Skip to Content
chart ticker

Investment Story

In the digital era, businesses that are able to harness their data faster and more effectively will be the ones that succeed through disruption.

Q2 and Half-Year 2022 Financial Results

July 21, 2022

As our Q2 results demonstrate, SAP’s portfolio is more relevant than ever. Our transition to the cloud is ahead of schedule and we have exceeded topline expectations, with cloud revenue becoming SAP’s largest revenue stream. Our pipeline is strong, and we are winning market share underpinned by the very strong 100% growth of S/4HANA current cloud backlog.

Christian Klein, CEO

This quarter again proves that our strategy is resonating, even in an increasingly challenging external environment. We continued to deliver strong topline growth, exceeding revenue expectations and increasing cloud profitability. This quarter, we have recognized the main impact of the war in Ukraine. We believe that we are now able to capitalize on our substantial growth investments of the last 18 months, by delivering sustained growth and profitability expansion.

Luka Mucic, CFO

Financial Performance

Group results at a glance – Second quarter 2022

  IFRS Non-IFRS1
€ million, unless otherwise stated Q2 2022 Q2 2021 ∆ in % Q2 2022 Q2 2021 ∆ in % ∆ in % const. curr.
Cloud revenue 3,056 2,276 34 3,056 2,276 34 24
Software licenses 426 650 −34 426 650 −34 −38
Software support 2,977 2,823 5 2,977 2,823 5 0
Software licenses and support revenue 3,403 3,474 −2 3,403 3,474 −2 −7
Cloud and software revenue 6,459 5,750 12 6,459 5,750 12 5
Total revenue 7,517 6,669 13 7,517 6,669 13 5
Share of more predictable revenue (in %) 80 76 4pp 80 76 4pp  
Operating profit (loss) 673 984 −32 1,680 1,922 −13 −16
Profit (loss) after tax 203 1,449 −86 1,093 2,214 −51  
Earnings per share - Basic (in €) 0.29 1.15 −75 0.96 1.75 −45  
Earnings per share - Diluted (in €) 0.28 1.15 −75        
Net cash flows from operating activities 268 686 −61        
Free cash flow       −86 403 <-100  
Number of employees (FTE, June 30) 110,409 103,876 6        

1 For a breakdown of the individual adjustments see table “Non-IFRS Adjustments by Functional Areas” in this Quarterly Statement.

Due to rounding, numbers may not add up precisely.

Group results at a glance – Six months ended June 2022

  IFRS Non-IFRS1
€ million, unless otherwise stated Q1–Q2
2022
Q1–Q2
2021
∆ in % Q1–Q2
2022
Q1–Q2
2021
∆ in % ∆ in %
const.
curr.
Cloud revenue 5,876 4,421 33 5,876 4,421 33 25
Software licenses 743 1,133 −34 743 1,133 −34 −38
Software support 5,900 5,624 5 5,900 5,624 5 0
Software licenses and support revenue 6,643 6,757 −2 6,643 6,757 −2 −6
Cloud and software revenue 12,519 11,178 12 12,519 11,178 12 6
Total revenue 14,594 13,017 12 14,594 13,017 12 6
Share of more predictable revenue (in %) 81 77 4pp 81 77 4pp  
Operating profit (loss) 1,726 1,944 −11 3,358 3,660 −8 −12
Profit (loss) after tax 835 2,519 −67 2,259 3,934 −43  
Earnings per share - Basic (in €) 0.92 2.03 −55 1.96 3.14 −37  
Earnings per share - Diluted (in €) 0.91 2.03 −55        
Net cash flows from operating activities 2,750 3,771 −27        
Free cash flow       2,079 3,251 −36  
Number of employees (FTE, June 30) 110,409 103,876 6        

1 For a breakdown of the individual adjustments see table “Non-IFRS Adjustments by Functional Areas” in this Quarterly Statement.

Due to rounding, numbers may not add up precisely.

Cloud Performance – Second quarter 2022

  IFRS Non-IFRS1
€ millions, unless otherwise stated Q2 2022 ∆ in % Q2 2022 ∆ in % ∆ in %
constant
currency
Current Cloud Backlog          
Total2 NA NA 10,403 34 25
Thereof SAP S/4HANA2 NA NA 2,258 100 87
Cloud Revenue          
SaaS3 2,409 35 2,409 35 24
PaaS4 389 49 389 49 40
IaaS5 257 14 257 14 7
Total 3,056 34 3,056 34 24
Thereof SAP S/4HANA 472 84 472 84 72
Thereof Qualtrics 279 61 279 61 43
Cloud Gross Profit          
SaaS3 1,753 41 1,813 40 28
PaaS4 310 47 310 47 41
IaaS5 70 −12 73 −11 −6
Total 2,132 39 2,196 38 28
Thereof Qualtrics 211 52 247 54 37
Cloud Gross Margin (in %)          
SaaS3 (in %) 72.8 3.1 pp 75.2 2.6 pp 2.6 pp
PaaS4 (in %) 79.5 −1.2 pp 79.6 −1.2 pp 0.5 pp
IaaS5 (in %) 27.1 −8.1 pp 28.5 −8.2 pp −4.6 pp
Total 69.8 2.3 pp 71.9 1.8 pp 2.3 pp
Thereof Qualtrics 75.8 −4.4pp 88.6 −3.8 pp −3.9 pp

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 matching IFRS equivalent.

3 Software as a service

4 Platform as a service

5 Infrastructure as a service

Due to rounding, numbers may not add up precisely

Cloud Performance − Six months ended June 30, 2022

  IFRS Non-IFRS1
€ millions, unless otherwise stated Q1-Q2 2022 ∆ in % Q1-Q2 2022 ∆ in % ∆ in %
constant
currency
Current Cloud Backlog          
Total2 NA NA 10,403 34 25
Thereof SAP S/4HANA2 NA NA 2,258 100 87
Cloud Revenue          
SaaS3 4,644 33 4,644 33 25
PaaS4 739 50 739 50 43
IaaS5 492 12 492 12 6
Total 5,876 33 5,876 33 25
Thereof SAP S/4HANA 876 81 876 81 71
Thereof Qualtrics 548 65 548 65 50
Cloud Gross Profit          
SaaS3 3,343 38 3,453 36 27
PaaS4 583 46 583 46 41
IaaS5 129 −13 134 −12 −9
Total 4,054 36 4,170 35 27
Thereof Qualtrics 418 60 489 59 45
Cloud Gross Margin (in %)          
SaaS3 (in %) 72.0 2.3 pp 74.4 1.8 pp 1.6 pp
PaaS4 (in %) 78.8 −1.9 pp 78.8 −2.0 pp −0.9 pp
IaaS5 (in %) 26.2 −7.6 pp 27.3 −7.7 pp −5.0 pp
Total 69.0 1.7 pp 71.0 1.2 pp 1.4 pp
Thereof Qualtrics 76.3 −2.1pp 89.1 −3.2 pp −3.3 pp

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 matching IFRS equivalent.

3 Software as a service

4 Platform as a service

5 Infrastructure as a service

Due to rounding, numbers may not add up precisely

Financial Highlights


Current cloud backlog exceeded €10 billion for the first time and was up 34% to €10.40 billion and up 25% at constant currencies, accelerating from 23% at constant currencies in the first quarter and demonstrating a strong foundation of future cloud revenue. 


Driven by double-digit growth across the SaaS and PaaS portfolio, cloud revenue was up 34% to €3.06 billion, up 24% at constant currencies. 

Our cloud gross margin was up 2.3 percentage points to 69.8% (IFRS) and up 1.8 percentage points to 71.9% (non-IFRS). This was driven by a strong increase in our SaaS margin, despite increased investments into our next generation cloud delivery program. Revenue growth, alongside cloud gross margin expansion, drove strong cloud gross profit growth of 39% (IFRS), 38% (non-IFRS) and 28% (non-IFRS at constant currencies). 

IFRS operating profit decreased 32% to €673 million and IFRS operating margin decreased by 5.8 percentage points to 8.9%. Non-IFRS operating profit was down 13% to €1.68 billion and decreased 16% at constant currencies. Non-IFRS operating margin decreased by 6.5 percentage points to 22.4% and was down by 5.8 percentage points at constant currencies. This was mainly driven by reduced contribution from software licenses revenue, as well as significant bad debt expenses related to the war in Ukraine. In addition, IFRS operating profit was affected by restructuring expenses of €130 million, primarily incurred due to the exit from Russia and Belarus. Estimated immediate financial impacts of the war in Ukraine lowered IFRS operating profit growth by 28 percentage points, non-IFRS operating profit growth by 8 percentage points and non-IFRS operating profit growth at constant currencies by 6 percentage points.

IFRS earnings per share decreased 75% to €0.29 and non-IFRS earnings per share decreased 45% to €0.96. The year-over-year decline of earnings per share reflects a contribution to financial income by Sapphire Ventures that, due to current market conditions, was lower than in the same period last year. Our effective tax rate was 62.2% (IFRS) and 29.3% (non-IFRS). The year-over-year effective tax rate increase mainly resulted from changes in tax exempt income and non-deductible expenses. For non-IFRS, the changes in non-deductible expenses do not apply due to respective adjustments of pre-tax figures.

Free cash flow for the first six months was down 36% to €2.08 billion. The decrease versus last year is mainly attributable to the development of profitability and impacts from working capital due to SAP’s continuing move to the cloud. In the second half-year, we expect a more favorable cash flow development due to lower cash taxes and better profitability. We are therefore reiterating our free cash flow outlook for the year.

On January 13, SAP announced a new share repurchase program to support the transition of SAP’s share-based compensation programs to equity settlement, which was completed on April 29. SAP had repurchased 10,004,763 shares at an average price of €99.63 with a purchased value of approximately €997 million. In addition, on July 21, SAP announced another share buyback program of approximately €500 million. Repurchased shares will primarily be used to service awards granted under share-based compensation plans for employees.


Impact of War in Ukraine 

 

In the first six months, SAP’s business was impacted by the war in Ukraine and SAP’s decision to wind down its business operations in Russia and Belarus. 

In the second quarter current cloud backlog was approximately €64 million lower due to the termination of existing cloud engagements, reducing current cloud backlog growth by approximately 1 percentage point at constant currencies. IFRS and non-IFRS operating profit were lowered mainly due to reduced software licenses and support revenues and bad debt reserves recorded on trade receivables. IFRS operating profit was additionally affected by restructuring expenses of approximately €120 million incurred due to severance payments to employees in Russia and Belarus and further impairments of assets. The increase of restructuring expenses versus prior expectations is due to the appreciation of the Russian ruble over the past quarter. The overall impact on IFRS operating profit was approximately €280 million (first six months: approximately €350 million) and on non-IFRS operating profit approximately €160 million (first six months: approximately €230 million).

For the fiscal year, we expect a total revenue impact of approximately €300 million at constant currencies from lack of new business and discontinuation of existing business. For non-IFRS operating profit we expect an impact of approximately €350 million at constant currencies from the revenue gaps mentioned above and other expense items. 

Other impacts due to this rapidly evolving situation are currently unknown and could potentially subject our business to materially adverse consequences should the situation escalate beyond its current scope.

Business Highlights

More than 650 customers chose SAP S/4HANA in the quarter, increasing total adoption to approximately 20,000 customers, up 15% year over year, of which more than 14,500 are live. In the second quarter, more than 60% of the additional SAP S/4HANA customers were net new.

In the second quarter, customers around the globe chose “RISE with SAP” to drive end-to-end business transformation, including ABB Information Systems, Bridgestone Australia, Capitec Bank, EisnerAmper, Hisense Group, Mitsubishi Materials Corporation, Moderna, Pitney Bowes, RWE, Sumitomo Rubber Industries, Zoomlion. Customers continue to expand their SAP landscape: Microsoft invested in “RISE with SAP”, while GlobalFoundries, HeidelbergCement, Malaysia Airlines, and Mapletree Investments combined the “RISE with SAP” offering with further solutions.

Key customer wins across SAP’s solution portfolio included: ALTANA, Analog Devices, ASUS, BeiGene, Coop Genossenschaft, Corning, Ericsson, Fisker Inc., FUNKE Mediengruppe, Kyndryl, Moët Hennessy, Persán, Positivo Tecnologia, Sportradar, Votorantim, Wieland-Werke. Antonio Puig, CONA Services, HCL Technologies, and Wittenstein all went live on SAP solutions in the second quarter.

SAP’s cloud revenue performance for the quarter was strong across all regions. Germany had an outstanding cloud revenue performance while the U.S., Brazil, Japan, India and Switzerland were particularly strong.

On May 4, SAP and Google Cloud announced an expansion of their relationship, unveiling new integrations between Google Workspace and SAP’s flagship cloud ERP, SAP S/4HANA Cloud.

On May 11, SAP and IBM announced the latest milestone in their long-standing partnership as IBM undertakes one of the world’s largest corporate transformation projects based on SAP ERP software, designed to fuel the company’s growth and better support its clients.

On May 18, SAP announced that the Annual General Meeting of Shareholders of SAP SE approved all proposals of the Executive Board and Supervisory Board. Prof. Dr. h. c. mult. Hasso Plattner, Dr. Rouven Westphal and Dr. Gunnar Wiedenfels were reelected and Jennifer Xin-Zhe Li was elected to the Supervisory Board. With these elections, the Supervisory Board has reached gender parity. In addition, the compensation report was approved and to ensure a smooth transition between auditors, KPMG, for fiscal year 2022, and the new auditor, BDO, for fiscal year 2023, were elected. Furthermore, the dividend proposal of €2.45 per share for fiscal year 2021 was approved. This amount includes a special dividend of €0.50 to mark the Company’s 50th anniversary.

Segment Results at a Glance

At the beginning of 2022, the Services segment was integrated into the former Applications, Technology & Support segment which was re-named to Applications, Technology & Services. 

Therefore, SAP now has two reportable segments: the Applications, Technology & Services segment and the Qualtrics segment.

In addition, certain marketing costs that we primarily incur for product and solution-specific activities in the Applications, Technology & Services segment are now presented in the results of this segment and are no longer allocated to SAP’s corporate functions.

Segment Performance Second Quarter 2022

€ million, unless otherwise stated
(Non-IFRS)
Applications, Technology & Services1 Qualtrics
Actual
Currency
∆ in % ∆ in %
const. curr.
Actual
Currency
∆ in % ∆ in %
const. curr.
Cloud revenue 2,704 31 22 279 61 43
Segment revenue 7,109 11 4 330 57 39
Segment profit (loss) 2,094 −11 −15 17 25 45
Cloud gross margin (in %) 69.5 1.3pp 2.0pp 88.6 −3.8pp −3.9pp
Segment margin (in %) 29.5 −7.4pp −6.7pp 5.1 −1.3pp 0.2pp

1 Segment information for comparative prior periods were restated to conform with the new segment composition.

SAP’s two reportable segments showed the following performance: 

 

Applications, Technology & Services (AT&S)

 

Segment revenue in AT&S was up 11% to €7.11 billion year over year, up 4% at constant currencies. Segment performance was mainly due to strong Cloud Revenue growth, driven by SAP S/4HANA as well as Business Technology Platform. Software licenses revenue decreased due to the shift to the cloud as more customers are adopting our ‘RISE with SAP’ offering. Segment support revenue was up 5% to €2.98 billion year over year and flat at constant currencies.

 

Qualtrics 

 

Qualtrics segment revenue was up 57% to €330 million year over year, up 39% at constant currencies. The continued strong growth was driven by robust renewal rates and expansions. LINE Plus, Merck KGaA, the New York City Department of Education, PGA TOUR, PNC Financial Services Group, Progress Residential, Scarlet Health, Tata Digital, Toyota North America, and Venues NSW, among others, selected Qualtrics Experience Management Solutions. 

Back to top