First Quarter 20172016
Results Release
April 25th, 2017
Safe Harbor Statement
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 Securities and Exchange Commission. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of their
dates.
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
2
Income Statement
Balance Sheet and Cash Flow Analysis
Outlook and Additional Information
Appendix
Key performance metrics Q1 2017
Cloud & Software Revenue
Operating Profit
in € millions
in € millions
Q1/16
Q1/17
4,328
3,850
Q1/16
3,851
Q1/17
4,328
813
1.104
673
1.198
IFRS
Non-IFRS
IFRS
Non-IFRS
+12%
+12% (+9%cc)
-17%
+8% (+2%cc)
Cloud Subscriptions &
Support Revenue
Share of
Predictable Revenue
in € millions
in percent
Non-IFRS
69%
5,285
5,285
+0pp
+12%
Non-IFRS
2017
905
906
+34% (+30%cc)
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
in € millions
IFRS
IFRS
+34%
Total Revenue
+12% (+8%cc)
4
Regional performance* Q1 2017
Americas
EMEA
APJ
12% (+8% cc**)
10% (+8% cc**)
21% (+16% cc**)
cloud and software revenue
cloud and software revenue
cloud and software revenue
27% (+22% cc**)
43% (+42% cc**)
65% (+56% cc**)
cloud subscriptions
and support revenue
cloud subscriptions
and support revenue
cloud subscriptions
and support revenue
EMEA with solid cloud and software
performance. In Germany, France
and Italy especially strong cloud
business; Triple-digit software
revenue growth in South Africa and
Netherlands.
APJ with exceptional performance
in cloud and software revenue.
Japan and India with strong results
in cloud subscriptions and software
revenue. Strong double-digit
software revenue growth in Greater
China*** and South Korea.
Strong growth in cloud and software revenue. High double-digit
cloud growth in Canada and Mexico.
Double-digit growth in software
revenue in North America; Brazil
was strong amidst a difficult
macroeconomic environment.
*Revenues calculated based on customer location; All numbers are non-IFRS if not otherwise stated ** at constant currency ***SAP’s Greater China region includes China, Hong Kong and Taiwan
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
5
Fast growing cloud business –
New cloud and software license order entry4) up >30% yoy in Q1/17
* Cloud subscriptions and support revenue
Q1/17 unless otherwise stated
Cloud subscriptions and
support revenue, non-IFRS
New cloud
bookings1)
(+30% at cc)
(+44% at cc )
+34%
+49%
yoy to €906m
SAP Business network –
Segment revenue, non-IFRS*
to €215m
Cloud subscriptions and
support backlog2)
Cloud applications total
subscribers
€5.4bn
~130m
+47% yoy
(€448m | +20% at cc)
>2.7m connected
companies trade on
Ariba network
Number of end users
processing travel &
expenses with Concur
€464m
>$900bn
>47m
yoy +24%
of
commerce3)
Flexible workers managed
with Fieldglass platform
>3.3m
annually
1) New cloud bookings – key measure for SAP’s sales success in the cloud – consist of order entry of a given period that is expected to be classified as cloud subscription and support revenue and results from purchases by
new customers and from incremental purchases by existing customers. Consequently, orders to renew existing contracts are not included. The order amount must be committed. Consequently, due to their pay-per-use
nature, business network transaction fees which do not include a committed minimum consumption are not reflected in the bookings metric (e.g. SAP Ariba and SAP Fieldglass transaction-based fees). Amounts included in
the measures are generally annualized.
2) Cloud subscriptions and support backlog represents expected future cloud subscriptions and support revenue that is contracted but not yet invoiced + thus not recorded in deferred revenue (as of Dec 31, 2016)
3) Network spend volume is the total value of purchase orders transacted on the Ariba Networks in the trailing 12 months.
4) 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 licenses are not included in the software license order entry metric.
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
6
Great start to the year where we continued rapid expansion in our top line
with accelerating cloud growth and an excellent software performance
Non-IFRS
∆% ∆% at cc
Q1/16
30
34
678
10
13
609
3
7
2,564
5
3,173
8
9
12
3,851
6
9
877
8
12
4,728
Q1/17
905
691
2,731
3,422
4,328
957
5,285
IFRS
Q1/16
677
609
2,564
3,172
3,850
877
4,727
∆%
34
13
7
8
12
9
12
Q1/17
906
691
2,731
3,422
4,328
957
5,285
-4,612
-3,914
18
-4,087
-3,624
13
10
Profit Numbers
Operating profit
Finance income, net
Profit before tax
Income tax expense
Profit after tax
673
13
668
-138
530
813
-35
743
-173
570
-17
<-100
-10
-20
-7
1,198
13
1,193
-306
887
1,104
-35
1,034
-271
763
8
<-100
15
13
16
2
Operating margin in %
Basic earnings per share, in €
12.7
0.43
17.2
0.48
-4,5pp
-9
22.7
0.73
23.4
0.64
-0,7pp
15
-1,4pp
€ millions, unless otherwise stated
Revenue Numbers
Cloud subscriptions and support
Software licenses
Software support
Software licenses and support
Cloud and software
Services
Total revenue
Operating Expense Numbers
Total operating expenses
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
7
Non-IFRS operating profit was solid in smallest top line quarter of year –
despite ongoing investments, increased headcount & revenue mix shift effect
Non-IFRS
Total operating expenses | Operating profit
Q1/16
Q1/17
€3.6bn
€4.1bn
€4.7bn
Non-IFRS operating profit
+8% to €1.2bn (Q1/16: €1.1bn)
+2% to €1.1bn at cc
€5.3bn
Non-IFRS operating margin
-0.7pp to 22.7% (Q1/16: 23.4%)
-1.4pp to 22.0% at cc
Total revenue
€1.1bn
€1.2bn
IFRS
Total operating expenses | Operating profit
Q1/16
€3.9bn
Q1/17
€4.6bn
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
€0.8
bn
€0.7
bn
Total revenue
IFRS operating profit
-17% to €0.7bn (Q1/16: €0.8bn)
€4.7bn
IFRS operating margin
-4.5pp to 12.7% (Q1/16: 17.2%)
€5.3bn
8
Revenue mix shift weighs on ATS and cloud gross margins
Non-IFRS
Share of Cloud
subscriptions
revenue*
Q1/16
Q1/17
17.6%
20.9%
App., Tech. & Services
Business Network
43.5% 55.0%
ATS margin
53.7
Business
Network margin
75.4
Cloud margin
65.9
47.3%
* Cloud subscriptions revenue share of cloud and software revenue
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
51.2%
51.7
76.9
 Q1/17: Cloud subscriptions gross margin increased
sequentially by 1.9pp to 64.6%, but a decline 1.2 pp yoy –
primarily due to revenue mix shift effects within different
cloud models and ongoing investments
 For entire cloud operations – we are still investing heavily in
cloud delivery and are also incurring costs to converge our
acquired cloud applications onto SAP HANA, which will
provide massive benefits for customers
 Cloud margin – business network cloud margin increased yoy
by 1.5pp to 76.9%; ATS declined to 51.7% yoy
(1) Revenue mix shift effect within ATS:
accelerated growth, and consequently higher share, of
private cloud business, which was positive for the third
quarter in a row and is now 11.1%. High investments in
public cloud result in a margin of 60.5%.
(2) Revenue mix shift effect within cloud business:
64.6
higher share of ATS segment of total cloud business
weighs on cloud margin as well.
9
Cost ratios
Q1 2017
€5.3bn total revenue, Non-IFRS
R&D
S&M
G&A
as a % of total revenue
as a % of total revenue
as a % of total revenue
€0.8bn
€1.5bn
€0.2bn
14.5%
28.3%
4.6%
0.0pp
+1.1pp
0.0pp
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
10
Income Statement
Balance Sheet and Cash Flow Analysis
Outlook and Additional Information
Appendix
Balance sheet, condensed
March 31, 2017, IFRS
Assets
03/31/17
12/31/16
Cash, cash equivalents and other
financial assets
7,481
4,826
Trade and other receivables
6,596
5,924
Other non-financial assets
1,070
814
Total current assets
15,147
11,564
Goodwill
23,092
23,312
Intangible assets
3,638
3,786
Property, plant, and equipment
2,620
2,580
€ millions
Equity and liabilities
03/31/17
12/31/16
1,183
1,281
158
183
Other liabilities
5,092
5,827
Deferred income, current
6,215
2,383
Total current liabilities
12,649
9.674
Financial liabilities
6,454
6,481
Provisions
321
217
Deferred income, non-current
70
143
Other non-current liabilities
1,464
1,365
Total non-current liabilities
8,308
8,205
€ millions
Trade and other payables
Provisions
Other non-current assets
3,228
3,036
Total liabilities
20,957
17,880
Total non-current assets
32,578
32,713
Total equity
26,768
26,397
Total assets
47,724
44,277
Total equity and liabilities
47,724
44,277
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
12
Q1 2017 – Operating cash flow increased by 16% to €2.9bn year-over-year
12/31/16
–03/31/17
12/31/15
–03/31/16
2,872
2,482
+16%
-291
-168
+73%
2,581
2,313
+12%
Free cash flow as a percentage of total revenue
49%
49%
+/-0pp
Cash conversion rate
5.42
4.36
+24%
72
72
+/-0
€ millions, unless otherwise stated
Operating cash flow
- Capital expenditure
Free cash flow
Days sales outstanding (DSO in days, March. 31)
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
∆
13
Net liquidity improved by €2.8 billion year-over-year
€ millions
+2,872
+4
-291
-22
7,345
+112
-7,805
-3
4,673
-7,805
Group
liquidity1)
12/31/16
1)
2)
3)
Operating
cash flow
Capital Repayment of
expenditure borrowings
Proceeds
Business
from
combinations
borrowings
Other2)
Group
liquidity1)
03/31/17
Financial
Debt
-460
Group
net
liquidity3)
03/31/17
Cash and cash equivalents + current investments
Includes purchase and sales of equity or debt instruments of other entities and effects of FX rates on cash and cash equivalents
Group Net Liquidity defined as Total Group Liquidity minus Group debt – for more details see 2016 integrated report
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
14
Income Statement
Balance Sheet and Cash Flow Analysis
Outlook and Additional Information
Appendix
Reiterated outlook for Q1 2017
SAP’s
outlook
FY 2017
Cloud subscriptions
and support revenue
Cloud and
software revenue
(Non-IFRS at cc)
(Non-IFRS at cc)
Total revenue
(Non-IFRS at cc)
Operating
profit
(Non-IFRS at cc)
€3.8bn to €4.0bn
upper end +34%
+6% to 8%
€23.2 to 23.6bn
€6.8bn to €7.0bn
[ 2016: €2.99bn]
[ 2016: €18.43bn]
[ 2016: €22.07bn]
[ 2016: €6.63bn]
€878m |+30%
+9%
€5.1bn | + 8 %
€1.1bn |+2%
Actual
performance
3M/17
While the Company's full-year 2017 business outlook is at constant currencies, actual currency reported figures are expected to
continue to be impacted by exchange rate fluctuations. If exchange rates remain at the March 2017 average level for the rest of
the year, the Company expects its non-IFRS cloud and software revenue growth rate as well as its non-IFRS operating profit
growth rate to experience a currency benefit in a range of 2 to 5 percentage points for Q2 2017. For the full year 2017 we expect
a range of 1 to 4 percentage points benefit.
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
16
Q1 2017 – Additional outlook information and non-IFRS adjustments
The company expects a full-year 2017 effective tax rate (IFRS) between 26.0% to 27.0%
(2016: 25.3%) and an effective tax rate (non-IFRS) between 27.0% to 28.0% (2016: 26.8%).
Actual Amounts
Q1/16
Actual Amounts
Q1/17
Est. Amounts
for FY 2017
€1m
€0m
<€20m
Share-based payment expenses
€109m
€363m
€900m to €1,150m
Acquisition-related charges
€170m
€157m
€620m to €650m
€11m
€4m
€250m to €300m
€291m
€525m
€1,790m to €2,120m
Non-IFRS adjustments
Revenue adjustments
Restructuring charges
Sum of all adjustments
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
17
Explanation of non-IFRS measures
SAP has provided its non-IFRS estimates for the full-year 2017. 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 Non-IFRS Measures and Estimates online.
Constant currency revenue figures are calculated by translating revenue of the current period
using the average exchange rates from the previous year's respective period instead of the
current period. 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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
18
Income Statement
Balance Sheet and Cash Flow Analysis
Outlook and Additional Information
Appendix
How to look at cloud subscription deals?
Simplified business example
Order
Entry
New and Upsell Bookings (ACV)
Period KPI
 Order Entry measure
 Logic: Average Contract Value per
year
 Decisive factor: Customer signature
4
Renewal
signature
Initial term
Renewal term
Renewal Rate:
100%
Main Cloud performance
indicator
5
1
New
Upsell
4
Renewal
0
31.12.
Q1 Y1
Q2
Q3
Q4
4
Q1 Y2
Q2
Q3
Q4
4
Q1 Y3
Q2
Q3
Q4
Q1 Y4
5
4
1
Invoicing (Billings):
Point in time KPI
 Invoicing usually once per year upfront
4
31.12.
Q1 Y1
Q2
Q3
Q4
Q1 Y2
Q2
Q3
Q4
Q1 Y3
Q2
Q3
Q4
New
Upsell
Renewal
Q1 Y4
15
Backlog (unbilled):
Point in time KPI
 Firm future revenue
 Decisive factors
 signed contract
 Invoicing
Deferred Revenue:
Period KPI
 Revenue recognition needs to be in line
with delivery (IFRS); too early invoiced
part of the deal needs to be parked in
B/S
12
8
8
3
8
4
31.12.
Q1 Y1
Q2
Q3
Q4
3
Q1 Y2
4
Q2
Q1 Y1
Q3
4
Q4
Q2
12
0
0
0
Q1 Y3
Q2
Q3
2
Q3
Q1 Y2
Q2
1
Q4
Q1 Y3
8
Q2
Q3
3
Q4
1
1
1
1
1
1
1
1
1
1
1
1,25
1
31.12.
Q1 Y1
Q2
Q3
Q4
Q1 Y2
Q2
Q3
Q4
Q1 Y3
Upsell
Renewal
Q2
Q3
Q4
New
Upsell
Renewal
Q1 Y4
0,25
1
New
Q1 Y4
0,75
2
Q3
10
2
3,75
1
Q4
Q4
3
1
31.12.
4
3
2
Revenue Recognition:
Period KPI
 Steadily over the course of the contract
term / delivery
© 2017 SAP SE or an SAP affiliate company. All rights reserved.
8
Q1 Y4
New
Upsell
Renewal
20