SAP SE (SAP) saw a sharp acceleration in new cloud business across its cloud portfolio
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(Updated - April 13, 2021 4:58 PM EDT)
"We are seeing very strong growth across all our applications. And we are just getting started. Our new offering 'RISE with SAP' is rapidly becoming a massive accelerator to our customers' business transformations with our platform at the center. Together with our unique ecosystem of more than 22,000 partners and with a strong innovation pipeline for the year, we are well on track with our strategy to deliver robust cloud growth."
Christian Klein, CEO
"The first quarter of 2021 was unique in many ways. We had the highest order entry growth across cloud and software in five years while posting the strongest increase in Non-IFRS operating profit and margin in a decade. In the mid term SAP's expedited shift to the cloud will accelerate topline growth and significantly increase the resiliency and predictability of our business."
Luka Mucic, CFO
First Quarter Business Update
After an initial review of its first quarter 2021 performance, SAP SE (NYSE: SAP) today announced its preliminary financial results for the first quarter ended March 31, 2021. All 2021 figures in this release are approximate due to the preliminary nature of the announcement.
SAP saw a sharp acceleration in new cloud business across its cloud portfolio, as well as a strong start for 'RISE with SAP' which is driving customers' business transformation in the cloud. Software licenses had strong, double-digit growth at constant currencies. SAP had significant competitive wins in ERP, digital supply chain and across its broader cloud solution portfolio.
Despite the continued impact of global travel restrictions on Concur's business, SAP's cloud revenue growth was resilient in the first quarter, up 13% at constant currencies. SaaS/PaaS cloud revenue outside the Intelligent Spend business was up 24% at constant currencies. Looking forward, SAP's strong new cloud business performance is expected to reaccelerate cloud revenue growth.
Throughout the COVID-19 crisis, SAP continues to serve its customers effectively with an embedded virtual sales and remote implementation strategy. The company retains a disciplined approach to hiring and discretionary spend while capturing natural savings e.g. from lower travel, facility-related costs and virtual events. The prior year included a cost of approximately €36 million in relation to the cancellation of its in-person annual SAPPHIRE NOW and other customer events, as well as normal travel behavior. These factors in combination with the strong topline performance drove materially higher operating profit (non-IFRS at constant currencies) and operating margin both of which were significantly above market expectations.
First Quarter Financial Performance
Current cloud backlog was up 15% to €7.63 billion and up 19% (at constant currencies). Cloud revenue was up 7% year over year to €2.14 billion (IFRS), up 7% to €2.15 billion (non-IFRS) and up 13% (non-IFRS at constant currencies). Software licenses revenue was up 7% year over year to €0.48 billion (IFRS and non-IFRS) and up 11% (non-IFRS at constant currencies). Cloud and software revenue was up 1% to €5.43 billion (IFRS and non-IFRS) and up 6% (non-IFRS at constant currencies). Services revenue was down 18% year over year to €0.9 billion (IFRS and non-IFRS) and down 14% (non-IFRS at constant currencies). This revenue decline reflects the November 2020 divestiture of SAP Digital Interconnect, which contributed approximately €90 million of services revenue (IFRS and non-IFRS) in the first quarter of 2020. Total revenue was down 3% year over year to €6.35 billion (IFRS and non-IFRS) and up 2% (non-IFRS at constant currencies).
The share of more predictable revenue1 grew by approximately 2 percentage points year over year to approximately 78% in the first quarter.
IFRS operating profit decreased 21% to €0.96 billion and IFRS operating margin decreased by 3.4 percentage points to 15.1% due to higher share-based compensation expenses (primarily related to Qualtrics IPO awards) and restructuring expenses related to the accelerated harmonization of SAP's cloud delivery infrastructure. Non-IFRS operating profit increased 17% to €1.74 billion, up 24% (non-IFRS at constant currencies) and operating margin increased by 4.7 percentage points to 27.4%, up 4.9 percentage points (non-IFRS at constant currencies).
Earnings per share increased 29% to €0.88 (IFRS) and increased 63% to €1.40 (non-IFRS) reflecting another strong contribution from Sapphire Ventures.
1 Share of more predictable revenue is the total of non-IFRS cloud revenue and non-IFRS software support revenue as a percentage of total revenue.
Financial Results at a Glance
First Quarter 2021
€ billion, unless otherwise stated
∆ in %
∆ in %
∆ in % constant currency
Current Cloud Backlog2)
Software licenses revenue
Software support revenue
Software licenses and support revenue
Cloud and software revenue
Share of more predictable revenue (in %)
Operating profit (loss)
Profit (loss) after tax
Operating margin (in %)
Basic earnings per share (in €)
Number of employees (FTE, March 31)
1) For a detailed description of SAP's non-IFRS measures Explanation of Non-IFRS Measures online.
2) As this is an order entry metric, there is no IFRS equivalent.
All figures are preliminary and unaudited. Due to rounding, numbers may not add up precisely.
The total difference between non-IFRS revenue metrics and the respective IFRS revenue metrics results from adjusting the impact of business combination fair value accounting. In the first quarter, the difference between non-IFRS operating profit and IFRS operating profit includes, in addition to the revenue adjustments of €0.00 billion (Q1 2020: €0.00 billion),
For more details on the individual adjusted expense and revenue categories, our reasons for providing non-IFRS measures and the limitations of our non-IFRS measures please refer to Explanation of Non-IFRS Measures.
SAP raises its full-year 2021 outlook reflecting the strong new cloud business performance which is expected to reaccelerate cloud revenue growth. The Company continues to expect a software licenses revenue decline for the full year as more customers turn to the "RISE with SAP" subscription offering for their mission-critical core processes. This outlook also continues to assume the COVID-19 crisis will begin to recede as vaccine programs roll out globally, leading to a gradually improving global demand environment in the second half of 2021.
SAP now expects:
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