- Cloud momentum continues to accelerate
- Cloud revenue up 38% and up 25% at constant currencies
- Current cloud backlog up 38% and up 26% at constant
currencies
- SAP S/4HANA current cloud backlog up 108% and up 90% at
constant currencies
- IFRS cloud gross profit up 44%, non-IFRS cloud gross profit up
42% and up 30% at constant currencies
- IFRS operating profit down 1%, non-IFRS operating profit flat
and down 8% at constant currencies
WALLDORF, Germany, Oct. 25,
2022 /PRNewswire/ -- SAP SE (NYSE: SAP) today
announced its financial results for the third quarter ended
September 30, 2022.
Christian Klein, CEO: "Our
cloud solutions are the answer, as customers turn to us to help
them future-proof their businesses. This trust in SAP is reflected
in our accelerating cloud momentum. With a recurring revenue share
of more than 80%, it's clear that our transformation has reached an
important inflection point, paving the way for continued growth in
the future."
Luka Mucic, CFO: "We have delivered a strong cloud
quarter with accelerating momentum across all key cloud indicators.
We're at an important inflection point in our transformation which
we anticipate will lead to accelerating revenue growth and
double-digit operating profit growth in 2023."
Financial Performance
|
Group results at a
glance – Third quarter 2022
|
|
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q3 2022
|
Q3 2021
|
∆ in %
|
|
Q3 2022
|
Q3 2021
|
∆ in %
|
∆ in %
const.
curr.
|
|
Cloud
revenue
|
3,288
|
2,386
|
38
|
|
3,288
|
2,386
|
38
|
25
|
|
Software
licenses
|
406
|
657
|
–38
|
|
406
|
657
|
–38
|
–42
|
|
Software
support
|
3,016
|
2,867
|
5
|
|
3,016
|
2,867
|
5
|
–2
|
|
Software licenses and
support revenue
|
3,422
|
3,524
|
–3
|
|
3,422
|
3,524
|
–3
|
–9
|
|
Cloud and software
revenue
|
6,710
|
5,910
|
14
|
|
6,710
|
5,910
|
14
|
5
|
|
Total
revenue
|
7,841
|
6,845
|
15
|
|
7,841
|
6,845
|
15
|
5
|
|
Share of more
predictable revenue (in %)
|
80
|
77
|
4pp
|
|
80
|
77
|
4pp
|
|
|
Operating profit
(loss)
|
1,239
|
1,249
|
–1
|
|
2,094
|
2,102
|
0
|
–8
|
|
Profit (loss) after
tax
|
547
|
1,418
|
–61
|
|
1,263
|
2,129
|
–41
|
|
|
Earnings per share -
Basic (in €)
|
0.57
|
1.19
|
–52
|
|
1.12
|
1.74
|
–36
|
|
|
Earnings per share -
Diluted (in €)
|
0.57
|
1.19
|
–52
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
849
|
1,183
|
–28
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
464
|
881
|
–47
|
|
|
Number of employees
(FTE, September 30)
|
112,632
|
105,015
|
7
|
|
|
|
|
|
|
1 For a
breakdown of the individual adjustments see table "Non-IFRS
Adjustments by Functional Areas" in this Quarterly
Statement.
|
|
Due to rounding,
numbers may not add up precisely.
|
|
|
Group results at a glance – Nine months ended
September 2022
|
|
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q1–Q3
2022
|
Q1–Q3
2021
|
∆ in %
|
|
Q1–Q3
2022
|
Q1–Q3
2021
|
∆ in %
|
∆ in %
const.
curr.
|
|
Cloud
revenue
|
9,164
|
6,806
|
35
|
|
9,164
|
6,806
|
35
|
25
|
|
Software
licenses
|
1,149
|
1,790
|
–36
|
|
1,149
|
1,790
|
–36
|
–39
|
|
Software
support
|
8,916
|
8,491
|
5
|
|
8,916
|
8,491
|
5
|
0
|
|
Software licenses and
support revenue
|
10,065
|
10,281
|
–2
|
|
10,065
|
10,281
|
–2
|
–7
|
|
Cloud and software
revenue
|
19,229
|
17,088
|
13
|
|
19,229
|
17,088
|
13
|
6
|
|
Total
revenue
|
22,435
|
19,861
|
13
|
|
22,435
|
19,861
|
13
|
6
|
|
Share of more
predictable revenue (in %)
|
81
|
77
|
4pp
|
|
81
|
77
|
4pp
|
|
|
Operating profit
(loss)
|
2,965
|
3,193
|
–7
|
|
5,452
|
5,762
|
–5
|
–10
|
|
Profit (loss) after
tax
|
1,382
|
3,936
|
–65
|
|
3,522
|
6,063
|
–42
|
|
|
Earnings per share -
Basic (in €)
|
1.49
|
3.22
|
–54
|
|
3.08
|
4.88
|
–37
|
|
|
Earnings per share -
Diluted (in €)
|
1.48
|
3.22
|
–54
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
3,598
|
4,954
|
–27
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
2,543
|
4,132
|
–38
|
|
|
Number of employees
(FTE, September 30)
|
112,632
|
105,015
|
7
|
|
|
|
|
|
|
1 For a
breakdown of the individual adjustments see table "Non-IFRS
Adjustments by Functional Areas" in this Quarterly
Statement.
|
|
Due to rounding,
numbers may not add up precisely
|
Financial Highlights
Current cloud backlog continued to build momentum and expanded
to €11.27 billion, accelerating growth to 38% and 26% at constant
currencies.
Driven by double-digit growth across the SaaS and PaaS
portfolio, cloud revenue was up 38% to €3.29 billion, up 25% at
constant currencies.
Cloud gross profit was up 44% (IFRS), 42% (non-IFRS) and 30%
(non-IFRS at constant currencies). Year-over-year, cloud gross
margin was up 2.8 percentage points to 69.8% (IFRS) and up 2.3
percentage points to 71.7% (non-IFRS). This was mainly driven by a
strong increase of the SaaS margin, with efficiency gains
overcompensating increased investments into the next generation
cloud delivery program.
IFRS operating profit decreased 1% to €1.24 billion and IFRS
operating margin decreased by 2.4 percentage points to 15.8%.
Non-IFRS operating profit was flat at €2.09 billion and decreased
8% at constant currencies. Non-IFRS operating margin decreased by
4.0 percentage points to 26.7% and was down by 3.8 percentage
points at constant currencies. As in previous quarters, this was
mainly driven by a reduced contribution from software licenses
revenue as well as accelerated investments into research &
development and sales & marketing to capture current and future
growth opportunities. In addition, prior year third quarter IFRS
and non-IFRS operating profit included a disposal gain of €77
million related to the launch of SAP Fioneer.
IFRS earnings per share decreased 52% to €0.57 and non-IFRS
earnings per share decreased 36% to €1.12. The year-over-year
decline of earnings per share reflects a contribution to financial
income by Sapphire Ventures that, due to current market conditions,
was significantly lower than in the same period last year.
Effective tax rate was 35.7% (IFRS) and 26.0% (non-IFRS). The
year-over-year increase mainly resulted from changes in tax exempt
income related to Sapphire Ventures.
Free cash flow for the first nine months was down 38% to €2.54
billion. The decrease versus last year is mainly attributable to
the development of profitability and adverse impacts in working
capital. In the fourth quarter, we continue to expect a more
favorable cash flow development due to a focus on working capital
management and lower payouts for cash taxes, share-based
compensation, and capex. However, based on our year-to-date
position, we are adjusting the free cash flow outlook for the year
to approximately €4.5 billion (previously: "above €4.5
billion").
On July 21, SAP announced its
second share buyback program for 2022, which was completed on
September 6. Under the program, SAP
repurchased 5,715,512 shares at an average price of €87.50 with a
purchase value of approximately €500 million. Repurchased shares
will primarily be used to service awards granted under share-based
compensation plans for employees.
Impact of War in Ukraine
In the first nine months, SAP's business was impacted by the war
in Ukraine and SAP's decision to
wind down its business operations in Russia and Belarus.
At the end of the third quarter current cloud backlog was
approximately €64 million lower due to the termination of existing
cloud engagements in Russia and
Belarus, reducing current cloud
backlog growth by approximately 1 percentage point at constant
currencies. The impact on third quarter IFRS operating profit was
approximately €20 million (first nine months: approximately €370
million) and approximately €20 million (first nine months:
approximately €250 million) on non-IFRS operating profit, mainly
due to reduced revenues.
For the full year, we expect a total revenue impact of
approximately €250 million at constant currencies from lack of new
business and discontinuation of existing business. For non-IFRS
operating profit we expect an impact of approximately €300 million
at constant currencies from the revenue gaps mentioned above and
other expense items.
Other impacts due to this evolving situation are currently
unknown and could potentially subject our business to materially
adverse consequences should the situation escalate beyond its
current scope.
Business Highlights
In the third quarter, customers around the globe chose "RISE
with SAP" to drive end-to-end business transformation, including
Alpargatas, Assaí Atacadista, Center for Pandemic Vaccines and
Therapeutics (ZEPAI) at the Paul-Ehrlich-Institut, Dabur India
Limited, Fonterra, HELLENiQ ENERGY, Nikon Corporation, Prada, RICOH
CO., Roborock, Salzburg AG, Schneider Electric, Wistron Corporation
and 11teamsports. BioNTech, Birlasoft, Bosch BASF Smart Farming,
Dufry International, NBA, Petrobras and Wipro went live on SAP
S/4HANA Cloud in the third quarter.
Key customer wins across SAP's solution portfolio included:
Allianz Technology, Cognizant, DB Schenker, Domino's Pizza
Enterprises, Endress+Hauser, Fujitsu Limited, Grupo Energía Bogotá,
Gustavo Gusto, Hapag-Lloyd, L.L.Bean, Salzgitter, Schiphol
Nederland, Siemens Energy, The Pennsylvania
State University, The State of
Missouri, Trent Limited and Valio.
SAP's cloud revenue performance for the quarter was very strong
across all regions. The U.S. and Germany had an outstanding cloud revenue
performance while Brazil,
China, India and Switzerland were particularly strong.
On July 21, SAP announced that it
has acquired Askdata, a startup focused on search-driven analytics.
With the acquisition of Askdata, SAP strengthens its ability to
help organizations take better-informed decisions by leveraging
AI-driven natural language searches.
On August 17, SAP and Francisco
Partners (FP) announced that FP has signed a definitive agreement
with SAP America Inc. under which FP will acquire SAP Litmos from
SAP. The transaction is expected to close in the fourth quarter of
2022 and is subject to customary regulatory clearances.
On August 31, SAP announced that
the SAP Supervisory Board has appointed Dominik Asam as CFO and member of the Executive
Board of SAP SE. He will start on March 7,
2023. Currently he is the CFO and a member of the Executive
Committee at Airbus. He will succeed Luka Mucic, who will remain a
member of the Executive Board until March
31, 2023.
On September 13, SAP announced
that SAP SuccessFactors unveiled new modules for its Human
Experience Management (HXM) Suite to create a powerful way for
organizations to execute on an integrated talent development
strategy and create a future-ready workforce. The new capabilities
are the most significant developments that SuccessFactors has had
in the last decade.
On October 20, Taulia and Standard
Chartered Bank signed a partner agreement to collaborate across a
range of working capital finance solutions primarily in APJ and
emerging markets. Further to this, Taulia has signed an agreement
with Mastercard to provide embedded payment capabilities by
integrating with the Mastercard Virtual Card platform which
facilitates access to multiple global banks to fund the
Taulia/Mastercard Virtual Card solution.
Among other accolades, in the third quarter SAP was:
- named a Leader in 2022 Gartner® Magic Quadrant™ for Digital
Commerce[1]
- recognized as a Leader in 2022 Gartner® Magic Quadrant™ for
Data Integration Tools
- named a leader in The Forrester Wave™: Digital Operations
Platforms for Manufacturing and Distribution and
- SAP SuccessFactors was named a Leader in IDC MarketScape: for
Worldwide Modern Talent Acquisition Suites 2022 Vendor
Assessment
|
_____________________________________________
|
|
1 Gartner
does not endorse any vendor, product or service depicted in its
research publications, and does not advise technology users to
select only those vendors with the highest ratings or other
designation. Gartner research publications consist of the opinions
of Gartner's research organization and should not be construed as
statements of fact. Gartner disclaims all warranties, expressed or
implied, with respect to this research, including any warranties of
merchantability or fitness for a particular purpose. SAP is not
responsible for the content of third-party research
reports.
|
Segment Results at a Glance
SAP's two reportable segments showed the following
performance:
|
Applications,
Technology & Services1
|
Q3
2022
|
Q1-Q3
2022
|
|
€ million, unless
otherwise stated
(Non-IFRS)
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
|
SaaS2
|
2,037
|
37
|
24
|
5,658
|
32
|
23
|
|
PaaS3
|
389
|
53
|
42
|
1,064
|
50
|
41
|
|
IaaS4
|
252
|
5
|
–3
|
751
|
10
|
3
|
|
Cloud
revenue
|
2,678
|
35
|
23
|
7,474
|
32
|
23
|
|
Segment
revenue
|
7,160
|
12
|
4
|
20,558
|
11
|
4
|
|
Segment profit
(loss)
|
2,268
|
–4
|
–10
|
6,080
|
–8
|
–12
|
|
SaaS2 (in %)
|
70.7
|
3.2pp
|
3.5pp
|
69.5
|
2.0pp
|
2.1pp
|
|
PaaS3 (in %)
|
77.4
|
–1.4pp
|
0.6pp
|
78.3
|
–1.6pp
|
–0.1pp
|
|
IaaS4 (in %)
|
21.0
|
–12.7pp
|
–7.3pp
|
26.0
|
–8.1pp
|
–4.6pp
|
|
Cloud gross margin (in
%)
|
67.0
|
2.2pp
|
3.2pp
|
66.4
|
1.3pp
|
2.0pp
|
|
Segment margin (in
%)
|
31.7
|
–5.2pp
|
–4.7pp
|
29.6
|
–6.0pp
|
–5.6pp
|
|
1 Segment
information for comparative prior periods were restated to conform
with the new segment composition.
|
|
2 Software as a service
|
|
3 Platform as a service
|
|
4 Infrastructure as a
service
|
Segment revenue in AT&S was up 12% to €7.16 billion
year-over-year, up 4% at constant currencies, due primarily to
strong cloud revenue growth, driven by SAP S/4HANA as well as
Business Technology Platform. Software licenses revenue decreased
due to the shift to the cloud as more customers are choosing our
'RISE with SAP' offering. Segment support revenue was up 5% to
€3.02 billion year-over-year and down 2% at constant
currencies.
|
Qualtrics
|
Q3
2022
|
Q1-Q3
2022
|
|
€ million, unless
otherwise stated
(Non-IFRS)
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
|
Cloud revenue –
SaaS2
|
322
|
70
|
47
|
870
|
67
|
49
|
|
Segment
revenue
|
384
|
65
|
42
|
1,033
|
60
|
43
|
|
Segment profit
(loss)
|
34
|
>100
|
>100
|
60
|
52
|
65
|
|
Cloud gross margin –
SaaS2 (in %)
|
88.9
|
–2.7pp
|
–2.9pp
|
89.0
|
–3.0pp
|
–3.1pp
|
|
Segment margin (in
%)
|
9.0
|
3.1pp
|
5.0pp
|
5.8
|
–0.3pp
|
1.0pp
|
Qualtrics segment revenue was up 65% to €384 million
year-over-year, up 42% at constant currencies. The continued strong
growth was driven by robust renewal rates and expansions.
Cloud Performance
|
Q3
2022
|
Q1 - Q3
2022
|
|
€ millions, unless
otherwise stated
(non-IFRS)
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
|
Current Cloud
Backlog
|
|
|
|
|
|
|
|
Total
|
11,267
|
38
|
26
|
11,267
|
38
|
26
|
|
Thereof SAP
S/4HANA
|
2,662
|
108
|
90
|
2,662
|
108
|
90
|
|
Cloud
Revenue
|
|
|
|
|
|
|
|
SaaS1
|
2,621
|
39
|
26
|
7,279
|
35
|
25
|
|
PaaS2
|
415
|
56
|
44
|
1,134
|
54
|
45
|
|
IaaS3
|
252
|
5
|
–3
|
752
|
10
|
3
|
|
Total
|
3,288
|
38
|
25
|
9,164
|
35
|
25
|
|
Thereof SAP
S/4HANA
|
546
|
98
|
81
|
1,422
|
87
|
75
|
|
Thereof
Qualtrics
|
322
|
70
|
47
|
870
|
67
|
49
|
|
Cloud Gross
Profit
|
|
|
|
|
|
|
|
SaaS1
|
1,978
|
45
|
31
|
5,434
|
39
|
28
|
|
PaaS2
|
325
|
54
|
46
|
898
|
52
|
46
|
|
IaaS3
|
53
|
–34
|
–24
|
196
|
–16
|
–10
|
|
Total
|
2,357
|
42
|
30
|
6,527
|
38
|
28
|
|
Thereof
Qualtrics
|
286
|
65
|
42
|
775
|
61
|
44
|
|
Cloud Gross Margin (in
%)
|
|
|
|
|
|
|
|
SaaS1 (in %)
|
75.5
|
2.9pp
|
2.9pp
|
74.7
|
2.0pp
|
1.8pp
|
|
PaaS2 (in %)
|
78.3
|
–1.0pp
|
0.9pp
|
79.2
|
–1.1pp
|
0.4pp
|
|
IaaS3 (in %)
|
21.0
|
–12.7pp
|
–7.3pp
|
26.0
|
–8.1pp
|
–4.5pp
|
|
Total
|
71.7
|
2.3pp
|
2.8pp
|
71.2
|
1.6pp
|
1.9pp
|
|
Thereof
Qualtrics
|
88.9
|
–2.7pp
|
–2.9pp
|
89.0
|
–3.0pp
|
–3.1pp
|
|
1 Software
as a service
|
|
2 Platform
as a service
|
|
3
Infrastructure as a service
|
|
Due to rounding,
numbers may not add up precisely
|
|
The Q1-Q3 2022 results
were also impacted by other effects. For details, please refer to
the disclosure on page 30 of this document.
|
Business Outlook 2022
SAP is executing on its cloud-led strategy, which is driving
accelerated cloud growth through both new business and cloud
adoption by existing customers. The pace and scale of SAP's cloud
momentum places the Company well on track towards its mid-term
ambition.
Financial Outlook
For 2022, SAP continues to expect:
- €11.55 – 11.85 billion cloud revenue at constant currencies
(2021: €9.42 billion), up 23% to 26% at constant currencies.
- €25.0 – 25.5 billion cloud and software revenue at constant
currencies (2021: €24.08 billion), up 4% to 6% at constant
currencies.
- €7.6 – 7.9 billion non-IFRS operating profit at constant
currencies (2021: €8.23 billion), down 4% to 8% at constant
currencies.
- The share of more predictable revenue (defined as the total of
cloud revenue and software support revenue) is expected to reach
approximately 78% (2021: 75%).
For 2022, SAP now expects:
- Free cash flow of approximately €4.5 billion (2021: €5.01
billion). The previous outlook was above €4.5 billion.
The current market environment and volatility in capital markets
also lead to a lower level of predictability regarding the
full-year 2022 effective tax rate outlook (IFRS and non-IFRS).
Based on current estimates, we now expect a full-year 2022
effective tax rate for IFRS of around 45.0% (previously: 34.0% to
38.0%) and for non-IFRS of around 30.0% (previously: 23.0% to
27.0%). As the further development of our effective tax rate (IFRS
and non-IFRS) strongly depends on the 2022 financial income
contribution of Sapphire Ventures, we may face major deviations
from the current estimate in either direction given current market
conditions.
While SAP's full-year 2022 business outlook is at constant
currencies, actual currency reported figures are expected to be
impacted by currency exchange rate fluctuations as the Company
progresses through the year.
See the table below for the Q4 and FY 2022 expected currency
impacts.
Expected Currency Impact Assuming September 2022 Rates Apply for the Rest of the
Year
|
In percentage
points
|
Q4 2022
|
FY 2022
|
|
Cloud revenue
growth
|
+10pp to
+12pp
|
+9pp to
+11pp
|
|
Cloud and software
revenue growth
|
+6pp to +8pp
|
+6pp to +8pp
|
|
Operating profit growth
(non-IFRS)
|
+6pp to +8pp
|
+4pp to +6pp
|
Non-Financial Outlook
For 2022, SAP continues to expect:
- Employee Engagement Index to be in a range of 80% to 84% (2021:
83%)
For 2022, SAP now expects:
- Customer Net Promoter Score of 3 to 8 (2021: 10) after
reviewing the year-to-date survey results. The previous range was
11 to 15.
- Net carbon emissions of 90 to 95 kt (2021: 110 kt). The
previous value was 70 kt.
Ambition 2025
SAP reiterates its mid-term ambition published in its Q3 2020
Quarterly Statement including the commitment to double-digit growth
of operating profit in 2023. In light of its strong cloud momentum
and most recent favorable currency exchange rate development, SAP
expects to update its mid-term ambition in the upcoming
quarters.
The full Q3 2022 Quarterly Statement can be downloaded from:
https://www.sap.com/investors/sap-2022-q3-statement.
Additional Information
This press release and all information therein is preliminary
and unaudited.
SAP Performance Measures
For more information about our key growth metrics and
performance measures, their calculation, their usefulness, and
their limitation, please refer to the following document on our
Investor Relations website: SAP Performance Measures.
Webcast
SAP senior management will host a financial analyst conference
call on Tuesday, October
25th at 2:00 PM
(CET) / 1:00 PM (GMT) /
8:00 AM (Eastern) / 5:00 AM (Pacific). The conference 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 can be found at
www.sap.com/investor.
About SAP
SAP's strategy is to help every business run as an intelligent
enterprise. As a market leader in enterprise application software,
we help companies of all sizes and in all industries run at their
best: SAP customers generate 87% of total global commerce. 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 business and
public customers across 25 industries globally 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 www.sap.com.
|
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)
|
This document contains forward-looking statements, which are
predictions, projections, or other statements about future events.
These statements are based on current expectations, forecasts, and
assumptions that are subject to risks and uncertainties that could
cause actual results and outcomes to materially differ. Additional
information regarding these risks and uncertainties may be found in
our filings with the Securities and Exchange Commission, including
but not limited to the risk factors section of SAP's 2021 Annual
Report on Form 20-F.
© 2022 SAP SE. All rights reserved.
SAP and other SAP products and services mentioned herein as well
as their respective logos are trademarks or registered trademarks
of SAP SE in Germany and other
countries. Please see https://www.sap.com/copyright for additional
information.
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