SAP Announces Third Quarter and First Nine Months 2018 Results

WALLDORF, Germany — SAP SE announced its financial results for the third quarter 2018 ended September 30, 2018.

  • Cloud Subscription Revenue Up 39% (IFRS) and Up 41% (Non-IFRS at Constant Currencies)
  • Cloud Eclipsing Software Even Faster than Expected: Cloud Subscription Revenue Now 40% Larger than Software License Revenue
  • Accelerated New Cloud Bookings Growth, Up 36% (37% at Constant Currencies)
  • Continued Strong New Cloud and Software License Order Entry, Up 12% at Constant Currencies
  • Total Revenue Up 8% (IFRS) and Up 10% (Non-IFRS at Constant Currencies)
  • Operating Profit Down 6% (IFRS) and Up 11% (Non-IFRS at Constant Currencies) Even with Stronger than Expected Cloud Momentum
  • EPS Down 1% (IFRS) and Up 13% (Non-IFRS)
  • SAP Raises 2018 Outlook Again Backed by Strong Cloud and Overall Business Momentum

Business Performance Financial Highlights Third Quarter 2018 New cloud bookings1 growth accelerated to 36% (37% at constant currencies). Cloud subscriptions and support revenue grew 39% year over year to €1.30 billion (IFRS), up 41% (non-IFRS at constant currencies).  Software revenue was down 9% year over year to €937 million (IFRS), down 8% (non-IFRS at constant currencies). While SAP had a strong software revenue performance in APJ and Greater China, customers in the Americas and parts of EMEA were moving faster than expected to cloud and hybrid models. With its expanded Intelligent Suite in the cloud and unique hybrid capabilities, SAP is capitalizing on this market trend. This is reflected in the strong new cloud and software license order entry, up 12% at constant currencies year over year in the third quarter. Cloud and software revenue grew 7% year over year to €5.01 billion (IFRS), up 10% (non-IFRS at constant currencies). Total revenue grew 8% year over year to €6.02 billion (IFRS), up 10% (non-IFRS at constant currencies).

SAP’s rapidly expanding cloud business together with solid growth in support revenue continued to drive the share of more predictable revenue. The total of cloud subscriptions & support revenue and software support revenue as a percentage of total revenue grew three percentage points year-over-year to 68% in the third quarter.

Amid a higher than expected share of cloud and services revenue third quarter operating profit declined 6% year over year to €1.24 billion (IFRS) and was up 11% (non-IFRS at constant currencies). The IFRS operating profit was mainly impacted by higher share-based compensation expenses. As announced in January 2018, the Company expects a positive revenue and profit impact from the adoption of IFRS 15 in 2018. In the third quarter, this positive impact on SAP’s operating profit was around €74 million. Earnings per share declined 1% at €0.82 (IFRS) and increased 13% to €1.14 (non-IFRS). Operating cash flow for the first nine months was €3.48 billion, down 16% year-over-year. The decrease in operating cash flow was mainly due to higher share-based compensation payments, higher tax and insurance payments as well as currency headwinds. Free cash flow decreased 26% year-over-year to €2.34 billion. Free cash flow was also lower due to the previously announced additional CapEx for 2018. At the end of the third quarter, net liquidity was -€2.78 billion.

Read the full statement.

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