After an initial review of its third quarter 2019 performance, SAP SE today announced its preliminary financial results for the third quarter ended September 30, 2019. All 2019 figures in this release are approximate due to the preliminary nature of the announcement.
New Cloud Bookings Up 38%,
Software License Revenue Down 1% C
loud Revenue Up 37%
Total Revenue Up 13% IFRS Operating Profit Up 36%;
Non-IFRS Operating Profit Up 20%
IFRS Operating Margin Up 4.2pp; Non-IFRS Operating Margin Up 1.7pp EPS Up 28% (IFRS) and Up 14% (Non-IFRS)
Rapid Cloud Gross Margin Expansion Continues
Outlook Reiterated “The growth story at SAP continues with maximum strength. I couldn’t be prouder of this very significant top line and bottom line expansion,” said Bill McDermott, SAP. “The future is bright!” “We have delivered a very strong result on the bottom line based on further acceleration of our operational excellence initiative and restructuring benefits in the third quarter. In parallel we have continued to execute extremely well on our cloud transition in the first nine months – a dynamic cloud business growing at 41% combined with a stable core, leading to double digit topline growth” said Luka Mucic, SAP. “It is with great confidence that we reiterate our 2019 outlook.”
In the third quarter, new cloud bookings were up 38% (33% at constant currencies) and up 50% excluding Infrastructure-as-a-Service (IaaS). A cloud deal with a major partner contributed 17 percentage points to Q3 new cloud bookings growth. The deal has a term of 3 years, with revenue recognition starting in the fourth quarter 2019.
Cloud revenue grew 37% year over year to €1.79 billion (IFRS), up 37% (non-IFRS) and 33% (non-IFRS at constant currencies). Software licenses revenue was down 1% year over year to €0.93 billion (IFRS), down 1% (non-IFRS) and down 4% (non-IFRS at constant currencies). Cloud and software revenue grew 12% year over year to €5.63 billion (IFRS), up 13% (non-IFRS) and 10% (non-IFRS at constant currencies). Total revenue grew 13% year over year to €6.79 billion (IFRS), up 13% (non-IFRS) and 10% (non-IFRS at constant currencies).
Adding more than 500 customers in the quarter, SAP S/4HANA adoption grew to more than 12,000 customers, up 25% year-over-year. The share of more predictable revenue grew by 2 percentage points year-over-year to 69% in the third quarter. Cloud gross margin increased 5.9 percentage points year over year to 64.5% (IFRS) and increased by 5.4 percentage points year over year to 69.0% (non-IFRS) and 5.5 percentage points to 69.0% (non-IFRS at constant currencies). Operating profit increased 36% year over year to €1.68 billion (IFRS), up 20% (non-IFRS) and up 15% (non-IFRS at constant currencies). Operating margin increased 4.2 percentage points year over year to 24.7% (IFRS) and expanded by 1.7 percentage points year over year to 30.6% (non-IFRS) and 1.5 percentage points to 30.4% (non-IFRS at constant currencies). Earnings per share was up 28% to €1.04 (IFRS) and up 14% to €1.30 (non-IFRS).
