SAP Cloud Business Soars

– Cloud Revenue Growth Accelerates, Up 30% (IFRS) and Up 40% (Non-IFRS at Constant Currencies), Outpacing Competition

– New Cloud Bookings Up 29% at Constant Currencies on Top of a Strong Prior Year Quarter

– Strong Digital Core Innovation Cycle – 600 S/4HANA Customers Added in Q2, S/4HANA Customer Count Now Close to 9,000

– Double-Digit Operating Profit Growth Continues, Up 13% (IFRS) and Up 12% (Non-IFRS at Constant Currencies)

WALLDORF, Germany, July 19, 2018 — SAP SE (NYSE: SAP) today announced its financial results for the second quarter ended June 30, 2018.

“The 4th generation of enterprise applications has taken another major step forward with C/4HANA. Together with S/4HANA, SAP customers are finally able to focus their entire business on delivering a personalized experience to their customers. The intelligent enterprise is the elixir to bridge silos inside fractured businesses and beyond so CEOs get a single view of the customer. SAP is presenting a clear strategy, customers are already validating it in Q2 and we are increasing guidance as a signal that a new wave of growth has been unleashed.” – Bill McDermott, CEO

“This quarter is exemplary for the road we have chosen: rapidly transforming the company to the cloud while substantially growing profits and margins. I am very confident that this momentum will continue to expand. That’s why we raised our 2018 outlook and 2020 ambition.” – Luka Mucic, CFO

Business Highlights

Financial Highlights

Second Quarter 2018
New cloud bookings1 grew 24% (29% at constant currencies) in the second quarter and reached €421 million. Cloud subscriptions and support revenue grew 30% year over year to €1.21 billion (IFRS), up 40% (non-IFRS at constant currencies).2  Software revenue was down 9% year over year to €996 million (IFRS), down 5% (non-IFRS at constant currencies). New cloud and software license order entry3 grew 12% at constant currencies year over year in the second quarter. Cloud and software revenue grew 4% year over year to €4.94 billion (IFRS), up 10% (non-IFRS at constant currencies). Total revenue grew 4% year over year to €6.00 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 2 percentage points year-over-year to 66% in the second quarter.

Second quarter operating profit was up 13% year over year to €1.04 billion (IFRS), up 12% (non-IFRS at constant currencies). As announced in January 2018, the Company expects a positive revenue and profit impact from the adoption of IFRS 15 in 2018. In the second quarter, this positive impact on SAP’s operating profit was around €54 million. Earnings per share increased 8% to €0.60 (IFRS) and increased 5% to €0.98 (non-IFRS).

Operating cash flow for the first six months was €2.99 billion, down 15% year over year. The decrease in operating cash flow was mainly due to timing of stock based compensation payments, currency headwinds as well as higher tax and insurance payments. Free cash flow decreased 25% year over year to €2.17 billion. Free cash flow was also lower due to the previously announced additional CapEx for 2018. At the end of the second quarter, net liquidity was -€2.97 billion.

SAP S/4HANA

With SAP’s next generation ERP S/4HANA, customers can massively simplify their IT landscape, turn real-time data into actions and reinvent their business models for the digital economy across every industry.

S/4HANA adoption grew to more than 8,900 customers, up 41% year over year. In the second quarter, approximately 600 additional customers signed up of which approximately 40% were net new.

S/4HANA continues to be selected by world-class global companies, including McDonalds (China) in the quarter. A growing number of companies are now adopting S/4HANA in the Cloud. TechnipFMC, China Sports Lemon, and Spirit Airlines chose S/4HANA Cloud.

SAP C/4HANA (Customer Experience)

SAP’s C/4HANA solutions serve a wide range of industries across both B2C and B2B and enable businesses to manage their entire front office: marketing, sales, commerce, service, customer data cloud – seamlessly and in real-time.

In the second quarter, SAP’s C/4HANA customer experience solutions achieved high double-digit year-over-year growth in new cloud bookings and total revenue in the SAP Customer Experience segment was up 65% to €242 million at constant currencies.

Whirlpool, Deutsche Telekom, and Novartis were among those that chose SAP’s C/4HANA solutions this quarter.

Human Capital Management

With SAP SuccessFactors and SAP Fieldglass, SAP delivers total workforce management across both permanent and contingent labor. The SAP SuccessFactors suite is localized for 92 countries and 42 languages.

SAP SuccessFactors Employee Central, which is the flagship of SAP’s HCM offering, ended the quarter with more than 2,600 customers and scored numerous competitive wins including BMW, Telecom Argentina, Shiseido, and MG Motors India.

SAP Leonardo

With SAP Leonardo SAP delivers powerful innovation by bringing together deep process and industry expertise, advanced design thinking methodology and cutting edge software capabilities such as IoT, Big Data, Machine Learning, Analytics, and Blockchain. All of this is integrated on the SAP Cloud Platform with new technologies easily added as they emerge.

Toyota and Porsche are among many others that adopted SAP Leonardo solutions in the second quarter.

Business Networks

With the SAP Business Networks SAP provides collaborative commerce capabilities (Ariba), flexible workforce management (Fieldglass) and effortless travel and expense processing (Concur). SAP Business Network is the largest commerce platform in the world with approximately $2.4 trillion4 in global commerce annually transacted in more than 180 countries.

In the second quarter, total revenue in the SAP Business Network segment was up 21% to €688 million at constant currencies year over year. Bosch-Siemens Hausgeräte, and Avianca chose SAP’s Business Network Solutions in the second quarter.

Regional Revenue Performance in the Second Quarter 2018

SAP had a very strong performance in the EMEA region with cloud and software revenue increasing 10% (IFRS) and 12% (non-IFRS at constant currencies). Cloud subscriptions and support revenue was strong and grew by 40% (IFRS) and 46% (non-IFRS at constant currencies) with Germany and the UK being highlights. In addition, SAP had strong double-digit software revenue growth in the UK, and the Middle East and Germany had another strong software revenue quarter with solid single digit growth.

The Company had a solid performance in the Americas region with a significant currency headwind. Cloud and software revenue decreased by 3% (IFRS) and increased by 8% (non-IFRS at constant currencies). Cloud subscriptions and support revenue increased by 24% (IFRS) and 35% (non-IFRS at constant currencies) with Brazil being a highlight.

In the APJ region, SAP had a strong performance. Cloud and software revenue was up by 4% (IFRS) and grew by 11% (non-IFRS at constant currencies). Cloud subscriptions and support revenue was exceptional and grew by 42% (IFRS) and 52% (non-IFRS at constant currencies) with China and Japanbeing highlights. For software revenue, Australia, China and India had impressive quarters and grew by double digits.

Financial Results at a Glance

Second Quarter 20181)

IFRS

Non-IFRS2)

€ million, unless otherwise stated

Q2 2018

Q2 2017

∆ in %

Q2 2018

Q2 2017

∆ in %

∆ in %
const.
curr.

New Cloud Bookings3)

N/A

N/A

N/A

421

340

24

29

Cloud subscriptions and support revenue

1,213

932

30

1,227

932

32

40

Software licenses and support revenue

3,731

3,826

–2

3,731

3,826

–2

3

Cloud and software revenue

4,944

4,757

4

4,959

4,758

4

10

Total revenue

5,999

5,782

4

6,014

5,782

4

10

Share of predictable revenue (in %)

66

63

2pp

66

63

2pp

Operating profit

1,044

926

13

1,640

1,570

4

12

Profit after tax

720

666

8

1,173

1,120

5

Basic earnings per share (€)

0.60

0.56

8

0.98

0.94

5

Number of employees (FTE, June 30)

93,846

87,114

8

N/A

N/A

N/A

N/A

Six months ended June 20181)

IFRS

Non-IFRS2)

€ million, unless otherwise stated

Q1–Q2
2018

Q1–Q2
2017

∆ in %

Q1–Q2
2018

Q1–Q2
2017

∆ in %

∆ in %
const. curr.

New Cloud Bookings3)

N/A

N/A

N/A

667

555

20

28

Cloud subscriptions and support revenue

2,283

1,837

24

2,299

1,837

25

36

Software licenses and support revenue

7,012

7,248

–3

7,012

7,248

–3

3

Cloud and software revenue

9,295

9,085

2

9,311

9,085

2

10

Total revenue

11,260

11,066

2

11,276