourth quarter with fast growth in cloud and double-digit growth in its core license business. For the full year, non-IFRS cloud and software revenue grew by 20% or 12% at constant currencies and exceeded the outlook of 8% - 10% growth at constant currencies. New cloud bookings, the key measure for SAP's sales success in the cloud, increased 103% in the full year to €883 million and 75% in the fourth quarter to €344 million. Non-IFRS cloud subscriptions and support revenue was €2.30 billion (€2.00 billion at constant currencies, achieving the full year outlook of €1.95 to €2.05 billion at constant currencies). Non-IFRS operating profit was €6.35 billion (€5.903 billion at constant currencies, beating the full year outlook of €5.6 - €5.9 billion at constant currencies).

'Our strength in 2015 shows that the S/4HANA innovation cycle is well underway,' said Bill McDermott, CEO of SAP. 'Our completeness of vision in the cloud has distinguished SAP from both legacy players and point solution providers. We beat on cloud and software, we beat on operating income and we are ever confident that SAP will remain a profitable growth business well into the future.'

'Our tremendous 2015 results validate our strategy of innovating across the core, the cloud and business networks to help our customers become true digital enterprises', said Luka Mucic, CFO of SAP. 'We have transformed our company and made it leaner by shifting investments from noncore activities to strategic growth areas enabling us to capture the tremendous growth opportunities in the market. This puts us on a strong path for the future reflected in an increase of our 2017 ambition.'

BUSINESS HIGHLIGHTS IN THE FOURTH QUARTER 2015

SAP S/4HANA Adoption Soars, More Than Doubling in the Fourth Quarter
SAP S/4HANA is the next generation business suite and the 'nucleus' around which businesses can operate all their processes in real time and seamlessly integrate their enterprise and their external ecosystem to enable successful business outcomes. Customer adoption of SAP S/4HANA continues to accelerate sharply, with more than 2,700 customers across all regions and industries at the end of 2015, more than doubling quarter over quarter. S/4HANA is also catalyzing broad customer adoption of our entire innovation portfolio. For example, Merck is turning to S/4HANA for fast data access, enhanced user experience, and productivity through simplified business processes.

Human Capital Management Shows Strong Momentum
Customers are increasingly turning to SAP to manage their global workforce, both permanent and flexible. The customer count for SuccessFactors Employee Central, which is the core of our Human Capital Management offerings, surpassed 1,000 for the first time in the fourth quarter. SAP is winning against its key HCM competitors, especially in markets outside of the United States. For example, Lufthansa selected SAP SuccessFactors. SAP's innovations in HCM will further increase SAP's differentiation and drive market share gains.

Customer Engagement and Commerce Drives Triple-Digit Bookings Growth
SAP saw excellent growth in its Customer Engagement and Commerce solutions. Customers build a new, more personalized relationship with their consumers, making it richer and more contextual across all channels. SAP is unique because it also enables businesses to connect the front and back office in real-time and fulfill ecommerce in one end-to-end value chain. New cloud bookings for Customer Engagement and Commerce saw triple-digit growth in full year 2015.

Strong Growth in Business Networks
SAP is leading the charge to a hyperconnected world. SAP Business Network Group comprises Ariba, Fieldglass and Concur - providing the common attributes of a rich open platform and a large ecosystem of customers, suppliers, partners and developers delivering ever expanding content and innovation. New cloud bookings for the business network increased 187% in the full year to €309 million.

Approximately 2 million connected companies trade over $740 billion of commerce on the Ariba network, more than 32 million end users process travel and expenses with Concur and customers managed over 1.9 million flexible workers in approximately 130 countries with the Fieldglass platform over the past 12 months.

Regional Performance - Double-Digit Growth Across All Regions in Cloud and Software Revenue
The EMEA region had an outstanding performance in the fourth quarter, with an 11% increase in non-IFRS cloud and software revenue including a strong double-digit software license performance in Germany and Russia. Non-IFRS cloud subscriptions and support revenue in EMEA grew by 53% with very strong double-digit growth in new cloud bookings.

The Americas region had strong double-digit growth, with non-IFRS cloud and software revenue rising 27% including a strong software revenue performance in the U.S.. Brazil rebounded with a strong double-digit software revenue performance amidst a macro environment that continued to be unstable. Non-IFRS cloud subscriptions and support revenue in the Americas region grew 89% with new cloud bookings growing in double-digits.

The APJ region was back to solid double-digit growth in the fourth quarter with non-IFRS cloud and software growth of 18% including strong double-digit software revenue growth in Australia and India. Non-IFRS cloud subscriptions and support revenue in APJ grew 55%. The Company saw exceptional momentum in new cloud bookings and grew in triple-digits.

• (1) New cloud bookings consist of all order entry of a given period that is expected to be classified as cloud subscription and support revenue and results from purchases by new customers and from incremental purchases by existing customers. The order amount must be contractually committed (i.e. variable amounts from pay-per-use and similar arrangements are not included). Consequently, due to their uncommitted pay-per-use nature Ariba and Fieldglass transaction-based fees are not reflected in the new cloud bookings metric. Amounts included in the measure are annualized. Concur contributed approximately €39 million to SAP's new cloud bookings in the fourth quarter 2015.
• (2) For the fourth quarter 2015, Concur contributed approximately €162 million to SAP's Non-IFRS cloud subscriptions and support revenue at constant currencies. The Concur acquisition was closed on December 4th, 2014.
• (3) Network spend volume is the total value of purchase orders transacted on the Ariba Network in the trailing 12 months. In previous quarters this also included Concur and Fieldglass for which as of the third quarter 2015 separate more relevant metrics are disclosed.

FINANCIAL RESULTS IN DETAIL

FOURTH QUARTER 2015

	Fourth Quarter 2015
	IFRS			Non-IFRS
€ million, unless otherwise stated	Q4 2015	Q4 2014	% change	Q4 2015	Q4 2014	% change	% change const. curr.
New cloud bookings	344	197	75	N/A	N/A	N/A	N/A
Cloud subscriptions and support	632	349	81	633	360	76	60
Software licenses and support	4,749	4,209	13	4,749	4,210	13	9
Cloud and software	5,381	4,558	18	5,382	4,570	18	13
Total revenue	6,346	5,458	16	6,347	5,469	16	11
Operating profit	1,699	1,753	-3	2,280	2,127	7	3
Profit after tax	1,283	1,309	-2	1,674	1,569	7
Basic earnings per share (€)	1.07	1.10	-2	1.40	1.31	7
Number of employees (FTE)	76,986	74,406	3	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 €632 million (2014: €349 million), an increase of 81%. Non-IFRS cloud subscriptions and support revenue was €633 million (2014: €360 million), an increase of 76% (60% at constant currencies). IFRS software licenses revenue was €2.15 billion (2014: €1.87 billion), an increase of 15%. Non-IFRS software licenses revenue was €2.15 billion (2014: €1.87 billion), an increase of 15% (11% at constant currencies). IFRS software licenses and support revenue was €4.75 billion (2014: €4.21 billion), an increase of 13%. Non-IFRS software licenses and support revenue was €4.75 billion (2014: €4.21 billion), an increase of 13% (9% at constant currencies). IFRS cloud and software revenue was €5.38 billion (2014: €4.56 billion), an increase of 18%. Non-IFRS cloud and software revenue was €5.38 billion (2014: €4.57 billion), an increase of 18% (13% at constant currencies). IFRS total revenue was €6.35 billion (2014: €5.46 billion), an increase of 16%. Non-IFRS total revenue was €6.35 billion (2014: €5.47 billion), an increase of 16% (11% at constant currencies).

IFRS operating profit was €1.70 billion (2014: €1.75 billion), a decrease of 3%. Non-IFRS operating profit was €2.28 billion (2014: €2.13 billion), an increase of 7% (3% at constant currencies). IFRS operating margin was 26.8% (2014: 32.1%), a decrease of 5.3 percentage points. Non-IFRS operating margin was 35.9% (2014: 38.9%), a decrease of 3.0 percentage points (2.6 percentage points at constant currencies).

IFRS profit after tax was €1.28 billion (2014: €1.31 billion), a decrease of 2%. Non-IFRS profit after tax was €1.67 billion (2014: €1.57 billion), an increase of 7%. IFRS basic earnings per share was €1.07 (2014: €1.10), a decrease of 2%. Non-IFRS basic earnings per share was €1.40 (2014: €1.31), an increase of 7%. The IFRS and non-IFRS effective tax rates in the fourth quarter of 2015 were 22.0% (2014: 24.5%) and 24.8% (2014: 25.5%), respectively.

FULL YEAR 2015

	Full Year 2015
	IFRS			Non-IFRS
€ million, unless otherwise stated	FY 2015	FY 2014	% change	FY 2015	FY 2014	% change	% change const. curr.
New cloud bookings	883	436	103	N/A	N/A	N/A	N/A
Cloud subscriptions and support	2,286	1,087	110	2,296	1,101	109	82
Software licenses and support	14,931	13,228	13	14,933	13,233	13	6
Cloud and software	17,218	14,315	20	17,229	14,334	20	12
Total revenue	20,797	17,560	18	20,809	17,580	18	10
Operating profit	4,251	4,331	-2	6,346	5,638	13	5
Profit after tax	3,061	3,280	-7	4,505	4,182	8
Basic earnings per share (€)	2.56	2.75	-7	3.77	3.50	8
Number of employees (FTE)	76,986	74,406	3	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 €2.29 billion (2014: €1.09 billion), an increase of 110%. Non-IFRS cloud subscriptions and support revenue was €2.30 billion (2014: €1.10 billion), an increase of 109% (82% at constant currencies). IFRS software licenses revenue was €4.84 billion (2014: €4.40 billion), an increase of 10%. Non-IFRS software licenses revenue was €4.84 billion (2014: €4.40 billion), an increase of 10% (4% at constant currencies). IFRS software licenses and support revenue was €14.93 billion (2014: €13.23 billion), an increase of 13%. Non-IFRS software licenses and support revenue was €14.93 billion (2014: €13.23 billion), an increase of 13% (6% at constant currencies). IFRS cloud and software revenue was €17.22 billion (2014: €14.32 billion), an increase of 20%. Non-IFRS cloud and software revenue was €17.23 billion (2014: €14.33 billion), an increase of 20% (12% at constant currencies). IFRS total revenue was €20.80 billion (2014: €17.56 billion), an increase of 18%. Non-IFRS total revenue was €20.81 billion (2014: €17.58 billion), an increase of 18% (10% at constant currencies).

IFRS operating profit was €4.25 billion (2014: €4.33 billion), a decrease of 2%. Non-IFRS operating profit was €6.35 billion (2014: €5.64 billion), an increase of 13% (5% at constant currencies). IFRS operating margin was 20.4% (2014: 24.7%), a decrease of 4.2 percentage points. Non-IFRS operating margin was 30.5% (2014: 32.1%), a decrease of 1.6 percentage points (1.5 percentage points at constant currencies).

IFRS profit after tax was €3.06 billion (2014: €3.28 billion), a decrease of 7%. Non-IFRS profit after tax was €4.50 billion (2014: €4.18 billion), an increase of 8%. IFRS basic earnings per share was €2.56 (2014: €2.75), a decrease of 7%. Non-IFRS basic earnings per share was €3.77 (2014: €3.50), an increase of 8%. The IFRS and non-IFRS effective tax rates for the twelve months of 2015 were 23.3% (2014: 24.7%) and 26.0% (2014: 26.1%), respectively.

Operating cash flow was €3.64 billion (2014: €3.50 billion), an increase of 4% year-over-year. Free cash flow increased year-over-year to €3.0 billion (2014: €2.76 billion). Free cash flow was 14% of total revenue (2014: 16%). At December 31, 2015, SAP had a total group liquidity of €3.56 billion (December 31, 2014: €3.42 billion), which includes cash and cash equivalents and current investments. Net liquidity 2 at December 31, 2015 was -€5.62 billion compared to -€7.67 billion at December 31, 2014.

The Company is providing the following full year outlook:

• Based on the continued strong momentum in SAP's cloud business the Company expects full year 2016 non-IFRS cloud subscriptions and support revenue to be in a range of €2.95 - €3.05 billion at constant currencies (2015: €2.30 billion). The upper end of this range represents a growth rate of 33% at constant currencies.
• The Company expects full year 2016 non-IFRS cloud and software revenue to increase by 6% - 8% at constant currencies (2015: €17.23 billion).
• The Company expects full-year 2016 non-IFRS operating profit to be in a range of €6.4 billion - €6.7 billion at constant currencies (2015: €6.35 billion).

While the Company's full-year 2016 business outlook is at constant currencies, actual currency reported figures are expected to be impacted by currency exchange rate fluctuations as we progress through the year.

MID-TERM OUTLOOK
Looking beyond 2016, SAP is raising its 2017 ambition to reflect both the current exchange rate environment and excellent business momentum.

Assuming a stable exchange rate environment going forward SAP now expects non-IFRS cloud subscriptions and support revenue in a range of €3.8 - €4.0 billion in 2017. The upper end of this range represents a 2015 to 2017 CAGR of 32%. Non-IFRS total revenue is now expected to be in a range of €23.0 - €23.5 billion in 2017. The Company now expects its 2017 non-IFRS operating profit to be in a range of €6.7 - €7.0 billion.

SAP continues to anticipate that the fast-growing cloud business along with growth in support revenue will drive a higher share of more predictable revenue. Given the current software license revenue momentum the Company now expects the total of cloud subscriptions & support revenue and software support revenue to be in a range of 63% - 65% of total revenue in 2017.

By 2017 SAP continues to expect its rapidly growing cloud subscriptions and support revenue to be close to software license revenue and is expected to exceed software license revenue in 2018. At that time, SAP expects to reach a scale in its cloud business that will clear the way for accelerated operating profit expansion.

The Company is not adjusting its long term, high level 2020 ambition at this time. The Company's 2020 ambition communicated in 2015 was:

• €7.5 - €8.0 billion non-IFRS cloud subscriptions and support revenue
• €26 - €28 billion non-IFRS total revenue
• €8.0 - €9.0 billion non-IFRS operating profit
• 70% - 75% share of more predictable revenue (defined as the total of cloud subscriptions & support revenue and software support revenue).
  

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.

In the fourth quarter 2015, we updated the customer location data underlying our cloud subscription and support revenue by region disclosures in 2015 to make the 2015 numbers comparable to prior year numbers. Updated revenue by region numbers for the first, second and third quarter of 2015 reflecting the updated customer location data are available on our website under Revenue by Region. Prior year numbers are not affected by the update.

2015 Integrated Report and Annual Report
SAP's 2015 Integrated Report and Annual Report to Shareholders and 2015 Annual Report on Form 20-F are scheduled to be published on March 29, 2016, and will be available for download at www.sap.com/investor.

Webcast
SAP senior management will host a press conference in Walldorf today at 10:00 AM (CET) /
9:00 AM (GMT) / 4:00 AM (Eastern) / 1:00 AM (Pacific), followed by a financial analyst conference call at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00 AM (Eastern) / 5:00 AM (Pacific). Both conferences 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 full-year and quarterly results can be found at www.sap.com/investor.

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 approximately 300,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.

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Appendix - Financial Information to Follow