in € millions, unless otherwise stated; based on SAP group
results from continuing operations
- Cloud revenue up 19% and up 22% at constant currencies. SAP
S/4HANA cloud revenue up 74% and accelerates to 79% at constant
currencies
- Current cloud backlog up 21% and up 25% constant
currencies
- IFRS cloud gross profit up 20%, non-IFRS cloud gross profit up
20% and up 24% at constant currencies, supported by completion of
SAP's next-generation cloud delivery program
- IFRS operating profit up 28%, non-IFRS operating profit up 23%
and up 28% at constant currencies
- SAP updates its 2023 revenue and operating profit outlook
- Expands market opportunity through new SAP Business AI and
premium AI offerings
WALLDORF, Germany, July 20,
2023 /PRNewswire/ -- SAP SE (NYSE: SAP) today
announced its financial results for the second quarter ended
June 30, 2023.
Christian Klein, CEO:
"This has been another strong quarter. We see significant
opportunities ahead, in particular through the transformative power
of AI. We are focused on delivering SAP Business AI that's
relevant, reliable, and responsible and we see significant
possibilities for market expansion through these technologies and
new premium offerings."
Dominik Asam, CFO: "We are
very pleased with our first half results. The revenue growth and
increased profitability, combined with sustained growth of our
cloud backlog, demonstrate the strength of our business model. Q2
performance puts us on the right trajectory and allows us to raise
our cloud and software revenue, as well as the operating profit
outlook for the year."
In Q1 2023, the Qualtrics consolidated group ("Qualtrics") was
classified as discontinued operations under IFRS 5.
Consequently, the contribution from Qualtrics is not included
in the reporting of SAP's continuing operations.
See section (M) Discontinued Operations. All figures in
this statement are based on SAP group results from continuing
operations unless otherwise noted.
Financial Performance
|
Group results at a glance – Second quarter
2023
|
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q2 2023
|
Q2 2022
|
∆ in %
|
|
Q2 2023
|
Q2 2022
|
∆ in %
|
∆ in %
const.
curr.
|
|
Cloud
revenue
|
3,316
|
2,796
|
19
|
|
3,316
|
2,796
|
19
|
22
|
|
Thereof SAP S/4HANA
Cloud revenue
|
823
|
472
|
74
|
|
823
|
472
|
74
|
79
|
|
Software
licenses
|
316
|
426
|
–26
|
|
316
|
426
|
–26
|
–24
|
|
Software
support
|
2,873
|
2,977
|
–3
|
|
2,873
|
2,977
|
–3
|
–1
|
|
Software licenses and
support revenue
|
3,189
|
3,403
|
–6
|
|
3,189
|
3,403
|
–6
|
–4
|
|
Cloud and software
revenue
|
6,505
|
6,199
|
5
|
|
6,505
|
6,199
|
5
|
8
|
|
Total
revenue
|
7,554
|
7,207
|
5
|
|
7,554
|
7,207
|
5
|
8
|
|
Share of more
predictable revenue (in %)
|
82
|
80
|
2pp
|
|
82
|
80
|
2pp
|
|
|
Operating profit
(loss)
|
1,358
|
1,060
|
28
|
|
2,058
|
1,678
|
23
|
28
|
|
Profit (loss) after tax
from continuing operations
|
724
|
613
|
18
|
|
1,249
|
1,098
|
14
|
|
|
Profit (loss) after
tax²
|
3,381
|
203
|
>100
|
|
3,460
|
1,093
|
>100
|
|
|
Earnings per share -
Basic (in €) from continuing operations
|
0.62
|
0.54
|
15
|
|
1.07
|
0.95
|
12
|
|
|
Earnings per share -
Diluted (in €) from continuing operations
|
0.62
|
0.54
|
14
|
|
|
|
|
|
|
Earnings per share -
Basic (in €)²
|
2.96
|
0.29
|
>100
|
|
3.14
|
0.96
|
>100
|
|
|
Earnings per share -
Diluted (in €)²
|
2.93
|
0.28
|
>100
|
|
|
|
|
|
|
Net cash flows from
operating activities from continuing operations
|
848
|
301
|
>100
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
604
|
–10
|
<–100
|
|
|
Number of employees
(FTE, June 30)
|
105,328
|
104,988
|
0
|
|
|
|
|
|
|
|
|
|
|
1
|
For a breakdown of the
individual adjustments see table "Non-IFRS Adjustments by
Functional Areas" in this Quarterly Statement.
|
|
2
|
From continuing and
discontinued operations.
|
|
Due to rounding,
numbers may not add up precisely.
|
|
Group results at a glance – Six months ended June
2023
|
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q1–Q2
2023
|
Q1–Q2
2022
|
∆ in %
|
|
Q1–Q2
2023
|
Q1–Q2
2022
|
∆ in %
|
∆ in %
const.
curr.
|
|
Cloud
revenue
|
6,493
|
5,362
|
21
|
|
6,493
|
5,362
|
21
|
22
|
|
Thereof SAP S/4HANA
Cloud revenue
|
1,539
|
876
|
76
|
|
1,539
|
876
|
76
|
77
|
|
Software
licenses
|
591
|
743
|
–20
|
|
591
|
743
|
–20
|
–19
|
|
Software
support
|
5,778
|
5,900
|
–2
|
|
5,778
|
5,900
|
–2
|
–1
|
|
Software licenses and
support revenue
|
6,369
|
6,643
|
–4
|
|
6,369
|
6,643
|
–4
|
–3
|
|
Cloud and software
revenue
|
12,863
|
12,005
|
7
|
|
12,863
|
12,005
|
7
|
8
|
|
Total
revenue
|
14,995
|
13,980
|
7
|
|
14,995
|
13,980
|
7
|
8
|
|
Share of more
predictable revenue (in %)
|
82
|
81
|
1pp
|
|
82
|
81
|
1pp
|
|
|
Operating profit
(loss)
|
2,161
|
2,531
|
–15
|
|
3,933
|
3,354
|
17
|
20
|
|
Profit (loss) after tax
from continuing operations
|
1,128
|
1,629
|
–31
|
|
2,502
|
2,269
|
10
|
|
|
Profit (loss) after
tax2
|
3,890
|
835
|
>100
|
|
5,047
|
2,259
|
>100
|
|
|
Earnings per share -
Basic (in €) from continuing operations
|
0.97
|
1.41
|
–31
|
|
2.15
|
1.96
|
10
|
|
|
Earnings per share -
Diluted (in €) from continuing operations
|
0.97
|
1.41
|
–32
|
|
|
|
|
|
|
Earnings per share -
Basic (in €)2
|
3.37
|
0.92
|
>100
|
|
4.41
|
1.96
|
>100
|
|
|
Earnings per share -
Diluted (in €)2
|
3.34
|
0.91
|
>100
|
|
|
|
|
|
|
Net cash flows from
operating activities from continuing operations
|
3,160
|
2,766
|
14
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
2,559
|
2,149
|
19
|
|
|
Number of employees
(FTE, June 30)
|
105,328
|
104,988
|
0
|
|
|
|
|
|
|
|
|
1
|
For a breakdown of the
individual adjustments see table "Non-IFRS Adjustments by
Functional Areas" in this Quarterly Statement.
|
|
2
|
From continuing and
discontinued operations.
|
|
Due to rounding,
numbers may not add up precisely.
|
Financial Highlights1
Second Quarter 2023
Current cloud backlog grew by 21% to €11.54 billion and was up
25% at constant currencies. SAP S/4HANA current cloud backlog was
up 65% to €3.72 billion and up 70% at constant currencies.
In the second quarter, cloud revenue was up 19% to €3.32 billion
and up 22% at constant currencies. SAP S/4HANA cloud revenue was up
74% to €823 million and up 79% at constant currencies.
Software licenses revenue decreased by 26% to €316 million and
was down 24% at constant currencies. Cloud and software revenue was
up 5% to €6.50 billion and up 8% at constant currencies. Services
revenue was up 4% to €1.05 billion and up 7% at constant
currencies. Total revenue was up 5% to €7.55 billion and up 8% at
constant currencies.
The share of more predictable revenue increased by 2 percentage
points to 82% in the second quarter.
Supported by the successful completion of the next-generation
cloud delivery program, cloud gross profit was up 20% (IFRS) to
€2.36 billion, up 20% to €2.40 billion (non-IFRS), and up 24%
(non-IFRS at constant currencies).
IFRS operating profit increased 28% to €1.36 billion. Non-IFRS
operating profit was up 23% to €2.06 billion and up 28% at constant
currencies. The increase was mainly driven by cloud revenue growth,
finalization of the next generation cloud delivery program, as well
as efficiency gains. In addition, operating profit in the second
quarter of last year was negatively impacted by SAP's decision to
wind down its business operations in Russia and Belarus. Beyond that, Q2 IFRS operating profit
growth benefitted from the restructuring expenses we reported in Q2
last year. On the other hand, it was negatively affected by higher
share-based compensation expenses primarily due to the
share-price development over the second quarter of this year.
IFRS earnings per share (basic) increased 15% to €0.62. Non-IFRS
earnings per share (basic) increased 12% to €1.07. The effective
tax rate was 33.8% (IFRS) and 30.4% (non-IFRS).
Free cash flow in the second quarter increased significantly to
€604 million, driven by the strong expansion of operating profit
and a reduction of payments for, amongst others, share-based
compensation, capex and leasing. For the first six months, free
cash flow was up 19% to €2.56 billion.
Completion of Qualtrics divestiture
On June 28, SAP announced the
completion of the sale of its stake in Qualtrics at a price of
US$18.15 in cash per share. The
closing of the transaction contributed an after-tax gain on sale of
approximately €3.2 billion (IFRS) and approximately €2.6 billion
(Non-IFRS) to SAP's results. The cash inflow resulting from the
purchase price was €7.1 billion (€6.4 billion net of cash and cash
equivalents held by Qualtrics). All contributions from the
Qualtrics divestiture are reflected in results from discontinued
operations. For details, please refer to section M in other
disclosures in the Q2 2023 Quarterly Statement.
Completion of next-generation cloud delivery program
Early in the second quarter, SAP successfully completed the
migration of its cloud customer base to its state-of-the-art,
harmonized cloud infrastructure. More than 20,000 customers and
half a million tenants were migrated as part of the program, which
was initiated at the beginning of 2021.
Business Highlights
In the second quarter, customers around the globe continued to
choose "RISE with SAP" to drive their end-to-end business
transformations. These customers included ARAG, Bacardi-Martini,
Bayer, DFS Deutsche Flugsicherung, Empresas Polar, Foodstuffs South
Island, GOL, McBride, Municipality of Utrecht, and Sochor.
ABN AMRO Bank, Cirque du Soleil, HanesBrands, Levi's, Tech
Mahindra, Versuni, went live on SAP S/4HANA Cloud in the second
quarter.
The Brenda Strafford Foundation, in-tech GmbH, NKK Switches,
Onyx Renewable Partners, StepLock, and Sunny Sky Products chose
"GROW with SAP", a new offering helping midsize customers adopt
cloud ERP with speed, predictability and continuous innovation.
Key customer wins across SAP's solution portfolio included:
Breakthru Beverage, Deutsche Börse, Endress+Hauser InfoServe, La
Poste, LB Group, Sabadell Digital, Santander, TATA Projects and
Visa. Numerous customers have also gone live with SAP solutions,
including: Asahi Kasei Corporation, Coca-Cola HBC, Falabella
Financiero, González Byass, Fujitsu, NTT, and OMV.
In the second quarter, SAP's cloud revenue performance was
strong across all regions. Germany, Brazil and India had outstanding cloud revenue growth
while the United States,
the Netherlands, France, China
and Chile performed particularly
strong.
On April 26, 2023, SAP and HP Inc.
announced an expansion of its strategic relationship as HP invested
in the RISE with SAP solution to support its focus on driving
digital transformation, portfolio optimization and operational
efficiency. The software will provide a platform for combining
hardware, software and services to deliver flexible workforce
solutions.
On May 11, SAP and Google Cloud
announced an extensive expansion of their partnership, introducing
a comprehensive open data offering designed to simplify data
landscapes and unleash the power of business data.
On May 11, SAP also announced that
the Annual General Meeting of Shareholders of SAP SE elected Dr.
h.c. Punit Renjen as new member of
the company's Supervisory Board and designated successor to Prof.
Dr. h.c. mult. Hasso Plattner in his
role as the Chairman of the Supervisory Board. In addition,
Jennifer Li and Dr. Qi Lu were
reelected as members of the Supervisory Board. The AGM also
approved all other proposals of the Executive Board and Supervisory
Board. That includes the compensation system for Executive Board
members, which incorporates revisions based on shareholder
feedback, and the approval to buy back treasury shares.
Furthermore, the dividend proposal of €2.05 per share for fiscal
year 2022 was approved.
On May 15, SAP announced the next
step in its long-standing partnership with Microsoft, using the
latest in enterprise-ready generative AI innovation to help solve
customers' most fundamental business challenges. The companies will
collaborate on integrating SAP SuccessFactors solutions with
Microsoft 365 Copilot and Copilot in Viva Learning, as well as
Microsoft's Azure OpenAI Service to access powerful language models
that analyze and generate natural language.
On May 16, SAP announced a new
share repurchase program with a volume of up to €5 billion. The
program is scheduled to start in the second half of 2023 and is
expected to be fully executed by the end of 2025.
SAP advances vision of Business Artificial Intelligence
(AI)
On May 2, SAP and IBM announced
that IBM Watson technology will be embedded into a broad range of
SAP solutions to provide new AI-driven insights and automation to
help accelerate innovation and create more efficient and effective
user experiences across the SAP application portfolio.
On July 11, Sapphire Ventures
announced that it is deepening its commitment to AI by investing
more than US$1 billion in AI-powered
enterprise technology startups, including those specializing in
generative AI. The commitment builds on Sapphire's history of
investing in and scaling enterprise AI startups and will focus on
all areas of the emerging AI tech stack including foundation
models, enablers and middleware, and next-gen AI applications.
On July 18, SAP announced the next
step in its commitment to deliver Business AI that is relevant,
reliable, and responsible with strategic direct investments in
three leading generative AI companies. The investments in Aleph
Alpha, Anthropic and Cohere reinforce SAP's open ecosystem approach
to AI, leveraging the best technology to embed AI across SAP's
portfolio. They build on a series of AI partnerships and enterprise
use cases announced in May and complement the above-mentioned
commitment from Sapphire Ventures.
Segment Results at a Glance
SAP's reportable segment showed the following performance:
|
Applications,
Technology & Services1
|
Q2
2023
|
|
€ million, unless
otherwise stated
(Non-IFRS)
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
|
Cloud revenue –
SaaS2
|
2,325
|
20
|
23
|
|
Cloud revenue –
PaaS3
|
521
|
42
|
45
|
|
Cloud revenue –
IaaS4
|
191
|
–23
|
–21
|
|
Cloud
revenue
|
3,037
|
19
|
22
|
|
Cloud gross profit –
SaaS2
|
1,620
|
21
|
25
|
|
Cloud gross profit –
PaaS3
|
437
|
47
|
50
|
|
Cloud gross profit –
IaaS4
|
70
|
–35
|
–36
|
|
Cloud gross
profit
|
2,127
|
22
|
25
|
|
Segment
revenue
|
7,269
|
5
|
7
|
|
Segment profit
(loss)
|
2,346
|
22
|
26
|
|
Segment margin (in
%)
|
32.3
|
4.6pp
|
4.9pp
|
|
|
|
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
|
In the second quarter, segment revenue in AT&S was up 5% to
€7.27 billion and up 7% at constant currencies, primarily due to
rapid cloud revenue growth, which was supported by SAP S/4HANA as
well as Business Technology Platform. Operating Expenses of the
segment decreased by 2% and remained flat at constant currencies,
resulting in a segment margin of 32.3% and 32.6% at constant
currencies. This implies a growth of 4.6 percentage points and 4.9
percentage points at constant currencies compared to the second
quarter of the prior year.
Cloud Performance
|
Q2
2023
|
Q1–Q2
2023
|
|
€ millions, unless
otherwise stated
(non-IFRS)
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
|
Current Cloud Backlog
|
|
|
|
|
|
|
|
Total
|
11,537
|
21
|
25
|
11,537
|
21
|
25
|
|
Thereof SAP
S/4HANA
|
3,717
|
65
|
70
|
3,717
|
65
|
70
|
|
Cloud Revenue
|
|
|
|
|
|
|
|
SaaS1
|
2,604
|
19
|
22
|
5,099
|
22
|
22
|
|
PaaS2
|
521
|
42
|
45
|
1,003
|
45
|
45
|
|
IaaS3
|
191
|
–23
|
–21
|
391
|
–18
|
–17
|
|
Total
|
3,316
|
19
|
22
|
6,493
|
21
|
22
|
|
Thereof SAP
S/4HANA
|
823
|
74
|
79
|
1,539
|
76
|
77
|
|
Cloud Gross Profit
|
|
|
|
|
|
|
|
SaaS1
|
1,888
|
19
|
23
|
3,675
|
22
|
23
|
|
PaaS2
|
437
|
47
|
50
|
843
|
50
|
51
|
|
IaaS3
|
70
|
–35
|
–36
|
146
|
–16
|
–14
|
|
Total
|
2,395
|
20
|
24
|
4,664
|
24
|
25
|
|
Cloud Gross Margin (in %)
|
|
|
|
|
|
|
|
SaaS1 (in %)
|
72.5
|
–0.1pp
|
0.1pp
|
72.1
|
0.0pp
|
0.3pp
|
|
PaaS2 (in %)
|
83.9
|
2.6pp
|
2.6pp
|
84.1
|
3.1pp
|
3.3pp
|
|
IaaS3 (in %)
|
36.6
|
–6.7pp
|
–8.1pp
|
37.3
|
0.6pp
|
1.2pp
|
|
Total
|
72.2
|
1.1pp
|
1.1pp
|
71.8
|
1.7pp
|
2.0pp
|
|
|
|
1
|
Software as a service:
SaaS comprises all other offerings which are not shown as PaaS and
IaaS.
|
|
2
|
Platform as a service:
PaaS primarily includes SAP Business Technology Platform and
SAP Signavio.
|
|
3
|
Infrastructure as a
service: A major portion of IaaS comes from SAP HANA
Enterprise Cloud.
|
|
Due to rounding,
numbers may not add up precisely.
|
Business Outlook
Financial Outlook 2023
For 2023, SAP is updating its revenue and operating profit
outlook and now expects:
- €14.0 – 14.2 billion cloud revenue at constant currencies
(2022: €11.43 billion), up 23% to 24% at constant currencies,
narrowing the range by €200 million. The previous range was €14.0 –
14.4 billion at constant currencies.
- €27.0 – 27.4 billion cloud and software revenue at constant
currencies (2022: €25.39 billion), up 6% to 8% at constant
currencies, narrowing the range by €100 million. The previous range
was €26.9 – 27.4 billion at constant currencies.
- €8.65 – 8.95 billion non-IFRS operating profit at constant
currencies (2022: €7.99 billion), up 8% to 12% at constant
currencies, raising the operating profit outlook by €50 million.
The previous range was €8.6 – 8.9 billion at constant
currencies.
SAP continues to expect:
- A share of more predictable revenue of approximately 82% (2022:
79%). It is defined as the total of cloud revenue and software
support revenue divided by total revenue.
- Free cash flow of approximately €4.9 billion (2022: €4.4
billion)
- An effective tax rate (IFRS) of 28.0% to 32.0% (2022: 32.0%)
and an effective tax rate (non-IFRS) of 26.0% to 28.0% (2022:
29.6%).
While SAP's 2023 financial 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.
Currency Impact Assuming June
2023 Rates Apply for 2023
|
In percentage
points
|
Q3 2023
|
FY 2023
|
|
Cloud revenue
growth
|
–7pp to
–5pp
|
–4pp to
–2pp
|
|
Cloud and software
revenue growth
|
–6pp to
–4pp
|
–3.5pp to
–1.5pp
|
|
Operating profit growth
(non-IFRS)
|
–6.5pp to
–4.5pp
|
–4.5pp to
–2.5pp
|
Non-Financial Outlook 2023
SAP continues to focus on three non-financial indicators:
customer loyalty, employee engagement, and carbon emissions.
In 2023, SAP continues to expect:
- a Customer Net Promoter Score of 8 to 12[2].
- an Employee Engagement Index to be in a range of 76% to
80%.
- Net carbon emissions of 0kt, meaning the Company will be carbon
neutral in its own operations.
Ambition 2025
Demonstrating its strong business momentum and reflecting the
divestiture of Qualtrics, SAP updated its mid-term ambition on
May 16, 2023, and expects:
- Cloud revenue of more than €21.5bn
- Total revenue of more than €37.5bn
- Non-IFRS cloud gross profit of approximately €16.3bn
- Non-IFRS operating profit of approximately €11.5bn
- A share of more predictable revenue of approximately 86%
- Free cash flow of approximately €7.5bn
The 2025 ambition is based on an exchange rate of 1.10 USD per EUR.
Additional Information
The full Q2 2023 Quarterly Statement can be downloaded from:
https://www.sap.com/investors/sap-2023-q2-statement.
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:
https://www.sap.com/investors/performance-measures.
Webcast
SAP senior management will host a financial analyst conference
call on Thursday, June
20th at 7:00 PM
(CEST) / 6:00 PM (BST) /
1:00 PM (Eastern) / 10:00 AM (Pacific). The conference will be
webcast on the Company's website at
https://www.sap.com/investor and will be available for replay.
Supplementary financial information pertaining to the second
quarter results can be found at https://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:
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Global Customer
Center:
|
+49 180
534-34-24
|
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United States
Only:
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+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 2022 Annual
Report on Form 20-F.
© 2023 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
trademark information and notices.
1 The Q2 2023 results were also impacted by other
effects. For details, please refer to the disclosures on page 29 of
this document.
2 The guidance is based on an adjusted methodology
for 2023 to better reflect the business priorities of the
company.
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SOURCE SAP SE
