CIMdata PLM Industry Summary Online Archive
17 February 2012
Financial News
More Transparency on Cloud Revenue: SAP Realigns Its Income Statement
SAP reported its preliminary financial results for the fourth quarter and full-year 2011 on January 25, 2012. On that day SAP announced a change in its income statement structure going forward and announced to make available in due course on its website updated income statement numbers based on this change for the four quarters of 2011. See below for a description of the changes made containing preliminary numbers in a multi-quarter summary. In addition, the company is providing, for all four quarters of 2011, updated software revenue by region numbers reflecting the reclassifications made to transfer to the new income statement structure.
Why Did SAP Change Its Income Statement Presentation?
In light of SAP’s strong focus on the cloud, SAP intends to realign its income statement, for periods starting on or after January 1, 2012 (and all reported prior periods). By doing this, SAP provides additional transparency into its revenues from software and software-related services, particularly into revenues from cloud subscription and support.
Which Line Items on the Income Statement Are Affected?
- Software revenue
- Support revenue
- Subscription and other software-related service revenue
Cloud subscriptions and support will no longer be included in the line item Subscription and other software-related service revenue, but will be presented as a separate line item within Software and software-related service revenue (SSRS revenue).
Revenues from multi-year licensing arrangements and all other revenues so far included in the Subscription and other software-related service revenue line item will be split into their software portion and support portion with these portions being allocated to the Software and Support revenue line items respectively.
As a consequence of this change, the Subscription and other software-related service revenue line item will no longer exist and the Software and Support line items for 2011 and all prior periods reported will increase.
Will Total Revenue or SSRS Revenue Amounts Change?
No, the change is a reclassification that only affects sub line items of SSRS revenue. The total of SSRS revenue and consequently total revenue figures will not be affected by this change.
How Does This Change Affect Quarterly Revenues for 2011?
The changes discussed in this Webmessage will also affect the quarterly revenues previously reported. Please see the following link for the updated 2011 quarterly income statement numbers.
How Does This Change Affect SAP’s Revenue by Region Numbers for 2011?
Total revenue and SSRS revenue for 2011 and all prior periods are unaffected by the change in the income statement, as well as the corresponding revenue by region numbers. However, Software revenue by region did change. Please see the following link for the updated quarterly 2011 software revenue by region numbers reflecting the reclassifications made to transfer to the new income statement structure.
The New Format
See the following link for a snapshot of the income statement in its new format. Please also note the added line items to provide more transparency on our cost of revenue: Total cost of revenue and Gross profit. The values of Cost of software and software-related services and Cost of professional services & other services were not affected as a result of this income statement change. The rest of the income statement remains unchanged. Please see the attachment for the reconciliation from non-IFRS to IFRS in the new format.
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