Walldorf, Germany — SAP SE (NYSE: SAP) today announced its financial results for the second quarter and the first half-year ended June 30, 2020.
SAP Resilient Amid COVID-19 Crisis
Sharp Increase in Operating and Free Cash Flow
Strong Current Cloud Backlog of €6.65 Billion, Up 21% At Constant Currencies
IFRS Cloud Gross Margin Up 3.4pp; Non-IFRS Cloud Gross Margin Up 1.6pp
IFRS Operating Margin Up 6.6pp; Non-IFRS Operating Margin Up 1.8pp
IFRS EPS At €0.73, Up 54%; Non-IFRS EPS At €1.17, Up 7%
Operating Cash Flow Up 41%, Free Cash Flow Up 59% in First Six Months
This quarter demonstrated that our Intelligent Enterprise strategy clearly resonates with customers around the world. More than ever, the pandemic has proven that digitalization is no longer an option but a must-have to withstand challenging times and to achieve desired business outcomes. We will continue to invest in innovative offerings for our customers to drive business transformations and run complex business processes. We also aim to expand the ecosystem on our business technology platform to complement our solutions and foster growth.
Christian Klein, CEO
We were happy to see such a strong sequential improvement in software licenses revenue and a robust margin expansion. Our broad solution portfolio, unmatched industry and geographic diversification coupled with our strong base of more predictable revenue have allowed us to manage the COVID-19 crisis this quarter. With our investments in strategic growth areas we are confident we will not only weather the crisis but emerge even stronger. We were also pleased to see a strong acceleration in free cash flow despite the current market dynamics.
Luka Mucic, CFO
Business Performance Second Quarter 2020
Financial Highlights1
Business activity gradually improved over the course of the second quarter following the global emergence of the COVID-19
crisis primarily in the last month of the first quarter. Software licenses revenue, while still below normal levels, recovered more
than expected. In particular, the APJ region had a strong recovery in software licenses revenue.
In the second quarter, current cloud backlog2 was up 20% to €6.65 billion (21% at constant currencies) with continued high
demand for digital supply chain, e-commerce, cloud platform and Qualtrics solutions. Cloud revenue was impacted by lower
pay-as-you-go transactional revenue as a result of the COVID-19 crisis and grew 21% year over year to €2.04 billion (IFRS), up
19% to €2.04 billion (non-IFRS) and up 18% (non-IFRS at constant currencies). Software licenses revenue was down 18%
year over year to €0.77 billion (IFRS and non-IFRS) and down 18% (non-IFRS at constant currencies), a strong sequential improvement compared to the first quarter. Cloud and software revenue grew 4% year over year to €5.71 billion (IFRS), up 3% to
€5.71 billion (non-IFRS) and up 3% (non-IFRS at constant currencies). Total revenue grew 2% year over year to €6.74 billion
(IFRS), up 1% to €6.74 billion (non-IFRS) and up 1% (non-IFRS at constant currencies).
The share of more predictable revenue grew by five percentage points year-over-year to 73% in the second quarter.
Cloud gross margin increased 3.4 percentage points year over year to 66.0% (IFRS) and increased by 1.6 percentage points
year over year to 69.5% (non-IFRS).
IFRS operating profit in the second quarter increased strongly primarily due to a significantly lower impact from restructuring
expenses compared to the previous year. Operating profit increased by 55% year over year to €1.28 billion (IFRS) and was up
8% to €1.96 billion (non-IFRS) and up 7% (non-IFRS at constant currencies). Operating margin increased 6.6 percentage
points year over year to 19.0% (IFRS) and increased 1.8 percentage points year over year to 29.1% (non-IFRS) and 1.7 percentage points to 28.9% (non-IFRS at constant currencies).
Earnings per share was up 54% year over year to €0.73 (IFRS) and was up 7% to €1.17 (non-IFRS).
Operating cash flow and free cash flow grew strongly in the second quarter. This was mainly driven by positive effects from
lower payments to suppliers and lower than expected income tax payments. Operating cash flow for the first six months was
€3.77 billion, up 41% year-over-year. Free cash flow for the first six months was up 59% year-over-year at €3.12 billion. Free
cash flow additionally benefited from lower capital expenditure compared to the previous year. At the end of the second quarter, net debt was -€7.45 billion.
COVID-19 Response
SAP remains focused on supporting its customers, employees and communities during the COVID-19 pandemic. SAP continues to operate with a virtual sales and remote implementation strategy to enable the large majority of its employees to work
productively from home while continuing to serve customers effectively. In certain locations around the globe a small number
of SAP employees have started to return or are planning to return to the office at a cautious pace as permitted by local regulations. SAP remains focused on the safety of the small number of its employees who are working onsite.
To ensure the Company’s financial flexibility, SAP is maintaining a slower pace of hiring than in usual circumstances and reduced discretionary spend in addition to natural savings e.g. from lower travel, facility related costs and virtualized events.
SAP remains focused on ensuring continuity for its customers and partners and SAP’s data centers are online with appropriate backup plans.
Since the COVID-19 crisis began, SAP has also been providing solutions to address many of the issues faced by its customers
and the broader community. Some recent examples:
• SAP has developed, together with Deutsche Telekom, the Corona Warning App which is the official German tracing app.
The app went live in less than 50 days and has been downloaded more than 16 million times.
• Qualtrics back-to-business solution is helping many US states and communities restart their economies.
• To address ongoing disruption to global supply chains, SAP has extended open access to SAP Ariba Discovery to the end
of 2020 so that buyers can post immediate sourcing needs and any supplier can respond.
1 Q2 2020 results were also impacted by other effects. For details, please refer to the disclosures on page 33 of this document.
2 For an explanation please refer to page 8 of this document. Additional information is available at https://www.sap.com/investors/en/reports/reporting-framework.html.
Due to the current uncertainty regarding the duration and severity of the COVID-19 pandemic, SAP cannot predict whether
our response to date or actions that we may take in the future will be effective in mitigating the impact of COVID-19 on our
business and results of operations.3
Segment Performance Second Quarter 2020
SAP’s four reportable segments “Applications, Technology & Support”, “Concur”, “Qualtrics” and “Services” showed the following performance:
Applications, Technology & Support (AT&S)
In the second quarter, segment revenue in AT&S was up 3% to €5.31 billion year-over-year (up 3% at constant currencies).
Solutions which contributed to this growth are listed below.
SAP S/4HANA
SAP S/4HANA is an intelligent, integrated ERP system that runs on SAP’s real time in-memory platform, SAP HANA. It addresses industry-specific requirements with proven best practices for 26 verticals and enables new business models as marketplaces evolve. It revolutionizes business processes with intelligent automation, supported by artificial intelligence and
robotic process automation. It helps users make better decisions faster with embedded analytics, a conversational interface,
and digital assistants. SAP offers customers a choice of deployment options including cloud, on-premise and hybrid so they
can choose the scenario or combination that is right for them, all on the same data model with a consistent user experience.
Over 500 SAP S/4HANA customers were added in the quarter, taking total adoption to more than 14,600 customers, up 22%
year over year, of which more than 7,400 are live. In the second quarter, more than 37% of the additional SAP S/4HANA customers were net new.
In the second quarter, world class organizations such as Neptune Energy, Vedanta, BNP Paribas, Comix, and Deutsche Börse
AG selected SAP S/4HANA. RAK Ceramics, beeline GmbH, and Zalando recently went live on SAP S/4HANA. A fast-growing
number of companies of all sizes such as E.ON, Rizing LLC, Mageline and Trevi Finanziaria Industriale chose SAP S/4HANA
Cloud. Colgate-Palmolive, De Nora Group, Grupo Ultra, and SUSE Software Solutions are now live on SAP S/4HANA
Cloud. IDC MarketScape recently named SAP S/4HANA Cloud as a Leader for Cloud Finance and Accounting Apps.
Human Experience Management (HXM)
The SAP SuccessFactors Human Experience Management (HXM) Suite provides solutions for core HR and payroll, talent
management, employee experience management and people analytics. Built as a highly scalable platform it meets complex
cross border requirements, delivering tax regulation and HR policy updates in 99 specific countries, 42 languages and payroll
in 46 countries.
HXM is designed around what employees need, how they work, and what motivates them. It empowers employees and enables HR leaders to accelerate business growth.
SAP SuccessFactors HXM solutions leverage Qualtrics solutions allowing customers to capture insights from employees and
link them with operational data to see what is happening, understand why and take action. More than 640 customers have
selected these solutions. FMC Corporation is one example of numerous companies using the Qualtrics and SAP SuccessFactors platforms.
Capgemini, JSC Lithuanian Railways, Bechtle AG, and Migros Group were some of many competitive wins. Etihad Aviation,
Group Erste Group Bank, and Royal London Mutual Insurance Society recently went live with SAP SuccessFactors solutions.
SAP was recently ranked as a Leader in “The Forrester Wave: Cloud Human Capital Management Suites for Q2 2020”.
SAP Customer Experience
SAP Customer Experience (CX) combines leading solutions for commerce, service, marketing, sales, and customer data, enabling companies to manage and deliver personalized customer experiences across touchpoints and channels based on a
complete view of the customer. As part of the Intelligent Enterprise, SAP CX suite integrates with SAP S/4HANA from demand signals to fulfillment in one end-to-end process.
3
For additional COVID-19 related disclosures and risk factors, please refer to SAP’s 2020 Half-Year Report.
SAP CX solutions also use the benefits of Qualtrics Customer Experience Management to understand the wants and needs of
customers. This enables organizations to combine customer feedback and operational data to listen, understand and take
action in the moment to improve the customer experience.
In the second quarter, SAP’s e-commerce solution was a standout, almost doubling new cloud business year over year.
Lumileds, Commission de la construction du Québec, Delivery Hero, Jiangsu Hengshun Group Co. Ltd., Telefônica Vivo, and
Hirose Electric Co. are some examples of companies who chose SAP Customer Experience solutions.
Business Technology Platform
SAP’s Business Technology Platform helps customers to turn their data into business value. It encompasses database and
data management, analytics, application development and integration, and intelligent technologies. The Business Technology
Platform represents a combination of SAP’s leading technologies such as SAP HANA, SAP Cloud Platform, SAP Data Warehouse Cloud, SAP Analytics Cloud, SAP Data Intelligence and SAP Intelligent Robotic Process Automation bundled into one
single reference architecture. It supports cloud, on-premise and hybrid customer landscapes. Additionally, the Business Technology Platform offers seamless interoperability with hyperscalers’ technologies to deliver a high level of scalability and flexibility. The Business Technology Platform provides customers with convenient access to SAP data, SAP technology and SAP
pre-configured business services to help them drive business value across their entire solution landscape.
The Swiss Canton of Zurich, the Australian Department of Defence, and L’Oréal selected SAP’s business technology platform
and analytics cloud solutions in the second quarter.
SAP was recently named as a leader in Gartner’s Magic Quadrant for Multiexperience Development Platforms.
Ariba & Fieldglass
SAP Ariba provides collaborative commerce capabilities from sourcing and orders through invoice and payment along with
expertise to help customers optimize their spend. It drives simple, intelligent exchanges between millions of buyers and suppliers across both direct and indirect expense categories. The SAP Ariba platform is embedding Qualtrics to enhance experience and to create a continuous feedback loop for buyers and suppliers on the network.
SAP Ariba and SAP Fieldglass, together with SAP Concur, represent SAP’s intelligent spend platform, the largest commerce
platform in the world with over $3.8 trillion in global commerce annually transacted in more than 180 countries.
Carrefour and NEC Corporation chose SAP Ariba solutions in the second quarter. Google is now live on SAP Ariba.
SAP Fieldglass is the leader in external workforce management and services procurement. It helps organizations find, engage,
and manage all types of flexible resources including contingent workers, consultants and freelancers. SAP Fieldglass added
more than 760,000 new external workers during the second quarter. Apache Corporation chose SAP Fieldglass solutions in
the second quarter.
Concur
In the second quarter, Concur segment revenue was down 4% to €379 million year-over-year (down 5% at constant currencies) due to lower pay-as-you-go transactional revenue as a result of significantly reduced business travel due to the COVID-19
crisis.
SAP Concur provides integrated travel, expense, and invoice management solutions that simplify and automate these timeconsuming everyday processes. The SAP Concur mobile app guides employees through every trip, charges are effortlessly
populated into expense reports, and invoice approvals are automated. By integrating near real-time data and using AI to audit
100% of transactions, businesses can see and efficiently control their travel spend.
Royal Voluntary Service was among the organizations who chose SAP Concur solutions in the second quarter.
Qualtrics
In the second quarter, Qualtrics segment revenue was up 34% to €168 million year-over-year (up 32% at constant currencies).
With Qualtrics, SAP combines market leadership in Experience Management (XM) with end-to-end operational power in 26
industries to help organizations manage and improve the four core experiences of business: customer, employee, product,
and brand.
The Qualtrics XM Platform™ is trusted by over 11,800 customers to listen, understand, and take action on experience data (Xdata™) by combining X-data with the operational data (O-data™) systems of the enterprise.
In the second quarter, Etsy, Inc., Blue Cross and Blue Shield of Alabama, Kendra Scott Design, Tableau and many others selected Qualtrics to move beyond systems of record to new systems of action and achieve breakthrough results.
Services
In the second quarter, Services segment revenue was down 6% to €796 million year-over-year (down 6% at constant currencies).
SAP deploys a global team of service professionals with in-depth expertise in SAP solutions and innovation to help companies
create valuable outcomes and experience to succeed in becoming Intelligent Enterprises.
The Services organization improves time to value for our customers’ digital transformation through:
• Outcome-focused services and proactive support offerings designed to guide customers transformation from end to
end
• Intelligent tools that automate delivery and support
• Embedded services with prepackaged reference solutions based on leading industry practices and processes
• Value-added partnerships with leading system integrators that facilitate success in any environment
Segment Results at a Glance Segment Performance Second Quarter 2020 Applications, Technology & Support Services Concur 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. Actual Currency ? in % ? in % const. curr.
Cloud revenue 1,589 24 24 0 NA NA 323 –4 –6 130 38 36
Segment revenue 5,314 3 3 796 –6 –6 379 –4 –5 168 34 32
Segment profit (loss) 2,329 5 5 121 >100 96 137 –4 –6 7 2 1
Cloud gross margin (in %) 65.2 2.8pp 2.6pp NM1) NM1) NM1) 88.4 1.9pp 1.8pp 91.0 –0.9pp –1.0pp
Segment margin (in %) 43.8 0.9pp 0.7pp 15.2 8.3pp 7.6pp 36.0 0.0pp –0.4pp 4.3 –1.4pp –1.3pp
1) NM = not meaningful
Regional Revenue Performance
SAP had a solid performance in the EMEA region with cloud and software revenue increasing 3% (both IFRS and non-IFRS at
constant currencies). Cloud revenue increased 29% (both IFRS and non-IFRS at constant currencies) with Germany and Switzerland being highlights. Spain and Saudi Arabia had strong quarters in software licenses revenue.
The Company had a solid performance in the Americas region. Cloud and software revenue increased 5% (IFRS) and 3%
(non-IFRS at constant currencies). Cloud revenue increased 17% (IFRS) and 13% (non-IFRS at constant currencies) with Canada and Mexico being highlights. In addition, the United States had a solid quarter in software licenses revenue.
In the APJ region, SAP had a stellar performance backed by a strong recovery in software licenses revenue particularly in Japan, South Korea and Indonesia. Cloud and software revenue was up 4% (both IFRS and non-IFRS at constant currencies).
Cloud revenue increased 19% (IFRS) and 18% (non-IFRS at constant currencies) with Japan, Singapore and South Korea being highlights.
see & read more on
https://www.sap.com/docs/download/investors/2020/sap-2020-q2-statement.pdf
tijd 09.19
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