SAP AG (SAP) Reports 3% Increase in FY14 Revenue; Cloud Subs, Support Up 45%

(Updated - January 12, 2015 10:16 AM EST)

SAP AG (NYSE: SAP) Q4 non-IFRS operation profit at €2.13 billion, with estimates at €2.18 billion. Software revenue at €1.87 billion versus estimates of €1.87 billion.

FY14 non-IFRS operating profit up 3 percent to €5.63 billion.

UPDATE - The press release follows:

SAP announced its preliminary financial results for the fourth quarter and full year ended December 31, 2014.

For the full year 2014, SAP delivered exceptionally strong growth in the cloud and continues to lead in this industry-wide transformation. Achieving guidance, full year non-IFRS cloud subscriptions and support revenue increased 45% at actual and constant currencies to €1.10 billion1. The company also showed solid software and software-related service revenue performance despite the accelerated shift from upfront to more ratable revenue. Non-IFRS software and software-related service revenue grew 7% at constant currencies (6% at actual currencies to €14.87 billion) achieving the full year target for 6% - 8% growth at constant currencies. Non-IFRS operating profit increased by 3% at constant currencies to €5.63 billion (3% at actual currencies to €5.64 billion), achieving the full year outlook of €5.6 - €5.8 billion at constant currencies.

With fourth quarter non-IFRS cloud subscriptions and support revenue increasing 59% year-over-year at constant currencies (72% at actual currencies), SAP is the fastest growing enterprise cloud company at scale2. The annual cloud revenue run rate now exceeds €1.7 billion3 or $2.0 billion4. Non-IFRS calculated cloud billings increased 115% (87% at constant currencies) in the fourth quarter. Non-IFRS deferred cloud subscriptions and support revenue was €729 million as of December 31, 2014, a year-over-year increase of 63% (45% at constant currencies)5.

SAP HANA, the platform for real-time business applications, had another great quarter and continues to be a major growth engine for SAP. Customer adoption this quarter was once again a highlight.

"In 2014 we continued to deliver on our winning growth strategy. We are the fastest growing enterprise cloud business at scale with the most users in the world. SAP HANA is delivering massive simplification for our customers," said Bill McDermott, CEO of SAP. "With the wide-spread adoption of the SAP HANA platform, 2015 is all about accelerating the introduction of next generation applications on HANA and scaling the world's largest Business Network. The roadmap for our customers and ever expanding ecosystem to Run Simple couldn't be more clear."

"In 2014, we achieved a solid 7% growth in non-IFRS software and software-related service revenue at constant currencies – in line with our full-year outlook range despite less upfront and significantly more ratable new business," said Luka Mucic, CFO of SAP. "Operating profit also increased year over year even as we stepped up investments in the cloud in response to higher than expected demand for our new cloud offerings. With the powerful shift to the cloud and our growing support revenues we are building a larger, more predictable business over the long term."

FINANCIAL HIGHLIGHTS – Fourth Quarter 2014

All 2014 figures in this release are approximate due to the preliminary nature of the announcement.

FINANCIAL HIGHLIGHTS – Full Year 2014

CALCULATED CLOUD BILLINGS

The following table presents the calculated cloud billings metric which we define as the total of a period's cloud subscription and support revenue and of the respective period's change in the deferred cloud subscription and support revenue balance. The table also reconciles the non-IFRS calculated cloud billings metric (including our non-IFRS at constant currency metric) to the respective IFRS based calculated cloud billings metric.

* Adjustments in the revenue and deferred revenue line items are for cloud subscriptions and support revenue, and other similarly recurring revenues that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules.

* * Constant currency revenue figures are calculated by translating revenue of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency deferred revenue balances are calculated by translating the current period's opening and closing deferred revenue balances as well as the comparative period's closing deferred revenue balance using the opening exchange rates of the comparative period.

Due to rounding, numbers may not add up precisely.

The company will report its fourth quarter and full year 2014 results on January 20th, including the outlook for 2015.

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