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Preliminary Fourth Quarter and
Full-Year 2019 Financial Results

January 28, 2020


SAP’s strategy to be the experience company powered by the intelligent enterprise is resonating. More and more customers are turning to SAP and Qualtrics to close their experience gap. At the same time, we continue to see strong adoption of S/4HANA as the core of the intelligent enterprise across all deployment models.
Jennifer Morgan and Christian Klein, Co-CEOs


For the fifth year in a row, we delivered on our full year outlook. I am particularly proud of our strong increase in non-IFRS profits and margins while continuing our remarkable top line momentum. This success would not have been possible without the dedication, innovative spirit and discipline of our people.
Luka Mucic, CFO

Financial Highlights

+35% Q4 Cloud Revenue (non-IFRS)

Revenue & Order Entry

In the fourth quarter, new cloud bookings were €878 million, up 19% (up 17% at constant currencies) and up 20% excluding Infrastructure-as-a-Service (IaaS). Validating SAP’s hybrid cloud strategy, one of SAP’s largest on premise customers decided to move most of its SAP on premise landscape to the cloud and augmented the use of SAP SaaS solutions. This contract contributed 10 percentage points to the total new cloud bookings growth of 19%. SAP expects more of its larger customers to follow this path. Cloud revenue grew 35% year over year to €1.90 billion (IFRS), up 35% (non-IFRS) and up 32% (non-IFRS at constant currencies). Software licenses revenue was down 4% year over year to €2.00 billion (IFRS), down 4% (non-IFRS) and down 6% (non-IFRS at constant currencies).  New cloud and software order entry exceeded €5 billion and grew by 6% year over year (5% at constant currencies) in the fourth quarter. Cloud and software revenue grew 8% year over year to €6.85 billion (IFRS), up 8% (non-IFRS) and 6% (non-IFRS at constant currencies). Total revenue was up 8% year over year to €8.04 billion (IFRS), up 8% (non-IFRS) and up 6% (non-IFRS at constant currencies).

Cloud gross margin increased 6.9 percentage points year over year to 65.2% (IFRS) and increased by 7.4 percentage points year over year to 69.5% (non-IFRS).

+0.8pp Q4 Operating Margin (non-IFRS)

Profit & Profitability

As expected, IFRS operating profit, operating margin and earnings per share were impacted by higher acquisition-related charges due to the Qualtrics acquisition and the charges from SAP’s global restructuring program announced in early 2019. In addition, IFRS operating profit, operating margin and earnings per share were impacted by higher share-based compensation (due to the Qualtrics acquisition and the strong SAP share price increase over the year). For the full year, IFRS operating profit was down 21% to €4.50 billion and operating margin decreased 6.8 percentage points year over year to 16.3% (IFRS). Non-IFRS operating profit at constant currencies was €7.96 billion, achieving the full year outlook (€7.85 to €8.05 billion non-IFRS at constant currencies). Non-IFRS operating margin expanded by 0.8 percentage points year over year (non-IFRS) and 0.6 percentage points (non-IFRS at constant currencies).

Earnings per share decreased 18% to €2.80 (IFRS) and increased 18% to €5.11 (non-IFRS). 

€3.5bn Operating Cash Flow

Cash Flow

Operating cash flow for the full year was €3.50 billion, a decrease of 19% year over year. The decrease in operating cash flow was primarily due to higher payouts related to share-based compensation (€286 million), restructuring payouts (€784 million) and higher tax cash outflows (€651 million) compared to the full year 2018. In addition, operating cash flow experienced a year over year benefit of roughly €404 million from the application of IFRS 16. Free cash flow decreased 20% year over year to €2.28 billion. At year end, net debt was –€8.29 billion. 

Financial Results at a Glance

Fourth Quarter 2019

    IFRS   Non-IFRS1)
€ million, unless otherwise stated   Q4 2019   Q4 2018   ∆ in %   Q4 2019   Q4 2018   ∆ in %   ∆ in % const. curr.
New Cloud Bookings2)   NA   NA   NA   878   736   19   17
Cloud revenue   1,897   1,406   35   1,908   1,413   35   32
Software licenses and support revenue   4,950   4,914   1   4,950   4,914   1   −1
Cloud and software revenue   6,847   6,320   8   6,858   6,327   8   6
Total revenue   8,040   7,428   8   8,051   7,434   8   6
Share of more predictable revenue (in %)   60   57   3pp   60   57   3pp    
Operating profit (loss)   2,125   2,399   −11   2,843   2,545   12   9
Profit (loss) after tax   1,654   1,691   −2   2,192   1,802   22    
Basic earnings per share (in €)   1.37   1.41   −3   1.82   1.51   21    
Number of employees (FTE, December 31)   100,330   96,498   4   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.

Full Year 2019

    IFRS   Non-IFRS1)
€ million, unless otherwise stated   Q1–Q4
2019
  Q1–Q4
2018
  ∆ in %   Q1–Q4
2019
  Q1–Q4
2018
  ∆ in %   ∆ in % const. curr.
New Cloud Bookings2)   NA   NA   NA   2,268   1,814   25   21
Cloud revenue   6,934   4,993   39   7,014   5,027   40   35
Software licenses and support revenue   16,080   15,628   3   16,080   15,629   3   1
Cloud and software revenue   23,014   20,622   12   23,094   20,655   12   9
Total revenue   27,553   24,708   12   27,634   24,741   12   9
Share of more predictable revenue (in %)   67   65   2pp   67   65   2pp    
Operating profit (loss)   4,495   5,703   −21   8,211   7,163   15   11
Profit (loss) after tax   3,387   4,088   −17   6,154   5,199   18    
Basic earnings per share (in €)   2.80   3.42   −18   5.11   4.35   18    
Number of employees (FTE, December 31)   100,330   96,498   4   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.

Segment Results

Fourth Quarter 2019

    Applications, Technology & Services   Intelligent Spend Group   Qualtrics
€ million, unless otherwise stated (Non-IFRS)   Actual
Currency
  ∆ in %   ∆ in %
const. curr.
  Actual
Currency
  ∆ in %   ∆ in %
const. curr.
  Actual
Currency
  ∆ in %   ∆ in %
const. curr.
Cloud revenue   1,094   35   32   701   17   14   110   NA   NA
Segment revenue   6,967   5   3   830   15   12   156   NA   NA
Segment profit (loss)   3,288   8   6   172   17   13   −10   NA   NA
Cloud gross margin (in %)   60.8   10.8pp   10.7pp   78.0   0.0pp   −0.1pp   90.1   NA   NA
Segment margin (in %)   47.2   1.1pp   1.0pp   20.7   0.4pp   0.2pp   −6.5   NA   NA
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