SAP Quarterly Statement – Preliminary Q4 and FY 2016 Results
SAP Q4 2016 Quarterly Statement
SAP Hits Increased 2016 Guidance ? Raises 2020 Targets
New Cloud Bookings Soar 40% in Q4; Cloud Backlog Surges 47% to 5.4 Billion at Year-End Full Year Cloud Subscription and Support Revenue Up 31% to 2.99 Billion (IFRS) and Up 31% to
3.01 Billion (Non-IFRS at Constant Currencies) Full Year Cloud and Software Revenue Up 7% (IFRS) and Up 8% (Non-IFRS at Constant Currencies) Full Year Operating Profit Up 20% to 5.12 Billion (IFRS) and Up 4% to 6.60 Billion (Non-IFRS at
Constant Currencies) Full Year EPS Up 18% to 3.03 (IFRS) and Up 3% to 3.89 (Non-IFRS) Targeting More Than 2.6x in Cloud to Reach up to 29 Billion Total Revenue in 2020
Cloud & Software Revenue
in millions
FY15 FY16
18,424 17,214
18,428 17,226
Operating Profit
in millions
FY15 FY16
4,252 5,121
6,348 6,629
IFRS
+7%
Non-IFRS
+7% (+8% cc)
IFRS
+20%
Non-IFRS
+4% (+4% cc)
Cloud Subscriptions &
Support Revenue
in millions
IFRS
Non-IFRS
2,993
+31%
2,995
+30% (+31% cc)
Share of Predictable Revenue
in percent
FY 2016
61%
+2 p.p.
Total Revenue
in millions
IFRS
Non-IFRS
22,062 22,067
+6%
+6% (+7% cc)
"SAP's outstanding 2016 performance is the latest in our seven year run of profitable growth. We expanded our addressable market, acquired best in class assets and innovated a new generation of ERP with SAP S/4HANA. We are the leader in the business software industry with a consistent trifecta of strong software sales, fast cloud growth and operating income expansion. Our innovation agenda is accelerating in Machine Learning, the Internet of Things and Blockchain. SAP is winning big and we have enormous confidence in our accelerated 2020 ambition!"
Bill McDermott, CEO
"SAP is consistently delivering on its promise and achieved all raised guidance metrics for the full year. Furthermore, operating cash flow was strong with a 27% increase in 2016. New cloud bookings growth of 40% for the fourth quarter was exceptional. Our strong backlog paired with our robust pipeline position us for yet another year of profitable growth in 2017 and allow us to confidently raise our high level 2020 ambition."
Luka Mucic, CFO
SAP Quarterly Statement ? Preliminary Q4 and FY 2016 Results
1
Walldorf, Germany ? January 24, 2017 SAP SE (NYSE: SAP) today announced its financial results for the fourth quarter and twelve months ended December 31, 2016.
Business Highlights
Financial Highlights
Full Year 2016
For the full year 2016, cloud and software revenue grew by 7% (IFRS) or 8% (non-IFRS at constant currencies), above the midpoint of the full year outlook raised in October (6.5% to 8.5% growth non-IFRS at constant currencies). Cloud subscriptions and support revenue was 2.99 billion (IFRS) or 3.01 billion (non-IFRS at constant currencies), achieving the full year outlook raised in October (3.00 to 3.05 billion non-IFRS at constant currencies). New cloud bookings1, the key measure for SAP's sales success in the cloud, increased 31% in the full year to 1.15 billion. Cloud subscriptions and support backlog2 increased 47%, reaching 5.4 billion at year-end. New cloud bookings and cloud backlog are SAP's lead indicators for continued strong cloud growth.
For the full year, operating profit was 5.12 billion (IFRS) or 6.60 billion (non-IFRS at constant currencies), achieving the full year outlook raised in October (6.5 to 6.7 billion non-IFRS at constant currencies). Earnings per share increased 18% to 3.03 (IFRS) and 3% to 3.89 (non-IFRS).
SAP's rapidly expanding cloud business together with solid growth in support revenue continued to drive the share of more predictable revenue. The total of cloud subscriptions & support revenue and software support revenue exceeded 61% of total revenue for the full year 2016, up 2 percentage points.
For the twelve months ended December 31, operating cash flow was 4.63 billion (2015: 3.64 billion), an increase of 27% year-over-year, and free cash flow increased 21% year-over-year to 3.63 billion (2015: 3.00 billion).
Fourth Quarter 2016
For the fourth quarter, cloud and software revenue grew 7% (IFRS) year-over-year or 6% (non-IFRS at constant currencies). SAP continues to outpace its main competitor in cloud and software revenue growth. Cloud subscriptions and support revenue grew 31% year-over-year to 827 million (IFRS) or 29% (non-IFRS at constant currencies). New cloud bookings were up 40% in the fourth quarter and reached 483 million.
For the fourth quarter, operating profit was up 14% year-over-year to 1.94 billion (IFRS) or 2% (non-IFRS at constant currencies). Earnings per share increased 18% year-over-year to 1.26 (IFRS) and 9% to 1.52 (non-IFRS).
SAP S/4HANA S/4HANA adoption doubled year over year to more than 5,400 customers. In the fourth quarter approximately 1,300 additional customers signed up of which approximately 30% are net new SAP customers. Running a live business on a massively simplified architecture is becoming a commercial imperative for more and more customers in the new digital economy. Nike and Ameco Beijing selected S/4HANA in the fourth quarter.
SAP Cloud Platform
The SAP Cloud Platform allows customers to extend functionalities, build new fast-paced applications with rapid development tools, and integrate across applications and deployment models. The SAP Cloud Platform is instrumental in the Internet of Things (IoT) revolution by connecting a rapidly growing number of intelligent devices and machines with people and processes to achieve superior business outcomes. Burger King Brazil selected SAP Cloud Platform to analyze sales in real time to improve marketing strategies, manage store performance, and improve the customer experience through the Internet of Things, Gamification, and mobility.
1 New cloud bookings consist of order entry of a given period that is expected to be classified as cloud subscriptions and support revenue and results from purchases by new customers and from incremental purchases by existing customers. Consequently, orders to renew existing contracts are not included. The order amount must be committed. Consequently, due to their pay-per-use nature, business network transaction fees which do not include a committed minimum consumption are not reflected in the bookings metric (e.g. SAP Ariba and SAP Fieldglass transaction-based fees). Amounts included in the measures are generally annualized. 2 Cloud subscription and support backlog represents expected future cloud subscriptions & support revenue that is contracted but not yet invoiced and thus not recorded in deferred revenue.
SAP Quarterly Statement ? Preliminary Q4 and FY 2016 Results
2
Human Capital Management SAP continues to gain traction with its cloud-based Human Capital Management solutions. SAP delivers total workforce management solutions globally across permanent and contingent labor. SAP is infusing intelligent services like automated matching of resumes to open positions and machine learning to root out bias in the workplace while promoting diversity and inclusion. Forrester recently named SAP SuccessFactors as a long-time worldwide leader for Learning and Performance Management. The customer count for SAP SuccessFactors Employee Central, which is the core of our Human Capital Management offerings, exceeded 1,580 at the end of the fourth quarter. Companies like Mercedes-AMG and Valentino purchased SAP's workforce management solutions in the fourth quarter.
Customer Engagement and Commerce SAP seamlessly combines customer engagement and commerce (CEC) for an increasingly omni-channel world. Our hybris solution serves both B2C and B2B across a wide range of industries, including retail, telco, financial services, public sector, and manufacturing. 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. CEC saw strong double-digit year-over-year new cloud bookings and cloud subscriptions and support revenue growth in the fourth quarter. Brooks Brothers selected SAP's customer engagement and commerce solutions in the fourth quarter.
Business Networks SAP is helping customers of all sizes embrace an increasingly interdependent world. Each of SAP's business network solutions connects a large ecosystem of customers, suppliers and partners. These network solutions are highly synergistic to SAP's other offerings. Cloud subscriptions and support revenue in the SAP Business Network segment was up 19% at constant currencies in the full year 2016.
Over the past 12 months, approximately 2.5 million connected companies trade over $885 billion of commerce on the SAP Ariba network, growing its commerce volume close to 20% year-over-year. More than 45 million end users process travel and expenses effortlessly with Concur and customers managed over 3.1 million flexible workers in approximately 135 countries with SAP Fieldglass.
Regional Revenue Performance in the Fourth Quarter 2016 The Company had a strong performance in the EMEA region, with an increase in cloud and software revenue of 9% (IFRS) and 10% (non-IFRS at constant currencies). Cloud subscriptions and support revenue grew 35% (IFRS) and 37% (non-IFRS at constant currencies). In EMEA, SAP had double-digit software licenses revenue growth in Germany and the UK.
In the Americas region, the Company grew cloud and software revenue by 5% (IFRS) and 2% (non-IFRS at constant currencies) and cloud subscriptions and support revenue by 27% (IFRS) and 24% (non-IFRS at constant currencies). In Latin America, SAP had strong double-digit growth in software licenses revenue in Mexico.
In the APJ region cloud and software revenue was up 9% (IFRS) and 5% (non-IFRS at constant currencies), with cloud subscriptions and support revenue growing by 54% (IFRS) and 48% (non-IFRS at constant currencies). In APJ, SAP had double-digit software licenses revenue growth in China, India and Japan.
SAP Quarterly Statement ? Preliminary Q4 and FY 2016 Results
3
Financial Results at a Glance
million, unless otherwise stated
New Cloud Bookings3) Cloud subscriptions and support Software licenses and support
Cloud and software Total revenue Share of predictable revenue (in %) Operating profit Profit after tax Basic earnings per share () Number of employees (FTE)
Fourth Quarter 20161) IFRS
Q4 2016 Q4 2015
N/A 827 4,933 5,760 6,724
53 1,936 1,510
1.26 84,183
N/A 631 4,745 5,377 6,342
51 1,700 1,278
1.07 76,986
in % Q4 2016
N/A
483
31
827
4
4,934
7
5,761
6
6,724
2pp
53
14
2,371
18
1,818
18
1.52
9
N/A
Non-IFRS2) Q4 2015 in %
344
40
632
31
4,745
4
5,378
7
6,343
6
51
2pp
2,282
4
1,670
9
1.40
9
N/A
N/A
in % const.
curr. 37 29 3 6 5
2
N/A
Full Year 20161)
IFRS
Non-IFRS2)
million, unless otherwise stated
New Cloud Bookings3) Cloud subscriptions and support Software licenses and support
Cloud and software Total revenue Share of predictable revenue (in %) Operating profit Profit after tax Basic earnings per share () Number of employees (FTE)
Q1?Q4 2016
N/A 2,993 15,431 18,424 22,062
61 5,121 3,618 3.03 84,183
Q1?Q4 2015
N/A 2,286 14,928 17,214 20,793
60 4,252 3,056
2.56 76,986
in %
Q1?Q4 2016
Q1?Q4 2015
N/A
1,147
874
31 2,995 2,296
3 15,434 14,930
7 18,428 17,226
6 22,067 20,805
2pp
61
60
20
6,629
6,348
18 4,650
4,501
18
3.89
3.77
9
N/A
N/A
in %
31 30
3 7 6 2pp 4 3 3 N/A
in % const.
curr. 31 31 4 8 7
4
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 14 in this Quarterly Statement. 3) As this is an order entry metric, there is no IFRS equivalent.
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement ? Preliminary Q4 and FY 2016 Results
4
Business Outlook 2017
The Company is providing the following 2017 outlook:
? Based on the continued strong momentum in SAP's cloud business the Company expects full year 2017 non-IFRS cloud subscriptions and support revenue to be in a range of 3.8 billion - 4.0 billion at constant currencies (2016: 2.99 billion), in line with the previous 2017 ambition which was raised at the beginning of 2016. The upper end of this range represents a growth rate of 34% at constant currencies.
? The Company expects full year 2017 non-IFRS cloud & software revenue to increase by 6% - 8% at constant currencies (2016: 18.43 billion).
? The Company expects full year 2017 non-IFRS total revenue in a range of 23.2 billion to 23.6 billion at constant currencies (2016: 22.07 billion). This is above the previous 2017 ambition which was raised at the beginning of 2016.
? The Company expects full-year 2017 non-IFRS operating profit to be in a range of 6.8 billion - 7.0 billion at constant currencies (2016: 6.63 billion). This is above the previous 2017 ambition which was raised at the beginning of 2016.
While the Company's full-year 2017 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. The 2017 business outlook at constant currencies replaces the formerly communicated 2017 ambition which was at actual currencies.
Ambition 2020
Looking beyond 2017, SAP is also raising its 2020 ambition to reflect the Company's consistent fast growth in the cloud, solid software momentum and operating profit expansion as well as the exchange rate development. Assuming an exchange rate environment comparable to 2016 SAP strives to reach the following in 2020:
? 8.0 - 8.5 billion non-IFRS cloud subscriptions and support revenue (previously 7.5 - 8.0 billion) ? 28 - 29 billion non-IFRS total revenue (previously 26 - 28 billion) ? 8.5 - 9.0 billion non-IFRS operating profit (previously 8 - 9 billion)
SAP continues to expect the share of more predictable revenue (defined as the total of cloud subscriptions & support revenue and software support revenue) to reach 70% - 75% in 2020.
SAP will discuss the key drivers behind the long term growth aspirations at the Company's Capital Markets Day in New York on February 9th, 2017.
SAP Quarterly Statement ? Preliminary Q4 and FY 2016 Results
5
Financial and Non-Financial Key Facts
millions, unless otherwise stated
Revenues Cloud subscriptions and support (IFRS) Cloud subscriptions and support (non-IFRS) % change ? yoy % change constant currency ? yoy Software licenses (IFRS) Software licenses (non-IFRS) % change ? yoy % change constant currency ? yoy Software support (IFRS) Software support (non-IFRS) % change ? yoy % change constant currency ? yoy Software licenses and support (IFRS) Software licenses and support (non-IFRS) % change ? yoy % change constant currency ? yoy Cloud and software (IFRS) Cloud and software (non-IFRS) % change ? yoy % change constant currency ? yoy Total revenue (IFRS) Total revenue (non-IFRS) % change ? yoy % change constant currency ? yoy Share of predictable revenue (IFRS, in %) Share of predictable revenue (non-IFRS, in %)
Q1 2015
Q2 2015
Q3 2015
Q4 2015
TY 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
TY 2016
503 509 131
95 696 696
12 1
2,454 2,454
17 7 3,150 3,150 16 5 3,653 3,659 24 12 4,497 4,502 22 10 66 66
552 555 129
92 979 979
2 ?7 2,531 2,531 17
7 3,510 3,510
13 3 4,062 4,065 21 9 4,970 4,972 20 8 62 62
599 600 116
90 1,014 1,015
7 4 2,509 2,509 12 6 3,523 3,524 11 6 4,122 4,124 19 12 4,985 4,987 17 10 62 62
631 632
76 60 2,146 2,146 15 11 2,600 2,600 11
6 4,745 4,745
13 9 5,377 5,378 18 13 6,342 6,343 16 11 51 51
2,286 2,296
109 82 4,835 4,836 10
4 10,093 10,094
14 7 14,928 14,930 13 6 17,214 17,226 20 12 20,793 20,805 18 10 60 60
677 678
33 33 609 609 ?13 ?10 2,564 2,564
5 5 3,172 3,173 1 2 3,850 3,851 5 6 4,727 4,728 5 6 69 69
720 721 30 33 1,040 1,042
6 10 2,598 2,598 3 6 3,639 3,640 4
7 4,359 4,361
7 11 5,237 5,239 5 9 63 63
769 769
28 29 1,034 1,034
2 2 2,653 2,653 6 6 3,686 3,687 5 5 4,455 4,456 8 9 5,375 5,375 8 8 64 64
827 827
31 29 2,177 2,177
1 0 2,756 2,756 6 5 4,933 4,934 4 3 5,760 5,761 7 6 6,724 6,724 6 5 53 53
2,993 2,995
30 31 4,860 4,862
1 1 10,571 10,572 5 6 15,431 15,434 3 4 18,424 18,428 7 8 22,062 22,067 6 7 61 61
Profits Operating profit (IFRS) Operating profit (non-IFRS) % change % change constant currency Profit after tax (IFRS) Profit after tax (non-IFRS) % change
638 1,056
15 ?2 413 697
5
701 1,394
13 1
469 960
2
1,214 1,616
19 15 895 1,173 16
1,700 2,282
7 3 1,278 1,670 6
4,252 6,348
13 5 3,056 4,501 8
813 1,104
5 4 570 763 9
1,269 1,516
9 11 813 979 2
1,103 1,638
1 1 725 1,089 ?7
1,936 2,371
4 2 1,510 1,818 9
5,121 6,629
4 4 3,618 4,650 3
Margins Cloud subscriptions and support gross margin (IFRS, in %) Cloud subscriptions and support gross margin (nonIFRS, in %) Software and support gross margin (IFRS, in %) Software and support gross margin (non-IFRS, in %) Cloud and software gross margin (IFRS, in %) Cloud and software gross margin (non-IFRS, in %) Gross margin (IFRS, in %) Gross margin (non-IFRS, in %) Operating margin (IFRS, in %) Operating margin (non-IFRS, in %)
55.3
65.1
82.8 85.1 79.0 82.3 66.8 70.6 14.2 23.5
56.5
65.7
84.0 86.1 80.3 83.3 69.0 72.4 14.1 28.0
57.9
68.8
85.0 86.7 81.1 84.1 70.7 73.6 24.3 32.4
51.8
63.0
86.1 87.7 82.1 84.8 72.4 75.6 26.8 36.0
55.3
65.6
84.7 86.6 80.8 83.8 70.0 73.3 20.5 30.5
57.5
66.3
84.2 85.9 79.5 82.4 67.0 69.7 17.2 23.4
57.0
65.2
86.1 87.4 81.3 83.7 70.4 72.7 24.2 28.9
56.7
64.9
85.4 87.4 80.5 83.5 69.4 72.7 20.5 30.5
55.2
63.1
87.1 88.5 82.5 84.8 73.0 75.6 28.8 35.3
56.5
64.8
85.9 87.4 81.1 83.7 70.2 72.9 23.2 30.0
SAP Quarterly Statement ? Preliminary Q4 and FY 2016 Results
6
millions, unless otherwise stated
AT&S Segment1) ? Cloud subscriptions and support gross margin (in %) AT&S Segment1) ? Gross margin (in %) AT&S Segment1) ? Segment margin (in %) SAP BN Segment2) ? Cloud subscriptions and support gross margin (in %) SAP BN Segment2) ? Gross margin (in %) SAP BN Segment2) ? Segment margin (in %)
Key Profit Ratios Effective tax rate (IFRS, in %) Effective tax rate (non-IFRS, in %)
Q1 2015
50
71 34
75
68 18
Q2 2015
51
73 39
75
68 16
Q3 2015
56
74 43
77
71 24
Q4 2015
51
77 46
72
65 20
TY 2015
52
74 41
75
68 19
Q1 2016
54
70 34
75
67 16
Q2 2016
52
73 40
76
68 18
Q3 2016
51
74 40
77
68 20
Q4 2016
49
77 45
75
66 16
TY 2016
52
74 40
76
67 18
13.6 22.3
26.4 27.8
27.1 28.0
22.4 25.1
23.4 26.1
23.3 26.2
28.9 29.6
28.4 29.7
22.5 23.7
25.4 26.9
Earnings per share, basic (IFRS, in ) Earnings per share, basic (non-IFRS, in )
0.35
0.39
0.75
1.07
2.56
0.48
0.68
0.61
0.58
0.80
0.98
1.40
3.77
0.64
0.82
0.91
1.26
3.03
1.52
3.89
Order Entry
New Cloud Bookings
Deferred cloud subscriptions and support revenue (IFRS, quarter end)
Orders ? Number of on-premise software deals (in transactions)
Share of orders greater than 5 million based on total software order entry volume (in %)
Share of orders smaller than 1 million based on total software order entry volume (in %)
117
199
213
344
874
145
255
265
483
1,147
793
789
782
957
957
953 1,003 1,081
1,271
1,271
12,037 13,504 14,027 17,871 57,439 12,884 14,468 13,048 16,891 57,291
23
24
24
31
27
17
29
26
34
29
49
41
44
34
40
48
38
40
35
38
Liquidity and Cash Flow Net cash flows from operating activities Purchase of intangible assets and property, plant, and equipment (without acquisitions) Free cash flow % of total revenue (IFRS) % of profit after tax (IFRS) Group liquidity, gross Group debt Group liquidity, net Days' sales outstanding (DSO, in days)3)
2,366
410
466
?139
?137
?148
2,227
273
317
50
5
6
539
58
35
5,333 4,180 4,608
?10,524 ?10,432 ?10,428
?5,191 ?6,251 ?5,820
67
68
69
397
?212
184 3 14
3,559 ?9,174 ?5,615
71
3,638 2,482
439
707
?636
?168
?237
?261
3,001 14 98
3,559 ?9,174 ?5,615
71
2,313 49
406 5,853 ?9,080 ?3,227
72
202 4
25 4,347 ?8,593 ?4,245
73
446 8 61
4,388 ?8,134 ?3,746
74
1,000
?335
665 10 44
4,673 ?7,825 ?3,152
74
4,628
?1,001
3,627 16
100 4,673 ?7,825 ?3,152
74
Financial Position Cash and cash equivalents Goodwill Total assets Equity Equity ratio (total equity in % of total assets)
4,635 22,896 43,753 22,117
51
3,923 22,300 41,088 20,801
51
3,844 22,222 40,649 21,540
53
3,411 22,689 41,390 23,295
56
3,411 22,689 41,390 23,295
56
5,743 21,922 42,884 22,920
53
4,206 22,354 41,788 22,963
55
4,112 22,276 41,601 23,764
57
3,702 23,311 44,354 26,382
59
3,702 23,311 44,354 26,382
59
Non-Financials Headcount (quarter end)4) Employee retention (in %, rolling 12 months) Women in management (in %, quarter end) Greenhouse gas emissions (in kilotons)
74,551 93.3 22.3 145
74,497 92.6 22.9 125
75,643 91.9 23.2 110
76,986 91.8 23.6 75
76,986 91.8 23.6 455
78,230 92.0 23.6 120
79,962 92.6 24.1 95
82,426 93.4 24.3 85
84,183 93.7 24.5 80
84,183 93.7 24.5 380
1) Applications, Technology & Services Segment 2) SAP Business Network Segment 3) Days' sales outstanding measures the length of time it takes to collect receivables. SAP calculates DSO by dividing the average invoiced accounts receivables
balance of the last 12 months by the average monthly sales of the last 12 months. 4) In full-time equivalents
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement ? Preliminary Q4 and FY 2016 Results
7
Consolidated Income Statements of SAP Group (IFRS) ? Quarter
millions, unless otherwise stated Cloud subscriptions and support Software licenses Software support Software licenses and support Cloud and software Services
Total revenue
Q4 2016 827
2,177 2,756 4,933 5,760
963 6,724
Q4 2015 631
2,146 2,600 4,745 5,377
965 6,342
in % 31 1 6 4 7 0 6
Cost of cloud subscriptions and support Cost of software licenses and support Cost of cloud and software Cost of services Total cost of revenue Gross profit Research and development Sales and marketing General and administration Restructuring Other operating income/expense, net Total operating expenses Operating profit
?371 ?637 ?1,008 ?806 ?1,814 4,909 ?857 ?1,833 ?277
?7 1
?4,787 1,936
?304 ?660 ?964 ?787 ?1,751 4,591 ?796 ?1,755 ?281
?59 1
?4,642 1,700
22 ?3
5 2 4 7 8 4 ?1 ?88 >100 3 14
Other non-operating income/expense, net Finance income Finance costs
Financial income, net Profit before tax
?54 125 ?59 67 1,949
?28 52
?76 ?24 1,647
91 >100
?23 ................
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