in € millions, unless otherwise stated; based on SAP group
results from continuing operations
- Cloud revenue up 16% and up 23% at constant currencies
- Current cloud backlog of €12.3 billion up 19% and up 25% at
constant currencies
- IFRS cloud gross profit up 21%, non-IFRS cloud gross profit up
21% and up 28% at constant currencies, supported by the expansion
of cloud gross margin
- IFRS operating profit up 11%, non-IFRS operating profit up 10%
and up 16% at constant currencies
- SAP reaffirms 2023 outlook
WALLDORF, Germany, Oct. 18,
2023 /PRNewswire/ -- SAP SE (NYSE: SAP) today
announced its financial results for the third quarter ended
September 30, 2023.
Christian Klein, CEO: "Our
Q3 results are yet another proof point that we have entered the
next phase of our transformation. We accelerated cloud growth
across our portfolio and significantly expanded our cloud gross
margins. Our strong focus on innovation, including our latest SAP
Business AI capabilities, ensure SAP's continued resiliency in the
face of tough macroeconomic conditions and increasing geopolitical
tensions."
Dominik Asam, CFO: "Our Q3
results demonstrate strong execution and the resilience of our
business, including sustained cloud growth in spite of persisting
macro headwinds. Also, we carefully balance growth and
profitability at all times. In combination, this allows us to boost
our bottom-line with the aim to achieve double-digit operating
profit growth this year."
All figures in this statement are based on SAP group results
from continuing operations unless otherwise noted. See section (M)
Discontinued Operations.
Financial Performance
|
Group results at a
glance – Third quarter 2023
|
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q3 2023
|
Q3 2022
|
∆ in %
|
|
Q3 2023
|
Q3 2022
|
∆ in %
|
∆ in %
const.
curr.
|
|
Cloud
revenue
|
3,472
|
2,986
|
16
|
|
3,472
|
2,986
|
16
|
23
|
|
Thereof SAP S/4HANA
Cloud revenue
|
914
|
546
|
67
|
|
914
|
546
|
67
|
77
|
|
Software
licenses
|
335
|
406
|
–17
|
|
335
|
406
|
–17
|
–14
|
|
Software
support
|
2,872
|
3,016
|
–5
|
|
2,872
|
3,016
|
–5
|
–1
|
|
Software licenses and
support revenue
|
3,208
|
3,422
|
–6
|
|
3,208
|
3,422
|
–6
|
–2
|
|
Cloud and software
revenue
|
6,679
|
6,408
|
4
|
|
6,679
|
6,408
|
4
|
9
|
|
Total
revenue
|
7,744
|
7,476
|
4
|
|
7,744
|
7,476
|
4
|
9
|
|
Share of more
predictable revenue (in %)
|
82
|
80
|
2pp
|
|
82
|
80
|
2pp
|
|
|
Operating profit
(loss)
|
1,724
|
1,557
|
11
|
|
2,278
|
2,075
|
10
|
16
|
|
Profit (loss) after tax
from continuing operations
|
1,272
|
839
|
52
|
|
1,687
|
1,240
|
36
|
|
|
Profit (loss) after
tax²
|
1,272
|
547
|
>100
|
|
1,687
|
1,263
|
34
|
|
|
Earnings per share -
Basic (in €) from continuing operations
|
1.09
|
0.75
|
45
|
|
1.45
|
1.10
|
32
|
|
|
Earnings per share -
Diluted (in €) from continuing operations
|
1.08
|
0.75
|
44
|
|
|
|
|
|
|
Earnings per share -
Basic (in €)²
|
1.09
|
0.57
|
91
|
|
1.45
|
1.12
|
30
|
|
|
Earnings per share -
Diluted (in €)²
|
1.08
|
0.57
|
90
|
|
|
|
|
|
|
Net cash flows from
operating activities from continuing operations
|
1,124
|
887
|
27
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
865
|
513
|
69
|
|
|
Number of employees
(FTE, September 30)
|
106,495
|
106,912
|
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.
|
|
Group results at a
glance – Nine months ended September 2023
|
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q1–Q3
2023
|
Q1–Q3
2022
|
∆ in %
|
|
Q1–Q3
2023
|
Q1–Q3
2022
|
∆ in %
|
∆ in %
const.
curr.
|
|
Cloud
revenue
|
9,965
|
8,348
|
19
|
|
9,965
|
8,348
|
19
|
22
|
|
Thereof SAP S/4HANA
Cloud revenue
|
2,453
|
1,422
|
72
|
|
2,453
|
1,422
|
72
|
77
|
|
Software
licenses
|
927
|
1,149
|
–19
|
|
927
|
1,149
|
–19
|
–17
|
|
Software
support
|
8,651
|
8,916
|
–3
|
|
8,651
|
8,916
|
–3
|
–1
|
|
Software licenses and
support revenue
|
9,577
|
10,065
|
–5
|
|
9,577
|
10,065
|
–5
|
–3
|
|
Cloud and software
revenue
|
19,542
|
18,413
|
6
|
|
19,542
|
18,413
|
6
|
9
|
|
Total
revenue
|
22,739
|
21,456
|
6
|
|
22,739
|
21,456
|
6
|
8
|
|
Share of more
predictable revenue (in %)
|
82
|
80
|
1pp
|
|
82
|
80
|
1pp
|
|
|
Operating profit
(loss)
|
3,885
|
4,088
|
–5
|
|
6,211
|
5,429
|
14
|
19
|
|
Profit (loss) after tax
from continuing operations
|
2,399
|
2,468
|
–3
|
|
4,189
|
3,508
|
19
|
|
|
Profit (loss) after
tax2
|
4,671
|
1,382
|
>100
|
|
6,243
|
3,522
|
77
|
|
|
Earnings per share -
Basic (in €) from continuing operations
|
2.07
|
2.17
|
–5
|
|
3.60
|
3.05
|
18
|
|
|
Earnings per share -
Diluted (in €) from continuing operations
|
2.05
|
2.16
|
–5
|
|
|
|
|
|
|
Earnings per share -
Basic (in €)2
|
4.13
|
1.49
|
>100
|
|
5.53
|
3.08
|
80
|
|
|
Earnings per share -
Diluted (in €)2
|
4.09
|
1.48
|
>100
|
|
|
|
|
|
|
Net cash flows from
operating activities from continuing operations
|
4,284
|
3,653
|
17
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
3,423
|
2,662
|
29
|
|
|
Number of employees
(FTE, September 30)
|
106,495
|
106,912
|
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.
|
Financial Highlights1
Third Quarter 2023
Current cloud backlog grew by 19% to €12.27 billion and was up
25% at constant currencies. SAP S/4HANA current cloud backlog was
up 58% to €4.20 billion and up 66% at constant currencies.
In the third quarter, cloud revenue was up 16% to €3.47 billion
and up 23% at constant currencies, mainly driven by the growth of
SAP's combined SaaS and PaaS portfolio, which was up 19% and up 26%
at constant currencies. SAP S/4HANA cloud revenue was up 67% to
€914 million and up 77% at constant currencies.
Supported by a few major transactions, software licenses revenue
decreased by 17% to €335 million and was down 14% at constant
currencies. Cloud and software revenue was up 4% to €6.68 billion
and up 9% at constant currencies. Services revenue was flat at
€1.07 billion and up 4% at constant currencies. Total revenue was
up 4% to €7.74 billion and up 9% at constant currencies.
The share of more predictable revenue increased by 2 percentage
points to 82% in the third quarter.
Cloud gross profit was up 21% (IFRS) to €2.53 billion, up 21% to
€2.56 billion (non-IFRS), and up 28% (non-IFRS at constant
currencies). Cloud gross profit growth was supported by a strong
increase in cloud gross margins. IFRS cloud gross margin was up 2.9
percentage points to 72.7%, non-IFRS cloud gross margin up 2.9
percentage points to 73.7% and up 2.9 percentage points at constant
currencies.
IFRS operating profit increased 11% to €1.72 billion. Non-IFRS
operating profit was up 10% to €2.28 billion and up 16% at constant
currencies. The increase was supported by the resilience of our
on-premise business as well as continued operational discipline,
which overcompensated the negative impact of an accelerated
amortization of capitalized sales commissions related to the
on-premise business (see section (O) Capitalized Cost from
Contracts with Customers – Costs of Obtaining Customer
Contracts).
IFRS earnings per share (basic) increased 45% to €1.09. Non-IFRS
earnings per share (basic) increased 32% to €1.45. The effective
tax rate was 27.8% (IFRS) and 27.1% (non-IFRS).
Free cash flow in the third quarter increased by 69% to €865
million. While payments for taxes and share-based compensation
increased, the positive development was driven by SAP's
profitability, improvements in working capital and lower payments
for capex and leasing. For the first nine months, free cash flow
was up 29% to €3.42 billion.
Share Repurchase Program
On May 16, SAP announced a new
share repurchase program with an aggregate volume of up to €5
billion and a term until December 31,
2025. As of September 29, SAP
had repurchased 7,190,252 shares at an average price of €125.49
with a purchased value of approximately €902 million under the
program.
Business Highlights
In the third quarter, customers around the globe continued to
choose "RISE with SAP" to drive their end-to-end business
transformations. These customers included ADAC, Alnatura, BC
Hydro, Bobst Mex, Constellium,
Graybar, Hitachi Zosen Corporation, KAESER KOMPRESSOREN, LG
Electronics, LG Energy Solution, PUMA, Siemens Healthineers, and
University of Leeds.
BMW Group, Celltrion Healthcare, City of Vancouver, Schneider Electric, Toll
Group, and UPL Limited went live on SAP S/4HANA Cloud in the
third quarter.
Atria, elobau, Leanin' Tree, Northstar Clean
Technologies, PERSSA, Phoenix Global, Tait International, and
Ziegler Holding 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:
Accenture, Adobe, BVG (Berlin
public transport), Ecovacs, freenet DLS,
Fressnapf, Heidelberger Druckmaschinen, Hyundai Motor Company
/ Kia, Jollibee Foods Corporation, Lenovo, RICOH,
Salling Group, and thyssenkrupp Steel Europe.
Ducati Motor Holding, Gilead Sciences,
Hunkemöller, The KaDeWe Group, Swiss Federal Railways, and
SCOTT Sports went live on SAP solutions.
In the third quarter, SAP's cloud revenue performance was
particularly strong in APJ and EMEA and solid in the Americas
region. Brazil, India, and the
Netherlands had outstanding cloud revenue growth while
Canada, China, France, Germany, Japan, and Switzerland performed particularly strong.
On July 4, 2023, SAP was informed
that Standard and Poor's (S&P) upgraded its credit rating to A+
from A, citing SAP's sound cloud transition execution, its track
record of deleveraging quickly and its high cash generation.
On July 18, SAP announced the next
step in its commitment to deliver Business AI that is relevant,
reliable, and responsible with strategic 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.
On August 29, SAP announced that
Gina Vargiu-Breuer has been appointed to the Executive Board of SAP
as Chief People Officer and labor director, effective from
February 1, 2024. She will succeed
Sabine Bendiek, who will be leaving the company at her own request
upon the end of her term on December 31,
2023.
On August 29, SAP and Google Cloud
announced an expanded partnership to help enterprises harness the
power of data and generative AI. The companies will combine their
integrated open data cloud using the SAP Datasphere solution with
Vertex AI to launch new generative AI-powered industry solutions
starting with automotive and to introduce new capabilities to help
customers improve sustainability performance.
On September 1, SAP announced the
appointment of Walter Sun as Global
Head of Artificial Intelligence. Sun joined SAP from Microsoft
where he served as vice president of Copilot Applied Artificial
Intelligence for business applications.
On September 7, SAP and LeanIX
GmbH announced that SAP has entered into an agreement to acquire
LeanIX, a leader in enterprise architecture management (EAM)
software. The planned acquisition is expected to help SAP expand
its business transformation portfolio, giving customers access to
the full suite of tools required for continuous business
transformation and facilitating AI-enabled process optimization.
The transaction is expected to close in the fourth quarter of 2023,
subject to customary closing conditions and regulatory
approvals.
On September 26, SAP announced
Joule, a natural-language, generative AI copilot. Joule will be
embedded throughout SAP's cloud enterprise portfolio, delivering
proactive and contextualized insights from across the breadth and
depth of SAP solutions and third-party sources.
Segment Results at a Glance
SAP's reportable segment showed the following performance:
|
Applications,
Technology & Services1
|
Q3
2023
|
|
€ million, unless
otherwise stated
(Non-IFRS)
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
|
Cloud revenue –
SaaS2
|
2,448
|
17
|
24
|
|
Cloud revenue –
PaaS3
|
558
|
39
|
46
|
|
Cloud revenue –
IaaS4
|
186
|
–20
|
–16
|
|
Cloud
revenue
|
3,192
|
17
|
24
|
|
Cloud gross profit –
SaaS2
|
1,750
|
18
|
26
|
|
Cloud gross profit –
PaaS3
|
473
|
48
|
55
|
|
Cloud gross profit –
IaaS4
|
70
|
1
|
–3
|
|
Cloud gross
profit
|
2,292
|
23
|
30
|
|
Segment
revenue
|
7,460
|
3
|
9
|
|
Segment profit
(loss)
|
2,666
|
18
|
24
|
|
Segment margin (in
%)
|
35.7
|
4.3pp
|
4.4pp
|
|
1
|
Segment information for
comparative prior periods were restated to conform with the new
segment composition.
|
|
2
|
Software as a service:
SaaS comprises all other offerings which are not shown as PaaS and
IaaS.
|
|
3
|
Platform as a service:
PaaS primarily includes SAP Business Technology Platform and SAP
Signavio.
|
|
4
|
Infrastructure as a
service: A major portion of IaaS comes from SAP HANA Enterprise
Cloud.
|
In the third quarter, segment revenue in AT&S was up 3% to
€7.46 billion and up 9% at constant currencies, primarily due to
strong cloud revenue growth, which was supported by SAP S/4HANA as
well as Business Technology Platform. Operating Expenses of the
segment decreased by 3% and increased by 2% at constant currencies,
resulting in a segment margin of 35.7% and 35.8% at constant
currencies. This implies a growth of 4.3 percentage points and 4.4
percentage points at constant currencies compared to the third
quarter of the prior year.
Cloud Performance
|
Q3
2023
|
|
Q1–Q3
2023
|
|
€ millions, unless
otherwise stated
(non-IFRS)
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
|
Current Cloud Backlog
|
|
|
|
|
|
|
|
|
Total
|
12,269
|
19
|
25
|
|
12,269
|
19
|
25
|
|
Thereof SAP
S/4HANA
|
4,199
|
58
|
66
|
|
4,199
|
58
|
66
|
|
Cloud Revenue
|
|
|
|
|
|
|
|
|
SaaS1
|
2,727
|
16
|
23
|
|
7,827
|
20
|
22
|
|
PaaS2
|
558
|
39
|
46
|
|
1,561
|
43
|
46
|
|
IaaS3
|
186
|
–20
|
–16
|
|
577
|
–18
|
–17
|
|
Total
|
3,472
|
16
|
23
|
|
9,965
|
19
|
22
|
|
Thereof SAP
S/4HANA
|
914
|
67
|
77
|
|
2,453
|
72
|
77
|
|
Cloud Gross Profit
|
|
|
|
|
|
|
|
|
SaaS1
|
2,016
|
17
|
24
|
|
5,688
|
20
|
23
|
|
PaaS2
|
473
|
48
|
55
|
|
1,316
|
49
|
53
|
|
IaaS3
|
70
|
1
|
–3
|
|
219
|
–11
|
–11
|
|
Total
|
2,558
|
21
|
28
|
|
7,222
|
23
|
26
|
|
Cloud Gross Margin (in %)
|
|
|
|
|
|
|
|
|
SaaS1 (in %)
|
73.9
|
0.6pp
|
0.7pp
|
|
72.7
|
0.2pp
|
0.4pp
|
|
PaaS2 (in %)
|
84.7
|
5.0pp
|
5.0pp
|
|
84.3
|
3.8pp
|
3.9pp
|
|
IaaS3 (in %)
|
37.4
|
7.9pp
|
4.6pp
|
|
37.9
|
3.0pp
|
2.4pp
|
|
Total
|
73.7
|
2.9pp
|
2.9pp
|
|
72.5
|
2.1pp
|
2.3pp
|
|
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 continues to expect:
- €14.0 – 14.2 billion cloud revenue at constant currencies
(2022: €11.43 billion), up 23% to 24% 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.
- €8.65 – 8.95 billion non-IFRS operating profit at constant
currencies (2022: €7.99 billion), up 8% to 12% at constant
currencies.
- A share of more predictable revenue of approximately 82% (2022:
79%).
- 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 September
2023 Rates Apply for 2023
|
In percentage
points
|
Q4
2023
|
FY
2023
|
|
Cloud revenue
growth
|
–5pp
to –3pp
|
–4pp to –2pp
|
|
Cloud and software
revenue growth
|
–4pp
to –2pp
|
–4pp to –2pp
|
|
Operating profit growth
(non-IFRS)
|
–4pp
to –2pp
|
–5pp to –3pp
|
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 122.
- 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.
Additional Information
The full Q3 2023 Quarterly Statement can be downloaded from:
https://www.sap.com/investors/sap-2023-q3-statement.
This press release and all information therein is preliminary
and unaudited. Due to rounding, numbers may not add up
precisely.
SAP Performance Measures
For more information about our key growth metrics and
performance measures, their calculation, their usefulness, and
their limitations, 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 Wednesday, October
18th at 11:00 PM
(CEST) / 10:00 PM (BST) /
5:00 PM (EDT) / 2:00 PM (PDT). 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 third 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:
|
|
Global Customer
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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.
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SAP and other SAP products and services mentioned herein as well
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1 The Q3 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
