SAP today announced its financial results for the first quarter 2018 ended March 31, 2018.
“SAP’s momentum continues with our latest trifecta, including fast growing cloud, strong software sales, and operating income expansion. Even against the steepest comparisons, S/4HANA led us again to major market share gains for the company. With an increasing share of predictable revenues, our beyond expectations profitability is cause for even greater shareholder confidence. From this position of immense strength, look for SAP to be bolder than ever in markets like CRM.” – Bill McDermott, CEO
“There are two things I am particularly proud of in Q1: We faced a very strong prior year quarter comparison and still delivered cloud & software growth above our full year guidance. Moreover, we increased operating margins while continuing to invest in our people and our portfolio. This gives me great confidence for 2018 and beyond.” – Luka Mucic, CFO
Financial Highlights
First Quarter 2018
New cloud bookings grew by 14% (25% at constant currencies) in the first quarter and reached €245 million. Cloud subscriptions and support revenue grew 18% year over year to €1.07 billion (IFRS), up 31% (non-IFRS at constant currencies). Software revenue was down 10% year over year to €625 million (IFRS), down 2% (non-IFRS at constant currencies). New cloud and software license order entry2 grew by 10% at constant currencies year over year in the first quarter. Cloud and software revenue grew 1% year over year to €4.35 billion (IFRS), up 9% (non-IFRS at constant currencies). Total revenue was flat year over year at €5.26 billion (IFRS), up 9% (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 to 71% in the first quarter and thus exceeded 70% for the first time.
First quarter operating profit was up 52% year over year to €1.03 billion (IFRS), up 14% (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 first quarter, this positive impact on SAP’s operating profit was around €44 million. Earnings per share increased 37% to €0.59 (IFRS) and was down 1% to €0.73 (non-IFRS).
Operating cash flow for the first quarter was €2.58 billion, down 10% year over year. Free cash flow decreased 17% year over year to €2.15 billion. The decrease in free cash flow was mainly due to higher tax payments and a currency headwind as well as increased CapEx spending compared to the prior year. At the end of the first quarter, net liquidity was €546 million, an improvement of €1 billion year over year.
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