Quarterly Statement Q2 2019 | 
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Double-Digit Growth Across the Board:
· Cloud Revenue Growth Soars
· Double-Digit Cloud & Software Revenue Growth
· Double-Digit Total Revenue Growth
Cloud Gross Margin Up Sharply
SAP Reiterates Outlook
· Cloud Revenue Up 40%
· Cloud Gross Margin Up 4 Percentage Points
· Cloud & Software Revenue and Total Revenue Up 11%
· Qualtrics Experience Management Solutions Drive Fast Growth in Customer Experience and Employee Experience
· SAP S/4HANA Momentum Continues, Growing to More Than 11,500 Customers
· Operating Profit (IFRS) Down 21% Due to Ongoing Restructuring and Significant Share Price Increase
· Operating Profit (Non-IFRS) Up 11% Benefitting from Operational Discipline and Increased Cloud Efficiency
„ SAP delivered double digit growth in total revenue, cloud revenue and non-IFRS operating income. Qualtrics is growing fast as the global standard in the Experience Management category. As shown by our rising cloud gross margins, we are progressing nicely on our ambition to be the Best-Run SAP. With XM driving the CEO digital transformation agenda, we resolutely reaffirm our full year guidance. Bill McDermott, CEO | | | „ I am pleased that our operational excellence measures are already showing effect. Our non-IFRS operating profit and margin performance is remarkable considering the margin headwinds from our latest acquisition and the recent short-term trade-related uncertainty in Asia that impacted our software revenue performance in the region. With continued strong customer demand and our tight focus on profitability we remain as confident in our 2019 outlook as we are in our mid-term ambition. Luka Mucic, CFO |
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Walldorf, Germany – July 18th, 2019
SAP SE (NYSE: SAP) today announced its financial results for the second quarter ended June 30, 2019.
Business Performance
Financial Highlights Second Quarter 20191
In the second quarter, new cloud bookings were up 17% to €494 million (15% at constant currencies). New cloud bookings excluding Infrastructure-as-a-Service (IaaS) were up 27% as SAP focuses on higher-margin IaaS opportunities, in line with its strategy of closely partnering with the hyperscale IaaS providers. Cloud revenue grew 40% year over year to €1.69 billion (IFRS), up 40% (non-IFRS) and 35% (non-IFRS at constant currencies). Software licenses revenue was down 5% year over year to €948 million (IFRS), down 5% (non-IFRS) and 6% (non-IFRS at constant currencies), affected by recent macro uncertainties, particularly in Asia. New cloud and software order entry was up 3% (1% at constant currencies) year over year in the second quarter. New cloud and software order entry excluding IaaS was up 9%. Cloud and software revenue grew 11% year over year to €5.49 billion (IFRS), up 11% (non-IFRS) and 8% (non-IFRS at constant currencies). Total revenue grew 11% year over year to €6.63 billion (IFRS), up 11% (non-IFRS) and 8% (non-IFRS at constant currencies).
The share of more predictable revenue grew by three percentage points year-over-year to 69% in the second quarter.
Operating profit in the second quarter benefitted from disciplined hiring as well as continued efficiency gains in SAP’s cloud business. As expected IFRS operating profit in the second quarter was impacted by higher acquisition-related charges. In addition, IFRS operating profit was impacted by higher share-based compensation (due to the Qualtrics acquisition and the strong SAP share price increase over the second quarter) as well as additional restructuring charges, mainly due to an increase in the expected participation rate in the voluntary redundancy and early retirement programs in Germany. Operating profit declined 21% year over year to €0.83 billion (IFRS), up 11% (non-IFRS) and up 8% (non-IFRS at constant currencies). Operating margin (IFRS) declined 4.9 percentage points year over year to 12.5%. Operating margin (non-IFRS and non-IFRS at constant currencies) remained stable at 27.3% despite acquisition headwind. Earnings per share was down 21% to €0.48 (IFRS) and up 11% to €1.09 (non-IFRS).
Operating cash flow for the first six months was €2.68 billion, down 10% year-over-year. The decrease in operating cash flow was primarily due to higher payouts related to share-based compensation (€234 million), restructuring payouts (€183 million) and higher tax cash outflows (€412 million) compared to the first six months of 2018. In addition, operating cash flow experienced a year over year benefit of roughly €185 million from the application of IFRS 16. Free cash flow2 decreased 10% year-over-year to €1.96 billion. At the end of the second quarter, net liquidity was -€8.55 billion.
Segment Performance Second Quarter 2019
SAP’s three reportable segments “Applications, Technology & Services”, “Intelligent Spend Group 3” and “Customer and Experience Management” showed the following performance:
Applications, Technology & Services (AT&S)
In the second quarter, segment revenue in AT&S was up 6% to €5.38 billion year-over-year (up 4% at constant currencies). Solutions which contributed to this growth are listed below.
SAP S/4HANA
SAP S/4HANA is at the core of the Intelligent Enterprise. It drives digital transformation and delivers instant business value. SAP offers customers a choice of deployment options including cloud, on-premise and hybrid so they can choose any scenario or combination that is right for them. Built on SAP’s industry-leading advanced in-memory computing platform, SAP S/4HANA is the market-leading intelligent ERP that provides unparalleled business agility, empowering companies across all industries to reinvent their business models for the digital economy and navigate dynamic marketplaces.
In Q2, SAP was ranked No. 1 by software revenue for 2018 in Gartner’s May “Market Share Analysis: ERP Software, Worldwide, 2018” report. SAP was also positioned as a Visionary in Gartner’s May Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large and Global Enterprises4.
1 Q2 2019 results were also impacted by changes in accounting policies, business combinations and other effects. For details, please refer to the disclosures on page 32 of this Quarterly Statement.
2 IFRS 16 also affects SAP’s cash flow statement: operating cash flow increased and cash flow from financing activities decreased by €185 million. The Company has modified its free cash flow metric by subtracting this impact. Therefore, free cash flow is not affected by this change. For details, please refer to the disclosures on page 32 of this Quarterly Statement.
3 As of the second quarter in 2019, we renamed the former Business Network segment to Intelligent Spend Group segment without any changes in the composition of this segment. For a more detailed description of SAP’s segment reporting, see Note (C.1) “Results of Segments” of our 2019 Consolidated Half-Year Financial Statements.
4 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, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose
2 | SAP Quarterly Statement Q2 2019 |
Adding 600 customers in the quarter, S/4HANA adoption grew to more than 11,500 customers, up 29% year over year. In the second quarter approximately 50% of the additional S/4HANA customers were net new.
S/4HANA continues to be selected by world-class global companies, including Wanhua Chemical Group and the Texas Department of Transportation. SAP and Intel are partnering to simplify and accelerate adoption of S/4HANA by creating a new Center of Excellence showcasing multiple proof of concepts for shared customers migrating to S/4HANA. A growing number of companies including Mercedes-Benz EQ Formula-E Team have chosen S/4HANA in the Cloud. Hitachi, Colgate-Palmolive, and Deloitte and Touche Southern Africa have gone live on S/4HANA Cloud.
Human Capital Management Solutions (HCM)
The unique combination of SAP SuccessFactors and Qualtrics Employee Experience Management is elevating HCM solutions to the next level and has driven significant HCM demand in the quarter. IDC recently described Employee Experience Management as the next frontier. Employees are the frontline face to the customer. Delivering great customer experiences requires focusing on employees and delivering great employee experiences. Organizations that deliver exceptional employee experiences achieve better business results and outperform the competition.
For example, the combination of SAP SuccessFactors and SAP Qualtrics solutions allows Merck KGaA (Germany) to continuously capture employee feedback and, based on this insight, act with precision and in real time to drive ongoing improvements for a better employee experience.
SAP SuccessFactors Employee Central, which is the flagship of SAP’s HCM offering, added more than 180 customers in the quarter and has now more than 3,350 customers globally. Competitive wins included Keolis, Claas, Burger King Brazil, and CONA Services.
In Q2, SAP SuccessFactors was named a Leader in the IDC MarketScape: Worldwide and U.S. Modern Talent Acquisition Suites – for Both “Large” and “Medium-Sized Enterprises” 2019 Vendor Assessments (April 2019).
SAP Leonardo
SAP Leonardo brings together cutting-edge technologies – AI, Machine Learning, IoT, Big Data, Advanced Analytics and Blockchain – with deep process and industry expertise, delivering completely new ways of working and powering the Intelligent Enterprise.
Companies like Patentes Talgo are among many others that adopted SAP Leonardo solutions in the second quarter, while Döhler Group SE has gone live.
Digital Platform & Analytics
Digital Platform includes SAP Cloud Platform and SAP Data Management Solutions. With SAP HANA’s data rich and real-time in-memory architecture as the foundation, this represents a massive opportunity to drive full use of HANA.
The SAP Cloud Platform facilitates new app development, extensions and seamless integration. It orchestrates “hybrid” customer landscapes across on premise and cloud.
SAP Data Management Solutions bring together multi-source data including unstructured to provide a 360-degree view of all company data and manage compliance and governance policies from one central location.
In Q2, SAP launched HANA Cloud Services as a gateway to this single source of truth, making the data available to people, algorithms and data-driven applications in the cloud. It provides low total cost of ownership (TCO), elasticity, serverless principles, high availability, resilience and autonomous capabilities.
The State of Illinois and Grupo Energia Bogota chose SAP’s Digital Platform solutions in the second quarter.
SAP Analytics Cloud delivers a unified, intuitive platform for business intelligence and collaborative planning, enhanced with the power of predictive analytics and machine learning technology to help users make decisions. In the second quarter, Uniper and Follett Corporation selected SAP Analytics Cloud.
Intelligent Spend Group
In the second quarter, segment revenue in the Intelligent Spend Group was up 22% to €786 million year-over-year (up 17% at constant currencies).
With the Intelligent Spend Group, SAP provides collaborative commerce capabilities (SAP Ariba), effortless travel and expense processing (SAP Concur) and flexible workforce management (SAP Fieldglass). The Intelligent Spend Group portfolio represents the largest commerce platform in the world with more than $3.3 trillion in global commerce annually transacted in more than 180 countries.
Kawasaki Heavy Industry and Uniper chose SAP’s Intelligent Spend Group solutions in the second quarter.
SAP Quarterly Statement Q2 2019 | 3 |
Customer and Experience Management (CXM)
In the second quarter, segment revenue in Customer and Experience Management was up 81% to €365 million year-over-year (74% at constant currencies). Solutions which contributed to this growth in the second quarter are listed below5.
SAP C/4HANA
SAP’s C/4HANA suite enables companies to manage and deliver personalized customer experiences across every touchpoint and across channels based on a complete view of the customer. C/4HANA combines leading solutions for marketing, sales, commerce, service and customer data. As part of the Intelligent Enterprise, C/4HANA integrates with S/4HANA to connects demand signals to fulfillment in one end-to-end process.
SAP was recently recognized by Gartner as a leader in the June 2019 Magic Quadrant for Sales Force Automation.
Aritzia, Hamburg Commercial Bank, and NH Hotel Group all chose SAP C/4HANA over competitors in Q2.
In Q2, SAP also introduced new editions of its SAP C/4HANA solutions leveraging Qualtrics CustomerXM. This enables organizations to combine customer feedback and operational data to listen, understand and act in the moment to improve the customer experience.
Experience Management Solutions (Qualtrics)
With Qualtrics, SAP combines market leadership in Experience Management (XM) with end-to-end operational power in over 25 industries to help organizations manage and improve the four core experiences of business: customer, employee, product, and brand.
The Qualtrics XM Platform is trusted by over 10,500 customers to listen, understand, and take action on experience data (X-data) by embedding X-data directly into the operational data (O-data) systems of the enterprise.
In Q2, Chalhoub Group and the United States Department of State selected Qualtrics to intelligently combine with SAP solutions to move beyond systems of record to new systems of action and achieve breakthrough results.
Segment Results at a Glance6
Segment Performance Second Quarter 2019 |
| Applications, Technology & Services | Intelligent Spend Group | Customer and Experience
Management |
€ million, unless otherwise stated
(Non-IFRS) | Actual
Currency | D in % | D in %
const. curr. | Actual
Currency | D in % | D in %
const. curr. | Actual
Currency | D in % | D in %
const. curr. |
Cloud revenue | 771 | 38 | 34 | 667 | 26 | 20 | 277 | >100 | >100 |
Segment revenue | 5,382 | 6 | 4 | 786 | 22 | 17 | 365 | 81 | 74 |
Segment profit (loss) | 2,279 | 9 | 6 | 154 | 19 | 12 | –3 | <-100 | <-100 |
Cloud gross margin (in %) | 55.9 | 7.0pp | 7.0pp | 78.2 | 0.8pp | 0.7pp | 76.6 | 7.9pp | 7.5pp |
Segment margin (in %) | 42.3 | 1.1pp | 1.0pp | 19.6 | –0.6pp | –0.9pp | –0.8 | –2.4pp | –2.6pp |
Regional Revenue Performance
SAP had a solid performance in the EMEA region with cloud and software revenue increasing 9% (IFRS) and 8% (non-IFRS at constant currencies). Cloud revenue increased 46% (IFRS) and 44% (non-IFRS at constant currencies) with Germany and Spain being highlights. In addition, Germany had a solid quarter in software license revenue. France and Italy had a strong quarter in software license revenue.
The Company had a strong performance in the Americas region. Cloud and software revenue increased 15% (IFRS) and 10% (non-IFRS at constant currencies). Cloud revenue increased 36% (IFRS) and 30% (non-IFRS at constant currencies) with the United States, Canada and Brazil being highlights. In addition, the United States had a solid quarter in software license revenue and Canada had a strong quarter.
In the APJ region, SAP had a solid performance despite trade related macro headwinds. Cloud and software revenue was up 8% (IFRS) and 6% (non-IFRS at constant currencies). Cloud revenue increased 41% (IFRS) and 37% (non-IFRS at constant currencies) with Japan being a highlight. For software license revenue, Australia and India had a strong quarter.
5 Q2 2019 results were impacted by business combinations. For details, please refer to the disclosures on page 32 of this Quarterly Statement
6 For details on the performance of our segments please refer to pages 21-28.
4 | SAP Quarterly Statement Q2 2019 |
Financial Results at a Glance
Second Quarter 2019 |
| IFRS | Non-IFRS1) |
€ million, unless otherwise stated | Q2 2019 | Q2 2018 | D in % | Q2 2019 | Q2 2018 | D in % | D in %
const.
curr. |
New Cloud Bookings2) | NA | NA | NA | 494 | 421 | 17 | 15 |
Cloud revenue | 1,692 | 1,213 | 40 | 1,717 | 1,227 | 40 | 35 |
Software licenses and support revenue | 3,802 | 3,731 | 2 | 3,802 | 3,731 | 2 | 0 |
Cloud and software revenue | 5,495 | 4,944 | 11 | 5,520 | 4,958 | 11 | 8 |
Total revenue | 6,631 | 5,999 | 11 | 6,656 | 6,014 | 11 | 8 |
Share of more predictable revenue (in %) | 69 | 66 | 3pp | 69 | 66 | 3pp | |
Operating profit (loss) | 827 | 1,044 | –21 | 1,816 | 1,640 | 11 | 8 |
Profit (loss) after tax | 582 | 718 | –19 | 1,317 | 1,171 | 12 | |
Basic earnings per share (in €) | 0.48 | 0.60 | –21 | 1.09 | 0.98 | 11 | |
Number of employees (FTE, June 30) | 98,332 | 93,846 | 5 | NA | NA | NA | NA |
Six months ended June 2019 |
| IFRS | Non-IFRS1) |
€ million, unless otherwise stated | Q1–Q2
2019 | Q1–Q2
2018 | D in % | Q1–Q2
2019 | Q1–Q2
2018 | D in % | D in %
const.
curr. |
New Cloud Bookings2) | NA | NA | NA | 818 | 667 | 23 | 19 |
Cloud revenue | 3,247 | 2,283 | 42 | 3,299 | 2,299 | 43 | 37 |
Software licenses and support revenue | 7,291 | 7,012 | 4 | 7,291 | 7,012 | 4 | 1 |
Cloud and software revenue | 10,538 | 9,295 | 13 | 10,589 | 9,311 | 14 | 10 |
Total revenue | 12,722 | 11,260 | 13 | 12,773 | 11,276 | 13 | 10 |
Share of more predictable revenue (in %) | 70 | 68 | 2pp | 70 | 68 | 2pp | |
Operating profit (loss) | 691 | 2,069 | –67 | 3,283 | 2,876 | 14 | 10 |
Profit (loss) after tax | 475 | 1,426 | –67 | 2,397 | 2,039 | 18 | |
Basic earnings per share (in €) | 0.38 | 1.19 | –68 | 1.99 | 1.71 | 17 | |
Number of employees (FTE, June 30) | 98,332 | 93,846 | 5 | NA | NA | NA | NA |
1) For a breakdown of the individual adjustments see table “Non-IFRS Adjustments by Functional Areas” in this Quarterly Statement.
2) As this is an order entry metric, there is no IFRS equivalent.
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 5 |
Business Outlook 2019
The company reiterates its outlook for the full year 2019.
SAP continues to expect:
· Non-IFRS cloud revenue to be in a range of €6.7 – €7.0 billion at constant currencies (2018: €5.03 billion), up 33% – 39% at constant currencies.
· Non-IFRS cloud and software revenue to be in a range of €22.4 – €22.7 billion at constant currencies (2018: €20.66 billion), up 8.5% – 10% at constant currencies.
· Non-IFRS operating profit to be in a range of €7.85 – €8.05 billion at constant currencies (2018: €7.16 billion), up 9.5% – 12.5% at constant currencies (previously: €7.7 – €8.0 billion, up 7.5% – 11.5% at constant currencies)
In addition, SAP expects total revenues to increase strongly, at a rate lower than operating profit.
The 2019 numbers include Qualtrics’ revenues and profits only from the acquisition date of January 23rd. The comparative numbers for full year 2018 do not include Qualtrics revenues and profits and include Callidus revenue and profits only from the April 5th, 2018 acquisition date.
While SAP’s full-year 2019 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 Q3 and FY 2019 expected currency impacts.
Expected Currency Impact Based on June 2019 Level for the Rest of the Year
In percentage points | | Q3 | | FY |
Cloud revenue | | +2pp to +4pp | | +3pp to +5pp |
Cloud and software revenue | | +1pp to +3pp | | +1pp to +3pp |
Operating profit | | +2pp to +4pp | | +1pp to +3pp |
Ambition 2020 and 2023
Looking beyond 2019, SAP continues to expect the following:
Ambition 2020
SAP continues to expect:
· €8.6 – €9.1 billion non-IFRS cloud revenue
· €28.6 – €29.2 billion non-IFRS total revenue
· The share of more predictable revenue (defined as the total of cloud revenue and software support revenue) in a range of 70% – 75%
· €8.8 – €9.1 billion non-IFRS operating profit
Ambition 2023
Over the period from 2018 through 2023, SAP continues to expect to:
· More than triple non-IFRS cloud revenue (2018: €5.03 billion)
· Grow to more than €35 billion in non-IFRS total revenue (2018: €24.74 billion)
· Approach a share of more predictable revenue of 80%
· Reach a Non-IFRS cloud gross margin of 75%
· Increase the non-IFRS operating margin by one percentage point per year on average, representing a total expansion of approximately 500 basis points.
6 | SAP Quarterly Statement Q2 2019 |
Additional Information
This Quarterly Statement and all information therein is unaudited.
Definition of key growth metrics
New cloud bookings are the total of all orders received in a given period the revenue from which is expected to be classified as cloud revenue and that result from purchases by new customers and from incremental purchases by existing customers. Consequently, orders to renew existing contracts are not included in this metric. 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 (annualized contract value ACV).
Share of more predictable revenue is the total of non-IFRS cloud revenue and non-IFRS software support revenue as a percentage of total revenue
New cloud and software license order entry is the total of new cloud order entry and software license order entry. The new cloud order entry metric is identical to the new cloud bookings metric defined above except that it considers the total contract value (TCV) of the orders where the new cloud bookings metric considers the orders’ annualized contract value (ACV). Software license order entry is the total of all orders received in a given period the revenue from which is expected to be classified as software license revenue. The support services commonly sold with the software license are not included in the software license order entry metric.
Global commerce is the total commerce volume transacted on the SAP Ariba, SAP Concur and SAP Fieldglass Networks in the trailing 12 months. SAP Ariba commerce includes procurement and sourcing spend.
For explanations on other key growth metrics please refer the performance management section of SAP’s Integrated Report 2018, which can be found at www.sapintegratedreport.com.
Webcast
SAP senior management will host a financial analyst conference call at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00 AM (Eastern) / 5:00 AM (Pacific). The call 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 second quarter results can be found at www.sap.com/investor.
Special Capital Markets Day
SAP will host a Special Capital Markets Day on November 12, 2019 in New York City.
About SAP
As the Experience Company powered by the Intelligent Enterprise, SAP is the market leader in enterprise application software, helping companies of all sizes and in all industries run at their best: 77% of the world’s transaction revenue touches an SAP system. 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 more than 437,000 business and public customers 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 more information, financial community only:
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Follow SAP Investor Relations on Twitter at @sapinvestor. |
For more information, press only:
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SAP Quarterly Statement Q2 2019 | 7 |
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
© 2019 SAP SE. All rights reserved.
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8 | SAP Quarterly Statement Q2 2019 |
Contents
Financial and Non-Financial Key Facts (IFRS and Non-IFRS) | 10 |
| |
Primary Financial Statements of SAP Group (IFRS) | 12 |
| | | |
(A) | Consolidated Income Statements | 12 |
| | | |
| (A.1) | Consolidated Income Statements – Quarter | 12 |
| | | |
| (A.2) | Consolidated Income Statements – Half Year | 13 |
| | | |
(B) | Consolidated Statements of Financial Position | 14 |
| | | |
(C) | Consolidated Statements of Cash Flows | 15 |
| | | |
Non-IFRS Numbers | 16 |
| | | |
(D) | Basis of Non-IFRS Presentation | 16 |
| | | |
(E) | Reconciliation from Non-IFRS Numbers to IFRS Numbers | 17 |
| | | |
| (E.1) | Reconciliation from Non-IFRS Numbers to IFRS Numbers – Quarter | 17 |
| | | |
| (E.2) | Reconciliation from Non-IFRS Numbers to IFRS Numbers – Half Year | 18 |
| | | |
(F) | Non-IFRS Adjustments – Actuals and Estimates | 19 |
| | | |
(G) | Non-IFRS Adjustments by Functional Areas | 19 |
| | | |
Disaggregations | 21 |
| | | |
(H) | Segment Reporting | 21 |
| | | |
| (H.1) | Segment Policies and Segment Changes | 21 |
| | | |
| (H.2) | Segment Reporting – Quarter | 21 |
| | | |
| (H.3) | Segment Reporting – Half Year | 25 |
| | | |
(I) | Revenue by Region (IFRS and Non-IFRS) | 29 |
| | | |
| (I.1) | Revenue by Region (IFRS and Non-IFRS) – Quarter | 29 |
| | | |
| (I.2) | Revenue by Region (IFRS and Non-IFRS) – Half Year | 30 |
| | | |
(J) | Employees by Region and Functional Areas | 31 |
| | | |
Other Disclosures | 32 |
| | | |
(K) | Accounting Policy Changes | 32 |
| | | |
| (K.1) | Adoption of IFRS 16 | 32 |
| | | |
(L) | Impact of Hyperinflation | 32 |
| | | |
(M) | Business Combinations and Divestments | 32 |
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| (M.1) | Business Combinations | 32 |
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| (M.2) | Divestments | 33 |
| | | |
(N) | Miscellaneous Disclosures | 33 |
| | | |
| (N.1) | Changes in Estimates | 33 |
| | | |
| (N.2) | Fair Value Measurement | 33 |
SAP Quarterly Statement Q2 2019 | 9 |
Financial and Non-Financial Key Facts
(IFRS and Non-IFRS)
€ millions, unless otherwise stated | | Q1
2018 | | Q2
2018 | | Q3
2018 | | Q4
2018 | | TY
2018 | | Q1
2019 | | Q2
2019 |
Revenues | | | | | | | | | | | | | | |
Cloud (IFRS) | | 1,070 | | 1,213 | | 1,304 | | 1,406 | | 4,993 | | 1,555 | | 1,692 |
Cloud (non-IFRS) | | 1,072 | | 1,227 | | 1,315 | | 1,413 | | 5,027 | | 1,581 | | 1,717 |
% change – yoy | | 18 | | 32 | | 40 | | 42 | | 33 | | 48 | | 40 |
% change constant currency – yoy | | 31 | | 40 | | 41 | | 40 | | 38 | | 41 | | 35 |
Software licenses (IFRS) | | 625 | | 996 | | 937 | | 2,089 | | 4,647 | | 650 | | 948 |
Software licenses (non-IFRS) | | 625 | | 996 | | 937 | | 2,089 | | 4,647 | | 650 | | 948 |
% change – yoy | | –10 | | –9 | | –9 | | 1 | | –5 | | 4 | | –5 |
% change constant currency – yoy | | –2 | | –5 | | –8 | | 8 | | 0 | | 1 | | –6 |
Software support (IFRS) | | 2,656 | | 2,735 | | 2,765 | | 2,825 | | 10,981 | | 2,838 | | 2,854 |
Software support (non-IFRS) | | 2,656 | | 2,735 | | 2,765 | | 2,826 | | 10,982 | | 2,838 | | 2,854 |
% change – yoy | | –3 | | 0 | | 3 | | 3 | | 1 | | 7 | | 4 |
% change constant currency – yoy | | 5 | | 7 | | 6 | | 3 | | 5 | | 4 | | 2 |
Software licenses and support (IFRS) | | 3,281 | | 3,731 | | 3,702 | | 4,914 | | 15,628 | | 3,489 | | 3,802 |
Software licenses and support (non-IFRS) | | 3,281 | | 3,731 | | 3,702 | | 4,914 | | 15,629 | | 3,489 | | 3,802 |
% change – yoy | | –4 | | –2 | | 0 | | 2 | | –1 | | 6 | | 2 |
% change constant currency – yoy | | 4 | | 3 | | 2 | | 5 | | 4 | | 3 | | 0 |
Cloud and software (IFRS) | | 4,351 | | 4,944 | | 5,007 | | 6,320 | | 20,622 | | 5,044 | | 5,495 |
Cloud and software (non-IFRS) | | 4,353 | | 4,958 | | 5,017 | | 6,327 | | 20,655 | | 5,070 | | 5,520 |
% change – yoy | | 1 | | 4 | | 8 | | 9 | | 6 | | 16 | | 11 |
% change constant currency – yoy | | 9 | | 10 | | 10 | | 11 | | 10 | | 12 | | 8 |
Total revenue (IFRS) | | 5,261 | | 5,999 | | 6,020 | | 7,428 | | 24,708 | | 6,091 | | 6,631 |
Total revenue (non-IFRS) | | 5,262 | | 6,014 | | 6,031 | | 7,434 | | 24,741 | | 6,118 | | 6,656 |
% change – yoy | | 0 | | 4 | | 8 | | 9 | | 5 | | 16 | | 11 |
% change constant currency – yoy | | 9 | | 10 | | 10 | | 13 | | 11 | | 12 | | 8 |
Share of more predictable revenue (IFRS, in %) | | 71 | | 66 | | 68 | | 57 | | 65 | | 72 | | 69 |
Share of more predictable revenue (non-IFRS, in %) | | 71 | | 66 | | 68 | | 57 | | 65 | | 72 | | 69 |
| | | | | | | | | | | | | | |
Profits | | | | | | | | | | | | | | |
Operating profit (loss) (IFRS) | | 1,025 | | 1,044 | | 1,236 | | 2,399 | | 5,703 | | –136 | | 827 |
Operating profit (loss) (non-IFRS) | | 1,235 | | 1,640 | | 1,742 | | 2,545 | | 7,163 | | 1,467 | | 1,816 |
% change – yoy | | 3 | | 4 | | 6 | | 8 | | 6 | | 19 | | 11 |
% change constant currency – yoy | | 14 | | 12 | | 11 | | 8 | | 10 | | 13 | | 8 |
Profit (loss) after tax (IFRS) | | 708 | | 718 | | 972 | | 1,691 | | 4,088 | | –108 | | 582 |
Profit (loss) after tax (non-IFRS) | | 868 | | 1,171 | | 1,358 | | 1,802 | | 5,199 | | 1,080 | | 1,317 |
% change – yoy | | –2 | | 5 | | 12 | | –16 | | –3 | | 25 | | 12 |
| | | | | | | | | | | | | | |
Margins | | | | | | | | | | | | | | |
Cloud gross margin (IFRS, in %) | | 59.3 | | 58.3 | | 58.6 | | 58.2 | | 58.6 | | 61.2 | | 62.6 |
Cloud gross margin (non-IFRS, in %) | | 63.2 | | 63.6 | | 63.5 | | 62.1 | | 63.1 | | 66.2 | | 67.9 |
Software license and support gross margin (IFRS, in %) | | 85.7 | | 85.8 | | 86.0 | | 88.3 | | 86.6 | | 84.6 | | 86.0 |
Software license and support gross margin (non-IFRS, in %) | | 86.4 | | 87.0 | | 87.1 | | 88.7 | | 87.4 | | 85.7 | | 87.1 |
Cloud and software gross margin (IFRS, in %) | | 79.2 | | 79.0 | | 78.9 | | 81.6 | | 79.8 | | 77.4 | | 78.8 |
Cloud and software gross margin (non-IFRS, in %) | | 80.7 | | 81.2 | | 80.9 | | 82.8 | | 81.5 | | 79.6 | | 81.1 |
Gross margin (IFRS, in %) | | 68.5 | | 68.6 | | 68.3 | | 72.9 | | 69.8 | | 66.5 | | 68.2 |
Gross margin (non-IFRS, in %) | | 70.2 | | 71.5 | | 71.0 | | 74.0 | | 71.8 | | 69.5 | | 71.4 |
Operating margin (IFRS, in %) | | 19.5 | | 17.4 | | 20.5 | | 32.3 | | 23.1 | | –2.2 | | 12.5 |
Operating margin (non-IFRS, in %) | | 23.5 | | 27.3 | | 28.9 | | 34.2 | | 29.0 | | 24.0 | | 27.3 |
AT&S segment – Cloud gross margin (in %) | | 49.1 | | 48.8 | | 48.1 | | 46.9 | | 48.2 | | 53.2 | | 55.9 |
AT&S segment – Segment gross margin (in %) | | 71.2 | | 72.6 | | 72.4 | | 75.2 | | 73.1 | | 70.1 | | 72.5 |
AT&S segment – Segment margin (in %) | | 36.5 | | 41.3 | | 41.8 | | 46.8 | | 42.1 | | 36.3 | | 42.3 |
ISG segment – Cloud gross margin (in %) | | 77.4 | | 77.4 | | 78.4 | | 78.0 | | 77.8 | | 78.0 | | 78.2 |
ISG segment – Segment gross margin (in %) | | 68.7 | | 69.3 | | 69.1 | | 69.2 | | 69.1 | | 69.2 | | 69.7 |
10 | SAP Quarterly Statement Q2 2019 |
€ millions, unless otherwise stated | | Q1
2018 | | Q2
2018 | | Q3
2018 | | Q4
2018 | | TY
2018 | | Q1
2019 | | Q2
2019 |
ISG segment – Segment margin (in %) | | 16.7 | | 20.3 | | 23.0 | | 20.4 | | 20.2 | | 21.6 | | 19.6 |
CXM segment – Cloud gross margin (in %) | | 65.4 | | 68.7 | | 67.6 | | 63.1 | | 66.2 | | 74.9 | | 76.6 |
CXM segment – Segment gross margin (in %) | | 75.9 | | 77.5 | | 75.1 | | 79.9 | | 77.6 | | 75.5 | | 75.5 |
CXM segment – Segment margin (in %) | | –6.5 | | 1.7 | | 5.6 | | 24.6 | | 9.7 | | –2.3 | | –0.8 |
| | | | | | | | | | | | | | |
Key Profit Ratios | | | | | | | | | | | | | | |
Effective tax rate (IFRS, in %) | | 28.3 | | 29.5 | | 24.1 | | 26.9 | | 27.0 | | 23.2 | | 28.6 |
Effective tax rate (non-IFRS, in %) | | 27.6 | | 27.5 | | 24.0 | | 26.7 | | 26.3 | | 26.1 | | 27.0 |
| | | | | | | | | | | | | | |
Earnings per share, basic (IFRS, in €) | | 0.59 | | 0.60 | | 0.81 | | 1.41 | | 3.42 | | –0.10 | | 0.48 |
Earnings per share, basic (non-IFRS, in €) | | 0.73 | | 0.98 | | 1.14 | | 1.51 | | 4.35 | | 0.90 | | 1.09 |
| | | | | | | | | | | | | | |
Order Entry | | | | | | | | | | | | | | |
New cloud and software order entry | | 1,346 | | 2,332 | | 2,221 | | 4,533 | | 10,432 | | 1,579 | | 2,404 |
% change – yoy | | 1 | | 8 | | 11 | | 15 | | 11 | | 17 | | 3 |
% change constant currency – yoy | | 10 | | 12 | | 12 | | 18 | | 14 | | 13 | | 1 |
New cloud bookings | | 245 | | 421 | | 411 | | 736 | | 1,814 | | 324 | | 494 |
% change – yoy | | 14 | | 24 | | 36 | | 25 | | 25 | | 32 | | 17 |
% change constant currency – yoy | | 25 | | 29 | | 37 | | 23 | | 28 | | 26 | | 15 |
Orders – number of cloud deals (in transactions) | | 2,376 | | 3,032 | | 3,375 | | 6,055 | | 14,839 | | 2,956 | | 3,609 |
Share of cloud orders greater than €5 million based on total cloud order entry volume (in %) | | 20 | | 32 | | 28 | | 33 | | 30 | | 26 | | 26 |
Share of cloud orders smaller than €1 million based on total cloud order entry volume (in %) | | 39 | | 31 | | 35 | | 28 | | 32 | | 39 | | 33 |
Orders – number of on-premise software deals (in transactions) | | 13,549 | | 14,538 | | 13,794 | | 16,649 | | 58,530 | | 12,229 | | 12,522 |
Share of orders greater than €5 million based on total software order entry volume (in %) | | 18 | | 29 | | 22 | | 35 | | 29 | | 28 | | 28 |
Share of orders smaller than €1 million based on total software order entry volume (in %) | | 50 | | 41 | | 42 | | 33 | | 39 | | 42 | | 36 |
| | | | | | | | | | | | | | |
Liquidity and Cash Flow | | | | | | | | | | | | | | |
Net cash flows from operating activities | | 2,578 | | 407 | | 499 | | 819 | | 4,303 | | 2,802 | | –122 |
Capital expenditure | | –427 | | –391 | | –328 | | –312 | | –1,458 | | –359 | | –180 |
Payments of lease liabilities | | NA | | NA | | NA | | NA | | NA | | –78 | | –106 |
Free cash flow | | 2,151 | | 16 | | 171 | | 506 | | 2,844 | | 2,365 | | –409 |
% of total revenue (IFRS) | | 41 | | 0 | | 3 | | 7 | | 12 | | 39 | | –6 |
% of profit after tax (IFRS) | | 304 | | 2 | | 18 | | 30 | | 70 | | –2,198 | | –70 |
Group liquidity, gross | | 8,270 | | 4,688 | | 4,738 | | 8,838 | | 8,838 | | 7,673 | | 5,280 |
Group debt | | –7,723 | | –7,660 | | –7,521 | | –11,331 | | –11,331 | | –13,866 | | –13,833 |
Group liquidity, net | | 546 | | –2,972 | | –2,784 | | –2,493 | | –2,493 | | –6,193 | | –8,553 |
Days sales outstanding (DSO, in days)1) | | 68 | | 68 | | 68 | | 70 | | 70 | | 69 | | 70 |
| | | | | | | | | | | | | | |
Financial Position | | | | | | | | | | | | | | |
Cash and cash equivalents | | 7,598 | | 4,516 | | 4,507 | | 8,627 | | 8,627 | | 7,332 | | 5,168 |
Goodwill | | 20,856 | | 23,406 | | 23,523 | | 23,736 | | 23,736 | | 29,108 | | 28,801 |
Total assets | | 45,463 | | 45,491 | | 45,631 | | 51,502 | | 51,502 | | 60,693 | | 57,707 |
Contract liabilities (current) | | 5,046 | | 4,867 | | 3,600 | | 3,028 | | 3,028 | | 6,068 | | 5,558 |
Equity ratio (total equity in % of total assets) | | 56 | | 57 | | 59 | | 56 | | 56 | | 48 | | 48 |
| | | | | | | | | | | | | | |
Non-Financials | | | | | | | | | | | | | | |
Number of employees (quarter end)2) | | 91,120 | | 93,846 | | 94,989 | | 96,498 | | 96,498 | | 98,659 | | 98,332 |
Employee retention (in %, rolling 12 months) | | 94.4 | | 94.3 | | 94.1 | | 93.9 | | 93.9 | | 93.8 | | 93.5 |
Women in management (in %, quarter end) | | 25.6 | | 25.8 | | 25.9 | | 25.7 | | 25.7 | | 26.0 | | 26.2 |
Greenhouse gas emissions (in kilotons) | | 100 | | 75 | | 65 | | 70 | | 310 | | 110 | | 75 |
1) Days sales outstanding measures the average number of days from the raised invoice to cash receipt from the customer. We calculate DSO by dividing the average invoiced trade receivables balance of the last 12 months by the average monthly cash receipt of the last 12 months.
2) In full-time equivalents.
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 11 |
Primary Financial Statements of SAP Group (IFRS)
(A) Consolidated Income Statements
(A.1) Consolidated Income Statements – Quarter
€ millions, unless otherwise stated | Q2 2019 | Q2 2018 | D in % |
Cloud2) | 1,692 | 1,213 | 40 |
Software licenses | 948 | 996 | –5 |
Software support | 2,854 | 2,735 | 4 |
Software licenses and support | 3,802 | 3,731 | 2 |
Cloud and software | 5,495 | 4,944 | 11 |
Services | 1,136 | 1,056 | 8 |
Total revenue | 6,631 | 5,999 | 11 |
| | | |
Cost of cloud2) | –633 | –506 | 25 |
Cost of software licenses and support | –531 | –531 | 0 |
Cost of cloud and software | –1,164 | –1,037 | 12 |
Cost of services | –946 | –849 | 11 |
Total cost of revenue | –2,111 | –1,886 | 12 |
Gross profit | 4,520 | 4,114 | 10 |
Research and development | –1,053 | –948 | 11 |
Sales and marketing | –1,995 | –1,798 | 11 |
General and administration | –457 | –317 | 44 |
Restructuring | –199 | –11 | >100 |
Other operating income/expense, net | 10 | 4 | >100 |
Total operating expenses | –5,803 | –4,955 | 17 |
Operating profit (loss) | 827 | 1,044 | –21 |
| | | |
Other non-operating income/expense, net | –41 | –81 | –50 |
Finance income | 158 | 142 | 11 |
Finance costs | –129 | –86 | 50 |
Financial income, net | 29 | 56 | –48 |
Profit (loss) before tax | 815 | 1,019 | –20 |
| | | |
Income tax expense | –233 | –301 | –23 |
Profit (loss) after tax | 582 | 718 | –19 |
Attributable to owners of parent | 569 | 717 | –21 |
Attributable to non-controlling interests | 13 | 1 | >100 |
| | | |
Earnings per share, basic (in €)1) | 0.48 | 0.60 | –21 |
Earnings per share, diluted (in €)1) | 0.48 | 0.60 | –21 |
1) For the three months ended June 30, 2019 and 2018, the weighted average number of shares was 1,194 million (diluted 1,194 million) and 1,194 million (diluted: 1,194 million), respectively (treasury stock excluded).
2) In 2019, we renamed “cloud subscription and support” revenue and “cost of cloud subscription and support” to “cloud” revenue and “cost of cloud” without changing the content of these line items.
Due to rounding, numbers may not add up precisely.
12 | SAP Quarterly Statement Q2 2019 |
(A.2) Consolidated Income Statements – Half Year
€ millions, unless otherwise stated | Q1–Q2 2019 | Q1–Q2 2018 | D in % |
Cloud2) | 3,247 | 2,283 | 42 |
Software licenses | 1,599 | 1,621 | –1 |
Software support | 5,692 | 5,391 | 6 |
Software licenses and support | 7,291 | 7,012 | 4 |
Cloud and software | 10,538 | 9,295 | 13 |
Services | 2,184 | 1,965 | 11 |
Total revenue | 12,722 | 11,260 | 13 |
| | | |
Cost of cloud2) | –1,237 | –941 | 31 |
Cost of software licenses and support | –1,069 | –1,001 | 7 |
Cost of cloud and software | –2,306 | –1,942 | 19 |
Cost of services | –1,845 | –1,600 | 15 |
Total cost of revenue | –4,151 | –3,542 | 17 |
Gross profit | 8,571 | 7,718 | 11 |
Research and development | –2,114 | –1,761 | 20 |
Sales and marketing | –3,833 | –3,314 | 16 |
General and administration | –895 | –548 | 63 |
Restructuring | –1,085 | –22 | >100 |
Other operating income/expense, net | 48 | –5 | <-100 |
Total operating expenses | –12,031 | –9,192 | 31 |
Operating profit (loss) | 691 | 2,069 | –67 |
| | | |
Other non-operating income/expense, net | –44 | –91 | –51 |
Finance income | 286 | 185 | 55 |
Finance costs | –258 | –157 | 64 |
Financial income, net | 29 | 28 | 3 |
Profit (loss) before tax | 675 | 2,006 | –66 |
| | | |
Income tax expense | –201 | –580 | –65 |
Profit (loss) after tax | 475 | 1,426 | –67 |
Attributable to owners of parent | 455 | 1,425 | –68 |
Attributable to non-controlling interests | 20 | 0 | >100 |
| | | |
Earnings per share, basic (in €)1) | 0.38 | 1.19 | –68 |
Earnings per share, diluted (in €)1) | 0.38 | 1.19 | –68 |
1) For the six months ended June 30, 2019 and 2018, the weighted average number of shares was 1,194 million (diluted 1,194 million) and 1,193 million (diluted: 1,194 million), respectively (treasury stock excluded).
2) In 2019, we renamed “cloud subscription and support” revenue and “cost of cloud subscription and support” to “cloud” revenue and “cost of cloud” without changing the content of these line items.
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 13 |
(B) Consolidated Statements of Financial Position
as at 6/30/2019 and 12/31/2018 |
€ millions | 2019 | 20181) |
Cash and cash equivalents | 5,168 | 8,627 |
Other financial assets | 402 | 448 |
Trade and other receivables | 6,074 | 6,362 |
Other non-financial assets | 1,212 | 889 |
Tax assets | 696 | 293 |
Total current assets | 13,551 | 16,620 |
Goodwill | 28,801 | 23,736 |
Intangible assets | 4,730 | 3,227 |
Property, plant, and equipment | 5,405 | 3,553 |
Other financial assets | 1,990 | 1,536 |
Trade and other receivables | 142 | 118 |
Other non-financial assets | 1,406 | 1,301 |
Tax assets | 379 | 397 |
Deferred tax assets | 1,303 | 1,014 |
Total non-current assets | 44,156 | 34,881 |
Total assets | 57,707 | 51,502 |
| | |
€ millions | 2019 | 20181) |
Trade and other payables | 1,472 | 1,491 |
Tax liabilities | 379 | 611 |
Financial liabilities | 2,183 | 1,125 |
Other non-financial liabilities | 3,669 | 4,120 |
Provisions | 952 | 110 |
Contract liabilities | 5,558 | 3,028 |
Total current liabilities | 14,213 | 10,486 |
Trade and other payables | 8 | 129 |
Tax liabilities | 545 | 495 |
Financial liabilities | 14,067 | 10,553 |
Other non-financial liabilities | 675 | 501 |
Provisions | 337 | 270 |
Deferred tax liabilities | 121 | 102 |
Contract liabilities | 99 | 88 |
Total non-current liabilities | 15,853 | 12,138 |
Total liabilities | 30,066 | 22,624 |
Issued capital | 1,229 | 1,229 |
Share premium | 545 | 543 |
Retained earnings | 25,972 | 27,407 |
Other components of equity | 1,415 | 1,234 |
Treasury shares | –1,580 | –1,580 |
Equity attributable to owners of parent | 27,581 | 28,832 |
| | |
Non-controlling interests | 60 | 45 |
Total equity | 27,641 | 28,877 |
Total equity and liabilities | 57,707 | 51,502 |
1) Under the adoption method we chose for IFRS 16, prior years are not restated to conform to the new policies. See section (K) Accounting Policy Changes in this Quarterly Statement.
Due to rounding, numbers may not add up precisely.
14 | SAP Quarterly Statement Q2 2019 |
(C) Consolidated Statements of Cash Flows
€ millions | Q1–Q2 2019 | Q1–Q2 20181) |
Profit (loss) after tax | 475 | 1,426 |
Adjustments to reconcile profit (loss) after tax to net cash flows from operating activities: | | |
Depreciation and amortization | 897 | 635 |
Share-based payment expense | 1,114 | 491 |
Income tax expense | 201 | 580 |
Financial income, net | –29 | –28 |
Decrease/increase in allowances on trade receivables | –9 | –43 |
Other adjustments for non-cash items | –55 | 4 |
Decrease/increase in trade and other receivables | 354 | 1,409 |
Decrease/increase in other assets | –390 | –380 |
Increase/decrease in trade payables, provisions, and other liabilities | –2 | –842 |
Increase/decrease in contract liabilities | 2,363 | 1,240 |
Share-based payments | –832 | –598 |
Interest paid | –176 | –101 |
Interest received | 45 | 54 |
Income taxes paid, net of refunds | –1,277 | –865 |
Net cash flows from operating activities | 2,679 | 2,985 |
Business combinations, net of cash and cash equivalents acquired | –6,147 | –1,995 |
Proceeds from sales of subsidiaries or other businesses | 61 | 0 |
Purchase of intangible assets or property, plant, and equipment | –539 | –818 |
Proceeds from sales of intangible assets or property, plant, and equipment | 35 | 32 |
Purchase of equity or debt instruments of other entities | –579 | –526 |
Proceeds from sales of equity or debt instruments of other entities | 469 | 1,079 |
Net cash flows from investing activities | –6,700 | –2,228 |
Dividends paid | –1,790 | –1,671 |
Dividends paid on non-controlling interests | –2 | –4 |
Proceeds from borrowings | 2,523 | 1,498 |
Repayments of borrowings | –29 | –146 |
Payments of lease liabilities | –185 | 0 |
Net cash flows from financing activities | 517 | –323 |
Effect of foreign currency rates on cash and cash equivalents | 45 | 70 |
Net decrease/increase in cash and cash equivalents | –3,459 | 504 |
Cash and cash equivalents at the beginning of the period | 8,627 | 4,011 |
Cash and cash equivalents at the end of the period | 5,168 | 4,515 |
1) Under the adoption method we chose for IFRS 16, prior years are not restated to conform to the new policies. See the Notes to the 2019 Consolidated Half-Year Financial Statements, Note (D.3).
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 15 |
Non-IFRS Numbers
(D) Basis of Non-IFRS Presentation
We disclose certain financial measures such as revenue (non-IFRS), expense (non-IFRS), and profit measures (non-IFRS) that are not prepared in accordance with IFRS and are therefore considered non-IFRS financial measures.
For a more detailed description of all of SAP’s non-IFRS measures and their limitations as well as our constant currency and free cash flow figures, see Explanation of Non-IFRS Measures online.
16 | SAP Quarterly Statement Q2 2019 |
(E) Reconciliation from Non-IFRS Numbers to IFRS Numbers
(E.1) Reconciliation from Non-IFRS Numbers to IFRS Numbers – Quarter
€ millions, unless otherwise stated | | | | | Q2 2019 | | Q2 2018 | | | D in % |
| IFRS | Adj. | Non-
IFRS | Currency
Impact | Non-IFRS
Constant
Currency | IFRS | Adj. | Non-
IFRS | IFRS | Non-
IFRS | Non-IFRS
Constant
Currency1) |
Revenue Numbers | | | | | | | | | | | |
Cloud | 1,692 | 25 | 1,717 | –64 | 1,654 | 1,213 | 14 | 1,227 | 40 | 40 | 35 |
Software licenses | 948 | 0 | 948 | –12 | 937 | 996 | 0 | 996 | –5 | –5 | –6 |
Software support | 2,854 | 0 | 2,854 | –66 | 2,788 | 2,735 | 0 | 2,735 | 4 | 4 | 2 |
Software licenses and support | 3,802 | 0 | 3,802 | –78 | 3,724 | 3,731 | 0 | 3,731 | 2 | 2 | 0 |
Cloud and software | 5,495 | 25 | 5,520 | –141 | 5,378 | 4,944 | 15 | 4,958 | 11 | 11 | 8 |
Services | 1,136 | 0 | 1,136 | –32 | 1,104 | 1,056 | 0 | 1,056 | 8 | 8 | 5 |
Total revenue | 6,631 | 25 | 6,656 | –173 | 6,482 | 5,999 | 15 | 6,014 | 11 | 11 | 8 |
| | | | | | | | | | | |
Operating Expense Numbers | | | | | | | | | | | |
Cost of cloud | –633 | 82 | –552 | | | –506 | 59 | –447 | 25 | 24 | |
Cost of software licenses and support | –531 | 41 | –490 | | | –531 | 46 | –485 | 0 | 1 | |
Cost of cloud and software | –1,164 | 123 | –1,042 | | | –1,037 | 105 | –932 | 12 | 12 | |
Cost of services | –946 | 82 | –864 | | | –849 | 66 | –782 | 11 | 10 | |
Total cost of revenue | –2,111 | 205 | –1,906 | | | –1,886 | 172 | –1,714 | 12 | 11 | |
Gross profit | 4,520 | 230 | 4,750 | | | 4,114 | 186 | 4,300 | 10 | 10 | |
Research and development | –1,053 | 132 | –921 | | | –948 | 106 | –842 | 11 | 9 | |
Sales and marketing | –1,995 | 264 | –1,730 | | | –1,798 | 230 | –1,569 | 11 | 10 | |
General and administration | –457 | 164 | –293 | | | –317 | 64 | –253 | 44 | 16 | |
Restructuring | –199 | 199 | 0 | | | –11 | 11 | 0 | >100 | NA | |
Other operating income/expense, net | 10 | 0 | 10 | | | 4 | 0 | 4 | >100 | >100 | |
Total operating expenses | –5,803 | 964 | –4,840 | 125 | –4,715 | –4,955 | 581 | –4,374 | 17 | 11 | 8 |
| | | | | | | | | | | |
Profit Numbers | | | | | | | | | | | |
Operating profit (loss) | 827 | 989 | 1,816 | –49 | 1,767 | 1,044 | 596 | 1,640 | –21 | 11 | 8 |
Other non-operating income/expense, net | –41 | 0 | –41 | | | –81 | 0 | –81 | –50 | –50 | |
Finance income | 158 | 0 | 158 | | | 142 | 0 | 142 | 11 | 11 | |
Finance costs | –129 | 0 | –129 | | | –86 | 0 | –86 | 50 | 50 | |
Financial income, net | 29 | 0 | 29 | | | 56 | 0 | 56 | –48 | –48 | |
Profit (loss) before tax | 815 | 989 | 1,804 | | | 1,019 | 596 | 1,615 | –20 | 12 | |
Income tax expense | –233 | –254 | –487 | | | –301 | –143 | –444 | –23 | 10 | |
Profit (loss) after tax | 582 | 734 | 1,317 | | | 718 | 453 | 1,171 | –19 | 12 | |
Attributable to owners of parent | 569 | 734 | 1,304 | | | 717 | 453 | 1,170 | –21 | 11 | |
Attributable to non-controlling interests | 13 | 0 | 13 | | | 1 | 0 | 1 | >100 | >100 | |
| | | | | | | | | | | |
Key Ratios | | | | | | | | | | | |
Operating margin (in %) | 12.5 | | 27.3 | | 27.3 | 17.4 | | 27.3 | –4.9pp | 0.0pp | 0.0pp |
Effective tax rate (in %)2) | 28.6 | | 27.0 | | | 29.5 | | 27.5 | –0.9pp | –0.5pp | |
Earnings per share, basic (in €) | 0.48 | | 1.09 | | | 0.60 | | 0.98 | –21 | 11 | |
1) Constant currency period-over-period changes are calculated by comparing the current year’s non-IFRS constant currency numbers with the non-IFRS number of the previous year’s respective period.
2) The difference between our effective tax rate (IFRS) and effective tax rate (non-IFRS) in Q2 2019 mainly results from tax effects of share-based payment expenses, restructuring expenses and acquisition-related charges.
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 17 |
(E.2) Reconciliation from Non-IFRS Numbers to IFRS Numbers – Half Year
€ millions, unless otherwise stated | | | | Q1–Q2 2019 | | Q1–Q2 2018 | | | D in % |
| IFRS | Adj. | Non-
IFRS | Currency
Impact | Non-IFRS
Constant
Currency | IFRS | Adj. | Non-
IFRS | IFRS | Non-
IFRS | Non-IFRS
Constant
Currency1) |
Revenue Numbers | | | | | | | | | | | |
Cloud | 3,247 | 51 | 3,299 | –138 | 3,161 | 2,283 | 16 | 2,299 | 42 | 43 | 37 |
Software licenses | 1,599 | 0 | 1,599 | –33 | 1,565 | 1,621 | 0 | 1,621 | –1 | –1 | –3 |
Software support | 5,692 | 0 | 5,692 | –143 | 5,549 | 5,391 | 0 | 5,391 | 6 | 6 | 3 |
Software licenses and support | 7,291 | 0 | 7,291 | –177 | 7,114 | 7,012 | 0 | 7,012 | 4 | 4 | 1 |
Cloud and software | 10,538 | 51 | 10,589 | –315 | 10,274 | 9,295 | 16 | 9,311 | 13 | 14 | 10 |
Services | 2,184 | 0 | 2,184 | –70 | 2,114 | 1,965 | 0 | 1,965 | 11 | 11 | 8 |
Total revenue | 12,722 | 51 | 12,773 | –385 | 12,389 | 11,260 | 16 | 11,276 | 13 | 13 | 10 |
| | | | | | | | | | | |
Operating Expense Numbers | | | | | | | | | | | |
Cost of cloud | –1,237 | 151 | –1,086 | | | –941 | 100 | –841 | 31 | 29 | |
Cost of software licenses and support | –1,069 | 79 | –990 | | | –1,001 | 71 | –930 | 7 | 6 | |
Cost of cloud and software | –2,306 | 231 | –2,075 | | | –1,942 | 171 | –1,771 | 19 | 17 | |
Cost of services | –1,845 | 146 | –1,699 | | | –1,600 | 86 | –1,514 | 15 | 12 | |
Total cost of revenue | –4,151 | 377 | –3,774 | | | –3,542 | 257 | –3,285 | 17 | 15 | |
Gross profit | 8,571 | 428 | 8,999 | | | 7,718 | 273 | 7,992 | 11 | 13 | |
Research and development | –2,114 | 257 | –1,857 | | | –1,761 | 127 | –1,635 | 20 | 14 | |
Sales and marketing | –3,833 | 496 | –3,337 | | | –3,314 | 319 | –2,995 | 16 | 11 | |
General and administration | –895 | 325 | –570 | | | –548 | 67 | –481 | 63 | 19 | |
Restructuring | –1,085 | 1,085 | 0 | | | –22 | 22 | 0 | >100 | NA | |
Other operating income/expense, net | 48 | 0 | 48 | | | –5 | 0 | –5 | <-100 | <-100 | |
Total operating expenses | –12,031 | 2,540 | –9,490 | 267 | –9,223 | –9,192 | 791 | –8,401 | 31 | 13 | 10 |
| | | | | | | | | | | |
Profit Numbers | | | | | | | | | | | |
Operating profit (loss) | 691 | 2,592 | 3,283 | –117 | 3,166 | 2,069 | 807 | 2,876 | –67 | 14 | 10 |
Other non-operating income/expense, net | –44 | 0 | –44 | | | –91 | 0 | –91 | –51 | –51 | |
Finance income | 286 | 0 | 286 | | | 185 | 0 | 185 | 55 | 55 | |
Finance costs | –258 | 0 | –258 | | | –157 | 0 | –157 | 64 | 64 | |
Financial income, net | 29 | 0 | 29 | | | 28 | 0 | 28 | 3 | 3 | |
Profit (loss) before tax | 675 | 2,592 | 3,267 | | | 2,006 | 807 | 2,813 | –66 | 16 | |
Income tax expense | –201 | –669 | –870 | | | –580 | –194 | –774 | –65 | 12 | |
Profit (loss) after tax | 475 | 1,923 | 2,397 | | | 1,426 | 613 | 2,039 | –67 | 18 | |
Attributable to owners of parent | 455 | 1,923 | 2,378 | | | 1,425 | 613 | 2,038 | –68 | 17 | |
Attributable to non-controlling interests | 20 | 0 | 20 | | | 0 | 0 | 0 | >100 | >100 | |
| | | | | | | | | | | |
Key Ratios | | | | | | | | | | | |
Operating margin (in %) | 5.4 | | 25.7 | | 25.6 | 18.4 | | 25.5 | –12.9pp | 0.2pp | 0.0pp |
Effective tax rate (in %)2) | 29.7 | | 26.6 | | | 28.9 | | 27.5 | 0.8pp | –0.9pp | |
Earnings per share, basic (in €) | 0.38 | | 1.99 | | | 1.19 | | 1.71 | –68 | 17 | |
1) Constant currency period-over-period changes are calculated by comparing the current year’s non-IFRS constant currency numbers with the non-IFRS number of the previous year’s respective period.
2) The difference between our effective tax rate (IFRS) and effective tax rate (non-IFRS) in the first half of 2019 mainly results from tax effects of share-based payment expenses, restructuring expenses and acquisition-related charges.
Due to rounding, numbers may not add up precisely.
18 | SAP Quarterly Statement Q2 2019 |
(F) Non-IFRS Adjustments – Actuals and Estimates
€ millions | Estimated Amounts
for
Full Year 2019 | Q1–Q2
2019 | Q2 2019 | Q1–Q2
2018 | Q2 2018 |
Operating profit (loss) (IFRS) | | 691 | 827 | 2,069 | 1,044 |
Revenue adjustments | 70–120 | 51 | 25 | 16 | 15 |
Adjustment for acquisition-related charges | 650–750 | 341 | 168 | 278 | 149 |
Adjustment for share-based payment expenses | 1,650–1,900 | 1,114 | 597 | 491 | 421 |
Adjustment for restructuring | 950–1,100 | 1,085 | 199 | 22 | 11 |
Operating expense adjustments | | 2,540 | 964 | 791 | 581 |
Operating profit (loss) adjustments | | 2,592 | 989 | 807 | 596 |
Operating profit (loss) (non-IFRS) | | 3,283 | 1,816 | 2,876 | 1,640 |
Due to rounding, numbers may not add up precisely.
(G) Non-IFRS Adjustments by Functional Areas
€ millions | | | | | Q2 2019 | | | | | Q2 2018 |
| IFRS | Acquisition-
Related | SBP1) | Restructuring | Non-IFRS | IFRS | Acquisition-
Related | SBP1) | Restructuring | Non-IFRS |
| | | | | | | | | | |
Cost of cloud and software | –1,164 | 79 | 44 | 0 | –1,042 | –1,037 | 68 | 38 | 0 | –932 |
Cost of services | –946 | 1 | 81 | 0 | –864 | –849 | 3 | 63 | 0 | –782 |
Research and development | –1,053 | 2 | 130 | 0 | –921 | –948 | 2 | 104 | 0 | –842 |
Sales and marketing | –1,995 | 85 | 179 | 0 | –1,730 | –1,798 | 71 | 158 | 0 | –1,569 |
General and administration | –457 | 1 | 163 | 0 | –293 | –317 | 5 | 58 | 0 | –253 |
Restructuring | –199 | 0 | 0 | 199 | 0 | –11 | 0 | 0 | 11 | 0 |
Other operating income/expense, net | 10 | 0 | 0 | 0 | 10 | 4 | 0 | 0 | 0 | 4 |
Total operating expenses | –5,803 | 168 | 597 | 199 | –4,840 | –4,955 | 149 | 421 | 11 | –4,374 |
€ millions | | | | Q1–Q2 2019 | | | | Q1–Q2 2018 |
| IFRS | Acquisition-
Related | SBP1) | Restructuring | Non-IFRS | IFRS | Acquisition-
Related | SBP1) | Restructuring | Non-IFRS |
Cost of cloud and software | –2,306 | 150 | 81 | 0 | –2,075 | –1,942 | 126 | 46 | 0 | –1,771 |
Cost of services | –1,845 | 3 | 144 | 0 | –1,699 | –1,600 | 5 | 80 | 0 | –1,514 |
Research and development | –2,114 | 5 | 252 | 0 | –1,857 | –1,761 | 3 | 123 | 0 | –1,635 |
Sales and marketing | –3,833 | 169 | 327 | 0 | –3,337 | –3,314 | 134 | 185 | 0 | –2,995 |
General and administration | –895 | 14 | 311 | 0 | –570 | –548 | 10 | 57 | 0 | –481 |
Restructuring | –1,085 | 0 | 0 | 1,085 | 0 | –22 | 0 | 0 | 22 | 0 |
Other operating income/expense, net | 48 | 0 | 0 | 0 | 48 | –5 | 0 | 0 | 0 | –5 |
Total operating expenses | –12,031 | 341 | 1,114 | 1,085 | –9,490 | –9,192 | 278 | 491 | 22 | –8,401 |
1) Share-based Payments
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 19 |
If not presented in a separate line item in our income statement, the restructuring expenses would break down as follows:
€ millions | Q2 2019 | Q1–Q2 2019 | Q2 2018 | Q1–Q2 2018 |
Cost of cloud and software | –10 | –127 | –2 | –3 |
Cost of services | –25 | –169 | –4 | –8 |
Research and development | –57 | –443 | –1 | –1 |
Sales and marketing | –104 | –281 | –4 | –9 |
General and administration | –3 | –64 | 0 | 0 |
Restructuring expenses | –199 | –1,085 | –11 | –22 |
Due to rounding, numbers may not add up precisely.
20 | SAP Quarterly Statement Q2 2019 |
Disaggregations
(H) Segment Reporting
(H.1) Segment Policies and Segment Changes
SAP has three reportable segments: the Applications, Technology & Services segment, the Intelligent Spend Group segment, and the Customer and Experience Management segment.
As of the second quarter in 2019, we renamed the former Business Network segment to Intelligent Spend Group segment without any changes in the composition of this segment.
For a more detailed description of SAP’s segment reporting, see the Notes to the 2019 Consolidated Half-Year Financial Statements, Note (C.1).
(H.2) Segment Reporting – Quarter
Applications, Technology & Services
€ millions, unless otherwise stated | | Q2 2019 | Q2 2018 | D in % | D in % |
| Actual
Currency | Constant
Currency | Actual
Currency | Actual
Currency | Constant
Currency |
Cloud – SaaS/PaaS1) | 601 | 583 | 446 | 35 | 31 |
Cloud – IaaS2) | 170 | 164 | 112 | 51 | 46 |
Cloud | 771 | 747 | 559 | 38 | 34 |
Software licenses | 883 | 873 | 926 | –5 | –6 |
Software support | 2,849 | 2,783 | 2,733 | 4 | 2 |
Software licenses and support | 3,732 | 3,656 | 3,660 | 2 | 0 |
Cloud and software | 4,503 | 4,404 | 4,218 | 7 | 4 |
Services | 879 | 857 | 847 | 4 | 1 |
Total segment revenue | 5,382 | 5,261 | 5,065 | 6 | 4 |
Cost of cloud – SaaS/PaaS1) | –208 | –202 | –187 | 12 | 8 |
Cost of cloud – IaaS2) | –132 | –128 | –99 | 33 | 29 |
Cost of cloud | –340 | –330 | –286 | 19 | 15 |
Cost of software licenses and support | –471 | –459 | –471 | 0 | –2 |
Cost of cloud and software | –811 | –789 | –756 | 7 | 4 |
Cost of services | –669 | –656 | –630 | 6 | 4 |
Total cost of revenue | –1,480 | –1,445 | –1,387 | 7 | 4 |
Segment gross profit | 3,902 | 3,816 | 3,678 | 6 | 4 |
Other segment expenses | –1,624 | –1,591 | –1,588 | 2 | 0 |
Segment profit (loss) | 2,279 | 2,224 | 2,090 | 9 | 6 |
Margins | | | | | |
Cloud gross margin – SaaS/PaaS1) (in %) | 65.4 | 65.4 | 58.2 | 7.2pp | 7.2pp |
Cloud gross margin – IaaS2) (in %) | 22.3 | 21.9 | 11.8 | 10.6pp | 10.2pp |
Cloud gross margin (in %) | 55.9 | 55.9 | 48.8 | 7.0pp | 7.0pp |
Segment gross margin (in %) | 72.5 | 72.5 | 72.6 | –0.1pp | –0.1pp |
Segment margin (in %) | 42.3 | 42.3 | 41.3 | 1.1pp | 1.0pp |
1) Software as a service/platform as a service
2) Infrastructure as a service
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 21 |
Intelligent Spend Group
€ millions, unless otherwise stated | | Q2 2019 | Q2 2018 | D in % | D in % |
| Actual
Currency | Constant
Currency | Actual
Currency | Actual
Currency | Constant
Currency |
Cloud – SaaS/PaaS1) | 667 | 639 | 531 | 26 | 20 |
Cloud | 667 | 639 | 531 | 26 | 20 |
Software licenses | 0 | 0 | 0 | <-100 | <-100 |
Software support | 4 | 4 | 4 | 6 | 1 |
Software licenses and support | 4 | 4 | 4 | –5 | –9 |
Cloud and software | 672 | 643 | 535 | 26 | 20 |
Services | 115 | 110 | 108 | 6 | 2 |
Total segment revenue | 786 | 753 | 643 | 22 | 17 |
Cost of cloud – SaaS/PaaS1) | –145 | –140 | –120 | 21 | 17 |
Cost of cloud | –145 | –140 | –120 | 21 | 17 |
Cost of software licenses and support | –2 | –2 | –1 | 18 | 14 |
Cost of cloud and software | –147 | –142 | –121 | 21 | 17 |
Cost of services | –91 | –88 | –76 | 19 | 15 |
Total cost of revenue | –238 | –229 | –198 | 20 | 16 |
Segment gross profit | 548 | 523 | 445 | 23 | 18 |
Other segment expenses | –394 | –378 | –315 | 25 | 20 |
Segment profit (loss) | 154 | 146 | 130 | 19 | 12 |
Margins | | | | | |
Cloud gross margin – SaaS/PaaS1) (in %) | 78.2 | 78.1 | 77.4 | 0.8pp | 0.7pp |
Cloud gross margin (in %) | 78.2 | 78.1 | 77.4 | 0.8pp | 0.7pp |
Segment gross margin (in %) | 69.7 | 69.5 | 69.3 | 0.5pp | 0.3pp |
Segment margin (in %) | 19.6 | 19.3 | 20.3 | –0.6pp | –0.9pp |
1) Software as a service/platform as a service
Due to rounding, numbers may not add up precisely.
22 | SAP Quarterly Statement Q2 2019 |
Customer and Experience Management
€ millions, unless otherwise stated | | Q2 2019 | Q2 2018 | D in % | D in % |
| Actual
Currency | Constant
Currency | Actual
Currency | Actual
Currency | Constant
Currency |
Cloud – SaaS/PaaS1) | 277 | 265 | 131 | >100 | >100 |
Cloud | 277 | 265 | 131 | >100 | >100 |
Software licenses | 57 | 56 | 70 | –18 | –20 |
Software support | 0 | 0 | 0 | –28 | –31 |
Software licenses and support | 57 | 56 | 70 | –18 | –20 |
Cloud and software | 334 | 321 | 201 | 66 | 60 |
Services | 31 | 29 | 1 | >100 | >100 |
Total segment revenue | 365 | 351 | 202 | 81 | 74 |
Cost of cloud – SaaS/PaaS1) | –65 | –63 | –41 | 57 | 54 |
Cost of cloud | –65 | –63 | –41 | 57 | 54 |
Cost of software licenses and support | –6 | –6 | –5 | 20 | 19 |
Cost of cloud and software | –71 | –70 | –46 | 53 | 50 |
Cost of services | –18 | –17 | 1 | <-100 | <-100 |
Total cost of revenue | –89 | –87 | –45 | 97 | 92 |
Segment gross profit | 275 | 264 | 157 | 76 | 69 |
Other segment expenses | –278 | –267 | –153 | 82 | 74 |
Segment profit (loss) | –3 | –3 | 3 | <-100 | <-100 |
Margins | | | | | |
Cloud gross margin – SaaS/PaaS1) (in %) | 76.6 | 76.2 | 68.7 | 7.9pp | 7.5pp |
Cloud gross margin (in %) | 76.6 | 76.2 | 68.7 | 7.9pp | 7.5pp |
Segment gross margin (in %) | 75.5 | 75.2 | 77.5 | –2.0pp | –2.3pp |
Segment margin (in %) | –0.8 | –1.0 | 1.7 | –2.4pp | –2.6pp |
1) Software as a service/platform as a service
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 23 |
Reconciliation of Cloud Revenues and Margins
€ millions, unless otherwise stated | | | | | | Q2 2019 | | Q2 2018 | | D in % | | D in % | |
| | | | Actual
Currency | | Constant
Currency | | Actual
Currency | | Actual
Currency | | Constant
Currency | |
| | Intelligent Spend Group segment | | 667 | | 639 | | 531 | | 26 | | 20 | |
Cloud revenue – SaaS/PaaS1) | | Other3) | | 880 | | 851 | | 584 | | 51 | | 46 | |
| | Total | | 1,547 | | 1,490 | | 1,115 | | 39 | | 34 | |
Cloud revenue – IaaS2) | | | | 170 | | 164 | | 112 | | 51 | | 46 | |
Cloud revenue | | | | 1,717 | | 1,654 | | 1,227 | | 40 | | 35 | |
| | Intelligent Spend Group segment | | 78.2 | | 78.1 | | 77.4 | | 0.8pp | | 0.7pp | |
Cloud gross margin – SaaS/PaaS1) (in %) | | Other3) | | 68.8 | | 68.7 | | 61.1 | | 7.8pp | | 7.7pp | |
| | Total | | 72.9 | | 72.7 | | 68.8 | | 4.0pp | | 3.9pp | |
Cloud gross margin – IaaS2) (in %) | | | | 22.3 | | 21.9 | | 11.8 | | 10.6pp | | 10.2pp | |
Cloud gross margin (in %) | | | | 67.9 | | 67.7 | | 63.6 | | 4.3pp | | 4.1pp | |
1) Software as a service/platform as a service
2) Infrastructure as a service
3) Other includes the Applications, Technology & Services segment, the Customer and Experience Management segment, and miscellaneous. The individual revenue and margin numbers for the Applications, Technology & Services segment and the Customer and Experience Management segment are disclosed on the previous pages.
Due to rounding, numbers may not add up precisely.
24 | SAP Quarterly Statement Q2 2019 |
(H.3) Segment Reporting – Half Year
Applications, Technology & Services
€ millions, unless otherwise stated | | Q1–Q2 2019 | Q1–Q2 2018 | D in % | D in % |
| Actual
Currency | Constant
Currency | Actual
Currency | Actual
Currency | Constant
Currency |
Cloud – SaaS/PaaS1) | 1,163 | 1,125 | 849 | 37 | 33 |
Cloud – IaaS2) | 327 | 315 | 217 | 51 | 45 |
Cloud | 1,490 | 1,440 | 1,066 | 40 | 35 |
Software licenses | 1,491 | 1,460 | 1,496 | 0 | –2 |
Software support | 5,684 | 5,541 | 5,386 | 6 | 3 |
Software licenses and support | 7,174 | 7,001 | 6,881 | 4 | 2 |
Cloud and software | 8,665 | 8,441 | 7,947 | 9 | 6 |
Services | 1,710 | 1,663 | 1,582 | 8 | 5 |
Total segment revenue | 10,375 | 10,104 | 9,529 | 9 | 6 |
Cost of cloud – SaaS/PaaS1) | –437 | –421 | –349 | 25 | 21 |
Cost of cloud – IaaS2) | –239 | –233 | –195 | 23 | 20 |
Cost of cloud | –677 | –654 | –544 | 24 | 20 |
Cost of software licenses and support | –955 | –933 | –911 | 5 | 2 |
Cost of cloud and software | –1,632 | –1,587 | –1,455 | 12 | 9 |
Cost of services | –1,341 | –1,312 | –1,216 | 10 | 8 |
Total cost of revenue | –2,973 | –2,899 | –2,671 | 11 | 9 |
Segment gross profit | 7,402 | 7,205 | 6,858 | 8 | 5 |
Other segment expenses | –3,311 | –3,237 | –3,138 | 6 | 3 |
Segment profit (loss) | 4,092 | 3,968 | 3,721 | 10 | 7 |
Margins | | | | | |
Cloud gross margin – SaaS/PaaS1) (in %) | 62.4 | 62.5 | 58.9 | 3.5pp | 3.7pp |
Cloud gross margin – IaaS2) (in %) | 26.9 | 26.1 | 10.3 | 16.6pp | 15.8pp |
Cloud gross margin (in %) | 54.6 | 54.6 | 49.0 | 5.6pp | 5.6pp |
Segment gross margin (in %) | 71.3 | 71.3 | 72.0 | –0.6pp | –0.7pp |
Segment margin (in %) | 39.4 | 39.3 | 39.0 | 0.4pp | 0.2pp |
1) Software as a service/platform as a service
2) Infrastructure as a service
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 25 |
Intelligent Spend Group
€ millions, unless otherwise stated | | Q1–Q2 2019 | Q1–Q2 2018 | D in % | D in % |
| Actual
Currency | Constant
Currency | Actual
Currency | Actual
Currency | Constant
Currency |
Cloud – SaaS/PaaS1) | 1,293 | 1,229 | 1,014 | 28 | 21 |
Cloud | 1,293 | 1,229 | 1,014 | 28 | 21 |
Software licenses | 0 | 0 | 0 | <-100 | <-100 |
Software support | 8 | 8 | 8 | 1 | –5 |
Software licenses and support | 8 | 7 | 8 | –5 | –10 |
Cloud and software | 1,301 | 1,237 | 1,022 | 27 | 21 |
Services | 225 | 214 | 210 | 7 | 2 |
Total segment revenue | 1,526 | 1,451 | 1,233 | 24 | 18 |
Cost of cloud – SaaS/PaaS1) | –283 | –270 | –229 | 23 | 18 |
Cost of cloud | –283 | –270 | –229 | 23 | 18 |
Cost of software licenses and support | –4 | –4 | –3 | 26 | 19 |
Cost of cloud and software | –287 | –274 | –233 | 23 | 18 |
Cost of services | –179 | –172 | –150 | 19 | 15 |
Total cost of revenue | –466 | –446 | –382 | 22 | 17 |
Segment gross profit | 1,060 | 1,005 | 850 | 25 | 18 |
Other segment expenses | –746 | –712 | –622 | 20 | 15 |
Segment profit (loss) | 314 | 293 | 229 | 37 | 28 |
Margins | | | | | |
Cloud gross margin – SaaS/PaaS1) (in %) | 78.1 | 78.0 | 77.4 | 0.8pp | 0.6pp |
Cloud gross margin (in %) | 78.1 | 78.0 | 77.4 | 0.8pp | 0.6pp |
Segment gross margin (in %) | 69.5 | 69.3 | 69.0 | 0.5pp | 0.3pp |
Segment margin (in %) | 20.6 | 20.2 | 18.5 | 2.0pp | 1.6pp |
1) Software as a service/platform as a service
Due to rounding, numbers may not add up precisely.
26 | SAP Quarterly Statement Q2 2019 |
Customer and Experience Management
€ millions, unless otherwise stated | | Q1–Q2 2019 | Q1–Q2 2018 | D in % | D in % |
| Actual
Currency | Constant
Currency | Actual
Currency | Actual
Currency | Constant
Currency |
Cloud – SaaS/PaaS1) | 510 | 486 | 210 | >100 | >100 |
Cloud | 510 | 486 | 210 | >100 | >100 |
Software licenses | 100 | 97 | 125 | –20 | –22 |
Software support | 0 | 0 | 0 | 40 | 31 |
Software licenses and support | 100 | 97 | 125 | –20 | –22 |
Cloud and software | 610 | 583 | 335 | 82 | 74 |
Services | 57 | 53 | 3 | >100 | >100 |
Total segment revenue | 667 | 636 | 338 | 97 | 88 |
Cost of cloud – SaaS/PaaS1) | –123 | –120 | –68 | 80 | 76 |
Cost of cloud | –123 | –120 | –68 | 80 | 76 |
Cost of software licenses and support | –10 | –10 | –10 | –5 | –6 |
Cost of cloud and software | –133 | –130 | –79 | 69 | 65 |
Cost of services | –30 | –28 | 1 | <-100 | <-100 |
Total cost of revenue | –163 | –158 | –78 | >100 | >100 |
Segment gross profit | 503 | 478 | 260 | 94 | 84 |
Other segment expenses | –513 | –490 | –265 | 93 | 85 |
Segment profit (loss) | –10 | –13 | –5 | 78 | >100 |
Margins | | | | | |
Cloud gross margin – SaaS/PaaS1) (in %) | 75.8 | 75.3 | 67.4 | 8.4pp | 7.8pp |
Cloud gross margin (in %) | 75.8 | 75.3 | 67.4 | 8.4pp | 7.8pp |
Segment gross margin (in %) | 75.5 | 75.1 | 76.9 | –1.4pp | –1.8pp |
Segment margin (in %) | –1.5 | –2.0 | –1.6 | 0.2pp | –0.4pp |
1) Software as a service/platform as a service
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 27 |
Reconciliation of Cloud Revenues and Margins
€ millions, unless otherwise stated | | | | Q1–Q2 2019 | | Q1–Q2 2018 | | D in % | | D in % | |
| | | | Actual
Currency | | Constant
Currency | | Actual
Currency | | Actual
Currency | | Constant
Currency | |
| | Intelligent Spend Group segment | | 1,293 | | 1,229 | | 1,014 | | 28 | | 21 | |
Cloud revenue – SaaS/PaaS1) | | Other3) | | 1,678 | | 1,616 | | 1,068 | | 57 | | 51 | |
| | Total | | 2,971 | | 2,845 | | 2,082 | | 43 | | 37 | |
Cloud revenue – IaaS2) | | | | 327 | | 315 | | 217 | | 51 | | 45 | |
Cloud revenue | | | | 3,299 | | 3,161 | | 2,299 | | 43 | | 37 | |
| | Intelligent Spend Group segment | | 78.1 | | 78.0 | | 77.4 | | 0.8pp | | 0.6pp | |
Cloud gross margin – SaaS/PaaS1) (in %) | | Other3) | | 66.4 | | 66.3 | | 61.0 | | 5.4pp | | 5.3pp | |
| | Total | | 71.5 | | 71.4 | | 69.0 | | 2.5pp | | 2.4pp | |
Cloud gross margin – IaaS2) (in %) | | | | 26.9 | | 26.1 | | 10.3 | | 16.6pp | | 15.8pp | |
Cloud gross margin (in %) | | | | 67.1 | | 66.9 | | 63.4 | | 3.7pp | | 3.4pp | |
1) Software as a service/platform as a service
2) Infrastructure as a service
3) Other includes the Applications, Technology & Services segment, the Customer and Experience Management segment, and miscellaneous. The individual revenue and margin numbers for the Applications, Technology & Services segment and the Customer and Experience Management segment are disclosed on the previous pages.
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 28 |
(I) Revenue by Region (IFRS and Non-IFRS)
(I.1) Revenue by Region (IFRS and Non-IFRS) – Quarter
€ millions | | | | | | | | Q2 2019 | | | | Q2 2018 | | | | | | D in % | |
| | IFRS | | Adj. | | Non-IFRS | Currency
Impact | Non-IFRS
Constant
Currency | | IFRS | | Adj. | | Non-IFRS | | IFRS | | Non-IFRS | | Non-IFRS
Constant
Currency1) | |
Cloud Revenue by Region | | | | | | | | | | | | | | | | | | | |
EMEA | | 511 | | 0 | | 511 | –7 | 504 | | 349 | | 0 | | 349 | | 46 | | 46 | | 44 | |
Americas | | 970 | | 25 | | 995 | –51 | 944 | | 713 | | 15 | | 727 | | 36 | | 37 | | 30 | |
APJ | | 212 | | 0 | | 212 | –5 | 206 | | 150 | | 0 | | 150 | | 41 | | 41 | | 37 | |
Cloud revenue | | 1,692 | | 25 | | 1,717 | –64 | 1,654 | | 1,213 | | 14 | | 1,227 | | 40 | | 40 | | 35 | |
| | | | | | | | | | | | | | | | | | | | | |
Cloud and Software Revenue by Region | | | | | | | | | | | | | | | | | |
EMEA | | 2,445 | | 0 | | 2,445 | –13 | 2,432 | | 2,249 | | 0 | | 2,249 | | 9 | | 9 | | 8 | |
Americas | | 2,185 | | 25 | | 2,210 | –111 | 2,098 | | 1,897 | | 15 | | 1,912 | | 15 | | 16 | | 10 | |
APJ | | 865 | | 0 | | 865 | –17 | 848 | | 798 | | 0 | | 798 | | 8 | | 8 | | 6 | |
Cloud and software revenue | | 5,495 | | 25 | | 5,520 | –141 | 5,378 | | 4,944 | | 15 | | 4,958 | | 11 | | 11 | | 8 | |
| | | | | | | | | | | | | | | | | | | | | |
Total Revenue by Region | | | | | | | | | | | | | | | | | | | |
Germany | | 948 | | 0 | | 948 | –1 | 948 | | 864 | | 0 | | 864 | | 10 | | 10 | | 10 | |
Rest of EMEA | | 1,961 | | 0 | | 1,961 | –15 | 1,947 | | 1,830 | | 0 | | 1,830 | | 7 | | 7 | | 6 | |
Total EMEA | | 2,910 | | 0 | | 2,910 | –15 | 2,894 | | 2,695 | | 0 | | 2,694 | | 8 | | 8 | | 7 | |
United States | | 2,201 | | 25 | | 2,226 | –119 | 2,107 | | 1,907 | | 15 | | 1,922 | | 15 | | 16 | | 10 | |
Rest of Americas | | 499 | | 0 | | 499 | –19 | 480 | | 453 | | 0 | | 453 | | 10 | | 10 | | 6 | |
Total Americas | | 2,700 | | 25 | | 2,725 | –138 | 2,588 | | 2,360 | | 15 | | 2,375 | | 14 | | 15 | | 9 | |
Japan | | 262 | | 0 | | 262 | –13 | 249 | | 234 | | 0 | | 234 | | 12 | | 12 | | 6 | |
Rest of APJ | | 759 | | 0 | | 759 | –7 | 752 | | 711 | | 0 | | 711 | | 7 | | 7 | | 6 | |
Total APJ | | 1,021 | | 0 | | 1,021 | –20 | 1,001 | | 945 | | 0 | | 945 | | 8 | | 8 | | 6 | |
Total revenue | | 6,631 | | 25 | | 6,656 | –173 | 6,482 | | 5,999 | | 15 | | 6,014 | | 11 | | 11 | | 8 | |
1) Constant currency period-over-period changes are calculated by comparing the current year’s non-IFRS constant currency numbers with the non-IFRS numbers of the previous year’s respective period.
Due to rounding, numbers may not add up precisely.
29 | SAP Quarterly Statement Q2 2019 |
(I.2) Revenue by Region (IFRS and Non-IFRS) – Half Year
€ millions | | | | | | | Q1–Q2 2019 | | | | Q1–Q2 2018 | | | | | | D in % | |
| | IFRS | | Adj. | | Non-IFRS | Currency
Impact | Non-IFRS
Constant
Currency | | IFRS | | Adj. | | Non-IFRS | | IFRS | | Non-
IFRS | | Non-IFRS
Constant
Currency1) | |
Cloud Revenue by Region | | | | | | | | | | | | | | | | | | | |
EMEA | | 967 | | 0 | | 967 | –15 | 952 | | 671 | | 0 | | 671 | | 44 | | 44 | | 42 | |
Americas | | 1,868 | | 51 | | 1,919 | –112 | 1,807 | | 1,333 | | 16 | | 1,349 | | 40 | | 42 | | 34 | |
APJ | | 412 | | 0 | | 412 | –12 | 401 | | 280 | | 0 | | 280 | | 48 | | 48 | | 43 | |
Cloud revenue | | 3,247 | | 51 | | 3,299 | –138 | 3,161 | | 2,283 | | 16 | | 2,299 | | 42 | | 43 | | 37 | |
| | | | | | | | | | | | | | | | | | | | | |
Cloud and Software Revenue by Region | | | | | | | | | | | | | | | | | |
EMEA | | 4,629 | | 0 | | 4,629 | –26 | 4,603 | | 4,207 | | 0 | | 4,207 | | 10 | | 10 | | 9 | |
Americas | | 4,230 | | 51 | | 4,281 | –247 | 4,034 | | 3,586 | | 16 | | 3,602 | | 18 | | 19 | | 12 | |
APJ | | 1,680 | | 0 | | 1,680 | –42 | 1,637 | | 1,503 | | 0 | | 1,503 | | 12 | | 12 | | 9 | |
Cloud and software revenue | | 10,538 | | 51 | | 10,589 | –315 | 10,274 | | 9,295 | | 16 | | 9,311 | | 13 | | 14 | | 10 | |
| | | | | | | | | | | | | | | | | | | | | |
Total Revenue by Region | | | | | | | | | | | | | | | | | | | |
Germany | | 1,783 | | 0 | | 1,783 | –1 | 1,782 | | 1,617 | | 0 | | 1,617 | | 10 | | 10 | | 10 | |
Rest of EMEA | | 3,754 | | 0 | | 3,754 | –28 | 3,726 | | 3,445 | | 0 | | 3,445 | | 9 | | 9 | | 8 | |
Total EMEA | �� | 5,537 | | 0 | | 5,537 | –30 | 5,507 | | 5,062 | | 0 | | 5,062 | | 9 | | 9 | | 9 | |
United States | | 4,245 | | 51 | | 4,296 | –272 | 4,024 | | 3,573 | | 16 | | 3,589 | | 19 | | 20 | | 12 | |
Rest of Americas | | 957 | | 0 | | 957 | –33 | 925 | | 851 | | 0 | | 851 | | 12 | | 12 | | 9 | |
Total Americas | | 5,202 | | 51 | | 5,253 | –305 | 4,949 | | 4,424 | | 16 | | 4,440 | | 18 | | 18 | | 11 | |
Japan | | 526 | | 0 | | 526 | –28 | 497 | | 443 | | 0 | | 443 | | 19 | | 19 | | 12 | |
Rest of APJ | | 1,457 | | 0 | | 1,457 | –22 | 1,435 | | 1,331 | | 0 | | 1,331 | | 9 | | 9 | | 8 | |
Total APJ | | 1,983 | | 0 | | 1,983 | –50 | 1,933 | | 1,774 | | 0 | | 1,774 | | 12 | | 12 | | 9 | |
Total revenue | | 12,722 | | 51 | | 12,773 | –385 | 12,389 | | 11,260 | | 16 | | 11,276 | | 13 | | 13 | | 10 | |
1) Constant currency period-over-period changes are calculated by comparing the current year’s non-IFRS constant currency numbers with the non-IFRS numbers of the previous year’s respective period.
Due to rounding, numbers may not add up precisely.
SAP Quarterly Statement Q2 2019 | 30 |
(J) Employees by Region and Functional Areas
Full-time equivalents | | | | | | | | 6/30/2019 | | | | | | | | 6/30/2018 | |
| | EMEA | | Americas | | APJ | | Total | | EMEA | | Americas | | APJ | | Total | |
Cloud and software | | 6,390 | | 4,530 | | 5,260 | | 16,180 | | 6,128 | | 4,113 | | 5,051 | | 15,291 | |
Services | | 8,302 | | 5,766 | | 5,772 | | 19,839 | | 7,924 | | 5,561 | | 5,370 | | 18,855 | |
Research and development | | 12,486 | | 5,378 | | 8,805 | | 26,668 | | 11,866 | | 5,534 | | 8,681 | | 26,081 | |
Sales and marketing | | 9,966 | | 10,223 | | 5,118 | | 25,307 | | 9,791 | | 9,621 | | 4,962 | | 24,374 | |
General and administration | | 3,120 | | 2,064 | | 1,239 | | 6,424 | | 2,814 | | 1,922 | | 1,096 | | 5,832 | |
Infrastructure | | 2,240 | | 1,022 | | 651 | | 3,913 | | 1,976 | | 902 | | 534 | | 3,413 | |
SAP Group (6/30) | | 42,504 | | 28,983 | | 26,844 | | 98,332 | | 40,498 | | 27,653 | | 25,694 | | 93,846 | |
Thereof acquisitions1) | | 338 | | 1,638 | | 137 | | 2,113 | | 638 | | 952 | | 434 | | 2,024 | |
SAP Group (six months’ end average) | | 42,538 | | 29,283 | | 26,784 | | 98,605 | | 39,722 | | 27,025 | | 25,219 | | 91,965 | |
1) Acquisitions closed between January 1 and June 30 of the respective year
31 | SAP Quarterly Statement Q2 2019 |
Other Disclosures
(K) Accounting Policy Changes
(K.1) Adoption of IFRS 16
As of January 1, 2019, SAP changed its accounting policies to adopt IFRS 16 ‘Leases’. Under the IFRS 16 adoption method chosen by SAP, prior years are not restated to conform to the new policies. Consequently, the year over year changes in profit, assets and liabilities and cash flows in 2019 are impacted by the new policies.
The transition impact of the policy change as of January 1, 2019, was as follows:
– Property, plant and equipment are higher by €1.9 billion resulting from the recognition of right-of-use assets,
– Financial liabilities are higher by €2.1 billion due to the recognition of lease liabilities,
– Trade and other payables are lower by €0.1 billion due to the de-recognition of deferred rent.
In the second quarter (first half) of 2019, we have recognized in our consolidated income statement depreciation expense from right-of-use assets of €90 million (€179 million) and interest expense on lease liabilities of €13 million (€26 million).
IFRS 16 also affects SAP’s cash flow statement in the first half of 2019 as follows:
– Operating cash flow increased by €185 million,
– Cash flow from financing activities decreased by €185 million.
The Free Cash Flow measure is not affected by this change.
Please also refer to section “Impact of the New Accounting Standard IFRS 16 ‘Leases’” in our 2019 Consolidated Half-Year Financial Statements for further explanations of the changes in accounting policies as a result of the adoption of IFRS 16.
For more information about the financial impacts of the adoption of IFRS 16, see the Notes to the 2019 Consolidated Half-Year Financial Statements, Note (D.3).
(L) Impact of Hyperinflation
We apply hyperinflation accounting for our subsidiaries in Argentina and Venezuela by restating the financial statements of these subsidiaries for the current period to account for changes in the general purchasing power of the local currency based on relevant price indexes at the reporting date. The restated financial statements of our subsidiaries in Venezuela and Argentina are translated at closing rates. Most significantly impacted by this accounting are (IFRS):
– Equity (retained earnings and other comprehensive income) (decrease of €23 million as at June 30, 2019),
– Contract liabilities (increase of €33 million as at June 30, 2019).
For more information about hyperinflation accounting, see the Notes to the 2019 Consolidated Half-Year Financial Statements, Note (C.4).
(M) Business Combinations and Divestments
(M.1) Business Combinations
We acquired several businesses during 2018 and in the first half of 2019 which, since their acquisition date, have contributed to our consolidated income statement but not in the comparison period.
The legal entities added by our significant acquisitions recognized (incremental amounts not included in the comparative periods)
– cloud revenue
n in the second quarter 2019 of €69 million (IFRS) and of €94 million (non-IFRS),
n in the first half 2019 of €163 million (IFRS) and of €215 million (non-IFRS),
– operating profit
n in the second quarter 2019 of –€221 million (IFRS) and of €3 million (non-IFRS),
n in the first half 2019 of –€429 million (IFRS) and of €21 million (non-IFRS).
SAP Quarterly Statement Q2 2019 | 32 |
These legal entities added by our significant acquisitions also recognized operating profit within our Customer and Experience Management segment
– in the second quarter 2019 of €3 million,
– in the first half 2019 of €24 million.
For more information about business combinations concluded in the first half of 2019, see the Notes to the 2019 Consolidated Half-Year Financial Statements, Note (D.1).
(M.2) Divestments
At the beginning of 2019, we sold one content as a service (CaaS) business to a third party. This sale generated
– a profit of €53 million in the first half 2019 (incremental income of €6 million in the second quarter), which is classified, in our half-year 2019 consolidated income statement, as other operating income,
– incremental employee related expenses of €7 million in the first quarter 2019, that are classified, in our half-year 2019 consolidated income statement, as cost of research and development.
(N) Miscellaneous Disclosures
(N.1) Changes in Estimates
At the beginning of 2019, we changed our estimate of the expected useful lives of certain computer hardware. The effect of this change is a reduction of actual and expected depreciation expense of
– €27 million in the second quarter 2019 (thereof €21 million in cost of cloud),
– €49 million in the first half 2019 (thereof €35 million in cost of cloud),
– €93 million in the full year 2019 (thereof €71 million in cost of cloud).
For more information regarding changes in estimates, see the Notes to the 2019 Consolidated Half-Year Financial Statements, Note (D.2).
(N.2) Fair Value Measurement
In the second quarter of 2019, the fair value estimate for SAP’s investment in Looker Data Sciences Inc. (Looker) was adjusted to reflect the estimated exit value based on Google LLC’s (Google) announcement on June 6, 2019, that Google had entered into a definitive agreement to acquire Looker. The closing of this transaction is subject to regulatory approvals. The adjustment resulted in gains recognized in finance income from financial assets at fair value through profit and loss of €45 million. The investment in Looker is held through our interest in Sapphire Ventures Fund II, L.P., a consolidated venture investment fund.
33 | SAP Quarterly Statement Q2 2019 |
