- Cloud revenue up 24% and up 25% at constant currencies,
supported by 32% Cloud ERP Suite revenue growth at constant
currencies
- Current cloud backlog of €14.2 billion, up 27% and up 28% at
constant currencies
- IFRS cloud gross profit up 27%, non-IFRS cloud gross profit up
27% and up 28% at constant currencies
- IFRS operating loss of –€0.8 billion due to a €2.2 billion
restructuring provision
- Non-IFRS operating profit up 16% and up 19% at constant
currencies even including higher share-based compensation resulting
from strong share price increase
- Outlook 2024 reaffirmed
WALLDORF, Germany, April 22,
2024 /PRNewswire/ -- SAP SE (NYSE: SAP) announced
today its financial results for the first quarter ended
March 31, 2024.
Christian Klein,
CEO:
We're off to a great start in 2024 and we're confident
we'll achieve our goals for the year. Looking ahead, we have
powerful growth drivers in place – Business AI, cross-selling
across our cloud portfolio, and winning new customers particularly
in the midmarket. The strength of our current cloud backlog
reaching a record growth rate is a testament to that momentum. Our
transformation program is also well on track and will help us to
capture this growth and increase efficiency.
Dominik Asam, CFO:
In
the first quarter we successfully kicked off the implementation of
our transformation program thereby allowing us to focus our
investments on the Business AI opportunity while decoupling expense
from revenue growth. We are also very pleased by the unabated
growth momentum of the Cloud ERP Suite, reflecting the market's
secular shift towards integrated cloud solutions.
All figures in this statement are based on SAP group results
from continuing operations unless otherwise noted.
Financial Performance
Group results at a glance – First quarter 2024
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q1 2024
|
Q1 2023
|
∆ in %
|
|
Q1 2024
|
Q1 2023
|
∆ in %
|
∆ in %
const. curr.
|
|
SaaS/PaaS
|
3,764
|
2,980
|
26
|
|
3,764
|
2,980
|
26
|
28
|
|
Thereof Cloud ERP
Suite2
|
3,167
|
2,422
|
31
|
|
3,167
|
2,422
|
31
|
32
|
|
Thereof Extension
Suite3
|
597
|
558
|
7
|
|
597
|
558
|
7
|
8
|
|
IaaS4
|
164
|
197
|
–17
|
|
164
|
197
|
–17
|
–15
|
|
Cloud
revenue
|
3,928
|
3,178
|
24
|
|
3,928
|
3,178
|
24
|
25
|
|
Cloud and software
revenue
|
6,960
|
6,358
|
9
|
|
6,960
|
6,358
|
9
|
11
|
|
Total
revenue
|
8,041
|
7,441
|
8
|
|
8,041
|
7,441
|
8
|
9
|
|
Share of more
predictable revenue (in %)
|
84
|
82
|
2pp
|
|
84
|
82
|
2pp
|
|
|
Cloud gross
profit
|
2,837
|
2,239
|
27
|
|
2,849
|
2,249
|
27
|
28
|
|
Gross profit
|
5,762
|
5,284
|
9
|
|
5,774
|
5,305
|
9
|
10
|
|
Operating profit
(loss)
|
–787
|
803
|
N/A
|
|
1,533
|
1,321
|
16
|
19
|
|
Profit (loss) after tax
from continuing operations
|
–824
|
403
|
N/A
|
|
944
|
868
|
9
|
|
|
Profit (loss) after
tax5
|
–824
|
509
|
N/A
|
|
944
|
1,012
|
–7
|
|
|
Earnings per share -
Basic (in €) from continuing operations
|
–0.71
|
0.35
|
N/A
|
|
0.81
|
0.75
|
8
|
|
|
Earnings per share -
Basic (in €)5
|
–0.71
|
0.41
|
N/A
|
|
0.81
|
0.83
|
–3
|
|
|
Net cash flows from
operating activities from continuing operations
|
2,757
|
2,311
|
19
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
2,492
|
1,955
|
28
|
|
|
1
|
For a breakdown of the
individual adjustments see table "Non-IFRS Operating Expense
Adjustments by Functional Areas" in this Quarterly
Statement.
|
|
2
|
Cloud ERP Suite
references the portfolio of strategic Software-as-a-Service (SaaS)
and Platform-as-a-Service (PaaS) solutions that are tightly
integrated with our core ERP solutions and are included in key
commercial packages, such as RISE with SAP. The following offerings
contribute to Cloud ERP Suite revenue: SAP S/4HANA Cloud, SAP
Business Technology Platform, and core solutions for HR and
payroll, spend management, commerce, customer data solutions,
business process transformation, and working capital management.
For additional information and historical data on Cloud ERP Suite,
see SAP's Reporting Framework.
|
|
3
|
Extension Suite
references SAP's remaining SaaS and PaaS solutions that supplement
and extend the functional coverage of the Cloud ERP
Suite.
|
|
4
|
Infrastructure as a
service (IaaS): The major portion of IaaS comes from SAP HANA
Enterprise Cloud.
|
|
5
|
From continuing and
discontinued operations.
|
Financial Highlights1
First Quarter 2024
In the first quarter, SAP's cloud momentum further accelerated
with a sequential growth rate increase in current cloud backlog of
1 percentage point at constant currencies. Current cloud backlog
grew by 27% to €14.18 billion and was up 28% at constant
currencies, the fastest growth on record. Cloud revenue was up 24%
to €3.93 billion and up 25% at constant currencies, mainly driven
by Cloud ERP Suite revenue, which was up 31% and up 32% at constant
currencies.
Software licenses revenue decreased by 26% to €203 million and
was down 25% at constant currencies. Cloud and software revenue was
up 9% to €6.96 billion and up 11% at constant currencies. Services
revenue was flat at €1.08 billion and up 1% at constant currencies.
Total revenue was up 8% to €8.04 billion and up 9% at constant
currencies.
The share of more predictable revenue increased by 2 percentage
points to 84% in the first quarter.
Cloud gross profit was up 27% (IFRS) to €2.84 billion, up 27% to
€2.85 billion (non-IFRS), and up 28% (non-IFRS at constant
currencies).
IFRS operating profit in the first quarter was impacted by a
€2.2 billion restructuring provision associated with the 2024
transformation program. This resulted in an IFRS operating loss of
–€787 million. Non-IFRS operating profit was up 16% to €1.53
billion and was up 19% at constant currencies. Non-IFRS operating
profit growth was negatively affected by a €0.1 billion increase in
share-based compensation, predominately driven by the strong share
price increase over the course of the first quarter.
IFRS earnings per share (basic) were –€0.71 and non-IFRS
earnings per share (basic) increased 8% to €0.81. IFRS effective
tax rate was 16.0% (Q1/2023: 40.5%) and non-IFRS effective tax rate
32.4% (Q1/2023: 29.1%). Both year-over-year changes mainly resulted
from a temporary inability to offset withholding taxes in
Germany due to tax losses in 2024
resulting from restructuring. This adverse impact was partially
compensated by changes in non-deductible expenses.
Free cash flow in the first quarter increased by 28% to €2.49
billion. While increased payouts mainly resulted from
compliance-related matters and interest, the positive development
was primarily attributable to increased profitability, improvements
in working capital and lower payments for capex and leasing.
Share Repurchase Program
In May 2023, SAP announced a share
repurchase program with an aggregate volume of up to €5 billion and
a term until December 31, 2025. As of
March 31, 2024, SAP had repurchased
10,024,841 shares at an average price of €137.62 resulting in
payouts of approximately €1.38 billion under the program.
2024 Transformation Program: Focus on scalability of
operations and key strategic growth areas
In 2024, SAP is further increasing its focus on key strategic
growth areas, in particular business AI. It is transforming its
operational setup to capture organizational synergies and AI-driven
efficiencies, and to prepare the company for highly scalable future
revenue growth.
To this end, as announced in January, SAP is executing a
company-wide restructuring program which is anticipated to conclude
in early 2025. The restructuring is intended to ensure that SAP's
skillset and resources continue to meet future business needs and
is expected to affect approximately 8,000 positions, a majority of
which will be covered by voluntary leave programs and internal
re-skilling measures. Reflecting re-investments into strategic
growth areas, SAP expects to exit 2024 at a headcount similar to
year-end 2023.
In the first quarter, a restructuring provision of €2.2 billion
was recorded, which is expected to cover the vast majority of the
program's total restructuring expenses. The provision includes
incremental expenses driven by the impact of the first quarter's
share price increase on share-based compensation of leavers, as
well as the positive reception of the voluntary early retirement
program amongst eligible employees in the US.
Since acceptance rates and precise conditions of voluntary
measures in some geographies, particularly Germany, are currently still unknown, SAP
expects to provide an update on restructuring expenses and cash
outflows once program implementation has further progressed.
Business Highlights
In the first quarter, customers around the globe continued to
choose "RISE with SAP" to drive their end-to-end business
transformations. These customers included: Brussels Regional Public
Service, Clearway Energy Group, Curtiss-Wright, Fresenius, Ineos
Europe, Lindt & Sprüngli, LyondellBasell, MAHLE International,
Public Power Corporation, SKF Group, Sumitomo Heavy Industries,
Sutherland, Velliv, ZF Friedrichshafen, and Zoetis.
Foodstuffs South Island, Havells India, PureTech Scientific,
Randoncorp, and Stuttgart Netze, went live on SAP S/4HANA Cloud in
the first quarter.
Aleron Shared Resources, American Printing House for the Blind,
Centrale del Latte di Roma,
Churchill Downs Incorporated, Climeworks, Ironwood Pharmaceuticals,
MaxiTRANS, SFC Energy, and Unico chose "GROW with SAP", an offering
helping midsize customers adopt cloud ERP with speed,
predictability, and continuous innovation.
Key customer wins across SAP's solution portfolio included:
Cintas, FrieslandCampina, LEONI, Maersk, Rabobank, Schaeffler
Group, Sky, and Vaillant Group.
ALDO Group, BARMER, Coca-Cola Europacific Partners, Dell, and
Korea Chamber of Commerce and Industry went live on SAP
solutions.
In the first quarter, SAP's cloud revenue performance was
particularly strong in APJ and EMEA and robust in the Americas
region. Brazil, Canada, Germany, Italy, the United
Arab Emirates, India, and
South Korea had outstanding
performances in cloud revenue growth while the U.S., Japan and Spain were particularly strong.
SAP proposed a dividend of €2.20 per share for fiscal year 2023
representing a year-over-year increase of 7% compared to the
regular dividend paid for fiscal year 2022. The dividend is subject
to shareholder approval at the upcoming AGM scheduled for
May 15, 2024.
On February 11, SAP announced that
the Supervisory Board of SAP SE nominated Mr. Pekka Ala-Pietilä to
stand for election as a new member of the Supervisory Board and
proposes Mr. Ala-Pietilä as the designated successor to Chairman
Prof. Dr. Hasso Plattner.
On February 29, SAP announced that
it filed the SAP Annual Report on Form 20-F for the year ended
December 31, 2023, with the U.S.
Securities and Exchange Commission (SEC), and that the SAP
Integrated Report 2023 is available and accessible online at
www.sapintegratedreport.com.
On March 6, SAP announced
transformative data innovations that will help customers harness
the full power of their data to drive deeper insights, faster
growth, and more efficiency in the era of AI. New capabilities in
the SAP Datasphere solution, including new generative-AI features,
transform enterprise planning through simplified data landscapes
and more-intuitive data interaction.
On March 15, Taulia and Visa
announced a new partnership to make embedded finance accessible to
businesses worldwide.
On March 18, SAP and NVIDIA
announced a partnership expansion focused on accelerating
enterprise customers' ability to harness the transformative power
of data and generative AI across SAP's portfolio of cloud solutions
and applications.
On March 20, SAP was informed that
Moody's upgraded its long-term issuer rating to A1 from A2, its
senior unsecured rating to A1 from A2 and its senior unsecured MTN
program rating to (P)A1 from (P)A2. Concurrently, Moody's affirmed
its P-1 short term issuer ratings. The outlook changed to stable
from positive.
Segment Results at a Glance
SAP's reportable segment showed the following performance:
|
Applications,
Technology & Services1
|
Q1 2024
|
|
€ million, unless
otherwise stated
(Non-IFRS)
|
Actual
Currency
|
∆ in %
|
∆ in %
Constant
Currency
|
|
Cloud
revenue
|
3,863
|
24
|
25
|
|
Cloud gross
profit
|
2,804
|
27
|
29
|
|
Segment
revenue
|
7,971
|
8
|
9
|
|
Segment profit
(loss)
|
2,198
|
13
|
15
|
|
Segment margin (in
%)
|
27.6
|
1.2pp
|
1.4pp
|
|
1 Segment
information for comparative prior periods were restated to conform
with the new segment composition.
|
In the first quarter, segment revenue in AT&S was up 8% to
€7.97 billion and up 9% at constant currencies, primarily due to
strong cloud revenue growth, which was supported by Cloud ERP
Suite. Operating Expenses of the segment increased by 6% and by 7%
at constant currencies, resulting in a segment margin of 27.6% and
27.8% at constant currencies. This implies an increase of 1.2
percentage points and 1.4 percentage points at constant currencies
compared to the first quarter of the prior year.
Financial Outlook 2024
SAP's financial outlook 2024 is based on SAP's updated non-IFRS
definition of profit measures which, beginning in 2024, include
share-based compensation expenses and exclude gains and losses from
equity securities, net. For more details, please refer to the
Reporting Framework section on our Investor Relations website:
https://www.sap.com/investors/en/reports/reporting-framework.html.
For 2024, SAP continues to expect:
- €17.0 – 17.3 billion cloud revenue at constant currencies
(2023: €13.66 billion), up 24% to 27% at constant currencies.
- €29.0 – 29.5 billion cloud and software revenue at constant
currencies (2023: €26.92 billion), up 8% to 10% at constant
currencies.
- €7.6 – 7.9 billion non-IFRS operating profit at constant
currencies (2023: €6.51 billion based on updated non-IFRS operating
profit definition), up 17% to 21% at constant currencies.
- Free cash flow of approximately €3.5 billion (2023: €5.09
billion).
- An effective tax rate (non-IFRS) of approximately 32% (2023:
30.3% based on updated tax rate definition
(non-IFRS))2.
While SAP's 2024 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 March
2024 Rates Apply for 2024
|
In percentage
points
|
Q2 2024
|
FY 2024
|
|
Cloud revenue
growth
|
–1.5pp to
+0.5pp
|
–1.5pp to
+0.5pp
|
|
Cloud and software
revenue growth
|
–1.5pp to
+0.5pp
|
–1.5pp to
+0.5pp
|
|
Operating profit growth
(non-IFRS)
|
–2pp to 0pp
|
–2pp to 0pp
|
Non-Financial Outlook 2024
In 2024, SAP continues to expect:
- A customer net promoter score of 9 to 13.
- The employee engagement index in the range of 76% to 80%.
- To steadily decrease carbon emissions across the relevant value
chain, in line with our target of achieving Net Zero carbon
emissions by 2030.
- To steadily increase the number of women in executive roles in
line with our end of year 2027 target to achieve 25%.
Additional Information
This press release and all information therein is preliminary
and unaudited. Due to rounding, numbers may not add up precisely.
The full Q1 2024 Quarterly Statement can be downloaded from:
https://www.sap.com/investors/sap-2024-q1-statement.
Financial Analyst and Investor Conference
SAP will hold a financial analyst event on Wednesday, June 5th, in conjunction
with its annual SAP Sapphire conference.
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 Monday, April 22nd 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 first quarter
results can be found at https://www.sap.com/investor
About SAP
As a global leader in enterprise applications and business AI,
SAP (NYSE: SAP) stands at the nexus of business and technology. For
over 50 years, organizations have trusted SAP to bring out their
best by uniting business-critical operations spanning finance,
procurement, HR, supply chain, and customer experience. 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 2023 Annual
Report on Form 20-F.
© 2024 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 Q1 2024 results were also impacted by other
effects. For details, please refer to the disclosures on page 20 of
this document.
2 The effective tax rate (non-IFRS) is a non-IFRS
financial measure and is presented for supplemental informational
purposes only. We do not provide an outlook for the effective tax
rate (IFRS) due to the uncertainty and potential variability of
gains and losses associated with equity securities, which are
reconciling items between the two effective tax rates (non-IFRS and
IFRS). These items cannot be provided without unreasonable efforts
but could have a significant impact on our future effective tax
rate (IFRS).
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