SAP’s rapid cloud expansion continued in the first quarter. New cloud bookings surged 49 percent (44 percent at constant currencies) in the first quarter and reached €215 million. IFRS cloud subscriptions and support revenue grew 34 percent year-over-year to €905 million.
Non-IFRS cloud subscriptions and support revenue grew 34 percent year-over-year (30 percent at constant currencies) to €906 million. IFRS software revenue grew 13 percent year-over-year to €691 million.
New cloud and software license order entry grew by more than 30 percent year-over-year in the first quarter. IFRS cloud and software revenue was €4.33 billion, an increase of 12 percent (9 percent non-IFRS at constant currencies). Total cloud subscriptions & support revenue and software support revenue was 69 percent of total revenue.
IFRS operating profit was down 17 percent to €673 million. Non-IFRS operating profit grew 8 percent to €1.20 billion (2 percent at constant currencies). IFRS earnings per share decreased 9 percent to €0.43. Non-IFRS earnings per share increased 15 percent to €0.73.
The IFRS operating profit and EPS were primarily impacted by an increase in share-based compensation expenses, which increased due to the strong development of SAP’s share price and an increase in employee participation. Nearly 65 percent of SAP employees have participated in SAP’s most recent stock program OWN SAP.
Operating cash flow was €2.87 billion, an increase of 16 percent year-over-year. Free cash flow increased 12 percent year-over-year to €2.58 billion. As a result, the company continues to deleverage its balance sheet ending the quarter with net debt of €460 million, an improvement of €2.8 billion year over year.
SAP S/4HANA
With S/4HANA customers can massively simplify their IT landscape, run live and re-invent their business model for the digital economy across both cloud and on-premise deployments. S/4HANA adoption grew to more than 5,800 customers.
In the first quarter approximately 400 additional customers signed up of which almost 50 percent were net new SAP customers. Innogy selected S/4HANA in the first quarter. S/4HANA Cloud brings next generation intelligent ERP to the cloud with speed and ease of deployment. Citrix and iColor chose the S/4HANA Cloud edition in the first quarter.
SAP Cloud Platform
SAP Cloud Platform is a platform as a service (PaaS) designed to help customers become digital enterprises. It offers a broad set of services to build new fast-paced applications and extensions for existing applications as well as to integrate across on-premise and cloud landscapes.
SAP Cloud Platform is instrumental in empowering enterprises to create new Internet of Things (IoT), machine learning and Big Data solutions by intelligently connecting processes with people, things and businesses. C&J Energy Services, a leading provider of oil and gas services selected SAP Cloud Platform to help build digital field ticketing applications, that allows rig supervisors to accurately capture job information and synchronize to the back-end SAP S/4HANA Finance system.
Human capital management
With SuccessFactors and Fieldglass, SAP delivers total workforce management across both permanent and contingent labor, localized for more than 80 countries and more than 40 languages.
Top industry analysts recently gave SAP SuccessFactors the highest rankings in Cloud HCM for Core HR and Talent Management for global organizations with more than 5,000 workers as well as for mid-market European-headquartered enterprises. SuccessFactors Employee Central, which is the core of our HCM offering, had close to 1,700 customers at the end of the first quarter. Companies like Dolce & Gabbana selected SAP’s workforce management solutions in the first quarter.
Customer engagement and commerce
SAP’s next generation customer engagement solutions enable businesses to manage their front office across the entire spectrum from marketing to sales to services – seamlessly and in real-time. Businesses get a single view of their customer – be it social, retail or e-commerce.
SAP’s CEC solutions serve both B2C and B2B across a wide range of industries, including retail, telco, financial services, manufacturing and the public sector. Top industry analysts recently named SAP Hybris a leader for B2C and B2B Digital Commerce and Multichannel Marketing Campaign Management.
SAP’s CEC solutions once again achieved strong double-digit cloud subscriptions and support revenue growth as well as double-digit growth in software revenue.
Business networks. Each of SAP's business network solutions provide a rich, open, global platform that connect a large ecosystem of customers, suppliers, partners and developers delivering ever expanding content and innovation.
On the Ariba Network, more than 2.7 million companies in over 180 countries collaborate and trade more than $900 billion in goods and services annually. Concur helps more than 47 million end users effortlessly process travel and expenses. With SAP Fieldglass customers manage over 3.3 million contingent workers in approximately 140 countries. Cloud subscriptions and support revenue in the SAP Business Network segment was up 24 percent in the first quarter.
Regional revenue performance in Q1 2017
In the EMEA region, cloud and software revenue increased 10 percent (IFRS). Cloud subscriptions and support revenue grew 43 percent (IFRS) with an especially strong quarter in Germany, France and Italy.
SAP had triple-digit software revenue growth in South Africa and the Netherlands.The company had a strong performance in the Americas region with cloud and software revenue growing by 12 percent (IFRS). Cloud subscriptions and support revenue was up 27 percent (IFRS), driven by a strong performance in Canada and Mexico with high double-digit growth.
In North America, SAP had double-digit growth in software revenue. In Latin America Brazil was a highlight with strong software revenue growth amidst a difficult macroeconomic environment.
In the APJ region SAP also had an exceptional performance in both cloud subscription and software revenue. Cloud and software revenue was up 21 percent (IFRS), with cloud subscriptions and support revenue growing by 65 percent (IFRS). Japan and India were highlights in the quarter with strong results in both cloud subscriptions and software revenue.
SAP also had strong double-digit software revenue growth in Greater China and South Korea.
Business outlook 2017The company re-iterates the following 2017 outlook:
* Based on the continued strong momentum in SAP’s cloud business the company expects full year 2017 non-IFRS cloud subscriptions and support revenue to be in a range of €3.8 billion to €4.0 billion at constant currencies (2016: €2.99 billion). The upper end of this range represents a growth rate of 34 percent at constant currencies.
* The company expects full year 2017 non-IFRS cloud & software revenue to increase by 6 percent to 8 percent at constant currencies (2016: €18.43 billion).
* The company expects full year 2017 non-IFRS total revenue in a range of €23.2 billion to €23.6 billion at constant currencies (2016: €22.07 billion).
* The company expects full-year 2017 non-IFRS operating profit to be in a range of €6.8 billion to €7.0 billion at constant currencies (2016: €6.63 billion).
