- Strong new cloud bookings, up 33%
- Stellar software revenue, up 5% – beating a record Q2 2016
- Operating profit down 27% (IFRS) and up 4% (Non-IFRS) – compared with exceptional profits in Q2 2016
- Digital core business soars with over 6,300 S/4HANA customers – up over 70% year over year
- Share buyback announced, up to €500 million in 2017 – following strong operating cash flow, up 20% in HY
“This strong quarter is the latest in SAP’s 8-year run of consistent, profitable growth. Our winning strategy is again validated by fast adoption of S/4HANA and our full portfolio of cloud solutions. We expect continuing momentum in the second half and confidently raise our guidance for the full year. SAP has never been better positioned.” Bill McDermott, CEO
“Our fantastic momentum continued with double-digit growth in total revenue. Our cloud & software revenue growth rate in the first half of the year is at the upper end of our full-year guidance range. Based on our strong growth and cash generation we are pleased to share SAP’s success with our shareholders by initiating a share buyback of up to €500 million in the second half.” Luka Mucic, CFO
Business Highlights
Second Quarter 2017
SAP’s fast growth in the cloud continued in the second quarter. New cloud bookings grew by 33% (33% at constant currencies) in the second quarter and reached €340 million. Both IFRS and non-IFRS cloud subscriptions and support revenue grew 29% year-over-year (27% at constant currencies) to €932 million. IFRS and non-IFRS software revenue was €1.09 billion, up 5% year-over-year (4% at constant currencies). New cloud and software license order entry grew by more than 20% year-over-year in the second quarter. IFRS and non-IFRS cloud and software revenue was €4.76 billion, an increase of 9% (8% at constant currencies). SAP’s “predictable revenue”, i.e. the total of cloud subscriptions & support revenue and software support revenue, was 63% of total revenue.
IFRS operating profit was down 27% to €926 million. Non-IFRS operating profit grew 4% to €1.57 billion (3% at constant currencies). IFRS earnings per share decreased 18% to €0.56. Non-IFRS earnings per share increased 14% to €0.94. The IFRS operating profit and EPS were primarily impacted by a strong increase in restructuring related expenses and share-based compensation expenses in the second quarter.
Operating cash flow for the first six months was €3.51 billion, an increase of 20% year-over-year and free cash flow increased 15% year-over-year to €2.90 billion. At quarter end, net debt was €1.79 billion, an improvement of €2.5 billion year over year. SAP’s strong growth and cash generation provide significant flexibility around capital allocation aimed at driving shareholder value. After evaluating the expected cash flow development for the second half of 2017 and consistent with the company’s capital allocation priorities, SAP has decided on a share buyback of up to €500 million in 2017. The share buyback will start shortly and will be executed in several tranches.
Business Outlook 2017
The Company is raising its outlook for the full year 2017:
– 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% at constant currencies.
– Due to increasing adoption of S/4HANA and our Digital Business Platform the Company now expects full year 2017 non-IFRS cloud & software revenue to increase by 6.5% to 8.5% at constant currencies (2016: €18.43 billion).
– The Company now expects full year 2017 non-IFRS total revenue in a range of €23.3 billion to €23.7 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).