SAP Announces Fourth Quarter and Full Year Results 2013

Successful Transition to the Cloud Outgrowing the Market and Expanding Operating Margin in 2013 SAP Accelerating Customer-Driven Transition to the Cloud / Aiming for €3.0 - €3.5 Billion Cloud Revenue in 2017

Walldorf, (PresseBox) - .
- Fast Growing Cloud Business and Solid Core Drive 4th Consecutive Year of Double-Digit Growth: Full Year 2013 Non-IFRS Software and Software-Related Service Revenue Increased 11% at Constant Currencies (6% at Actual Currencies to €14.03 Billion)
- Cloud Subscription and Support Backlog Increased 50% to approximately €1.2 billion as of December 31, 2013, Non-IFRS Deferred Cloud Subscription and Support Revenue Increased 25% to €447 Million as of December 31, 2013
- SAP HANA Success Continued in 2013: Full Year 2013 HANA Software Revenue Increased 69% at Constant Currencies to €664 Million (61% at Actual Currencies to €633 Million), SAP HANA Becomes the Real-Time Platform for the Industry
- Full Year 2013 Non-IFRS Operating Profit Increased 13% at Constant Currencies to €5.90 Billion, Resulting in Non-IFRS Operating Margin Expansion of 150 Basis Points at Constant Currencies to 33.5%
- Full Year 2013 Non-IFRS Earnings Per Share Increased 11% to €3.37
- Introducing 2017 Targets Reflecting Customer-Driven Shift to Cloud: At least €22 Billion in Total Revenue, €3.0 - €3.5 Billion Total Revenue from the Cloud Business and 35% Non-IFRS Operating Margin by 2017

SAP AG (NYSE: SAP) today announced its financial results for the fourth quarter and full year ended December 31, 2013.

BUSINESS HIGHLIGHTS IN THE FOURTH QUARTER AND FULL YEAR 2013

SAP delivered strong revenue growth in 2013. Full year non-IFRS software and cloud subscription revenue increased 11% at constant currencies (6% at actual currencies to €5.28 billion). Non-IFRS software and software-related service revenue grew 11% at constant currencies (6% at actual currencies to €14.03 billion). Non-IFRS total revenue grew 8% at constant currencies (4% at actual currencies to €16.90 billion).

"We are proud of having delivered another year of double digit growth, outperforming the market and expanding our margin, while at the same time investing in innovation and the cloud," said Co-CEOs Bill McDermott and Jim Hagemann Snabe. "Based on our strong global momentum from 2013 we will accelerate the transition to the cloud by offering customers choice. With all solutions moving to the Cloud powered by our real time platform HANA, we will simplify for our customers, extend our lead and drive growth that is more predictable and profitable for the long term."

"We finished 2013 with a strong fourth quarter. We significantly expanded our Non-IFRS operating margin in the fourth quarter, leading to a full-year Non-IFRS operating margin expansion of 150 basis points at constant currencies and 11% growth in Non-IFRS EPS for the full year 2013," said Werner Brandt, CFO of SAP. "This was driven by operational excellence despite the margin impact from acquisitions and our momentum in the cloud."

SAP's fast-growing cloud business demonstrates the Company's leadership in the cloud. Non-IFRS cloud subscription and support revenue was €787 million at constant currencies, which exceeded the Company's full year 2013 guidance of €750 million (2012: €343 million).

Non-IFRS deferred cloud subscription and support revenue[1] was €447 million as of December 31, 2013, a year-over-year increase of 25%. The Company's cloud subscription and support backlog[2] as of December 31, 2013 was approximately €1.2 billion, a year-over-year increase of 50%. SAP's annual cloud revenue run rate now exceeds €1.06 billion[3]. SAP's total cloud portfolio applications subscribers now exceed 35 million. The trailing twelve month Ariba network spend volume[4] now exceeds $0.5 trillion. Today Ariba is the world's largest Web-based business trading community with 1.4 million connected companies.

SAP HANA, the platform for real-time business applications, was a major growth engine in 2013. The Company has now over 3,000 HANA customers. Full year 2013 HANA software revenue increased 69% at constant currencies to €664 million (61% at actual currencies to €633 million). SAP Business Suite powered by SAP HANA is the best-in-class platform for high-performance applications. With 800 customers at the end of 2013, demand for SAP Business Suite powered by HANA has exceeded SAP's own expectations in the short period since its launch in May 2013.

Fourth Quarter 2013 Regional Revenue

The EMEA region saw high single-digit growth with non-IFRS software and cloud subscription revenue increasing 9% at constant currencies. This was the result of high double-digit growth in cloud subscription and support revenue in this region and strong double-digit software revenue growth at constant currencies in Germany, France, Russia, Middle East and Africa. The Americas region grew single-digit in the fourth quarter in non-IFRS software and cloud subscription revenue at constant currencies. This was the result of the transition to the cloud and a tough year-over-year comparison in software revenue. Non-IFRS software and cloud subscription revenue in the Asia Pacific Japan (APJ) region continued on its path of double-digit growth at constant currencies, driven by a strong performance in China.

Full Year 2013 Regional Revenue

The EMEA region saw high-single digit growth with non-IFRS software and cloud subscription revenue at constant currencies which is an impressive result in light of continued market uncertainty seen throughout the year. The Americas region delivered a very strong full year performance in non-IFRS software and cloud subscription revenue with 15% growth at constant currencies while rapidly shifting to the Cloud. Non-IFRS software and cloud subscriptions revenue in the APJ region increased by 3% at constant currencies in the full year 2013 after ending the year with a strong fourth quarter.

FINANCIAL RESULTS IN DETAIL

FINANCIAL HIGHLIGHTS - Fourth Quarter 2013

IFRS and non-IFRS software revenue was €1.90 billion (2012: €1.94 billion), a decrease of 2% (an increase of 4% at constant currencies). IFRS software and cloud subscription revenue was €2.11 billion (2012: €2.06 billion), an increase of 2%. Non-IFRS software and cloud subscription revenue was €2.11 billion (2012: €2.10 billion), an increase of 1% (6% at constant currencies). IFRS software and software-related service revenue was €4.38 billion (2012: €4.23 billion), an increase of 4%. Non-IFRS software and software-related service revenue was €4.39 billion (2012: €4.27 billion), an increase of 3% (8% at constant currencies). IFRS total revenue was €5.11 billion (2012: €5.02 billion), an increase of 2%. Non-IFRS total revenue was €5.12 billion (2012: €5.06 billion), an increase of 1% (7% at constant currencies).

IFRS operating profit was €1.81 billion (2012: €1.59 billion), an increase of 13%. Non-IFRS operating profit was €2.10 billion (2012: €1.97 billion), an increase of 7% (15% at constant currencies). IFRS operating margin was 35.3% (2012: 31.7%), an increase of 3.6 percentage points. Non-IFRS operating margin was 41.0% (2012: 38.9%), or 41.8% at constant currencies, an increase of 2.1 percentage points (2.9 percentage points at constant currencies).

IFRS profit after tax was €1.32 billion (2012: €1.10 billion), an increase of 20%. Non-IFRS profit after tax was €1.52 billion (2012: €1.36 billion), an increase of 12%. IFRS basic earnings per share was €1.11 (2012: €0.92), an increase of 21%. Non-IFRS basic earnings per share was €1.28 (2012: €1.14), an increase of 12%. The IFRS and non-IFRS effective tax rates in the fourth quarter of 2013 were 25.6% (2012: 28.0%) and 26.4% (2012: 28.7%), respectively.

FINANCIAL HIGHLIGHTS – Full Year 2013

IFRS and non-IFRS software revenue was €4.52 billion (2012: €4.66 billion), a decrease of 3% (an increase of 2% at constant currencies). IFRS software and cloud subscription revenue was €5.21 billion (2012: €4.93 billion), an increase of 6%. Non-IFRS software and cloud subscription revenue was €5.28 billion (2012: €5.00 billion), an increase of 6% (11% at constant currencies). IFRS software and software-related service revenue was €13.95 billion (2012: €13.17 billion), an increase of 6%. Non-IFRS software and software-related service revenue was €14.03 billion (2012: €13.25 billion), an increase of 6% (11% at constant currencies). This exceeded SAP’s non-IFRS software and software-related service revenue guidance which was at least 10% at constant currencies. IFRS total revenue was €16.82 billion (2012: €16.22 billion), an increase of 4%. Non-IFRS total revenue was €16.90 billion (2012: €16.30 billion), an increase of 4% (8% at constant currencies).

IFRS operating profit was €4.48 billion (2012: €4.07 billion), an increase of 10%. Non-IFRS operating profit was €5.51 billion (2012: €5.21 billion), an increase of 6% (€5.90 billion or 13% at constant currencies). This met SAP’s non-IFRS operating profit guidance (which was in a range of €5.85 - €5.95 billion at constant currencies). IFRS operating margin was 26.7% (2012: 25.1%), an increase of 1.6 percentage points. Non-IFRS operating margin was 32.6% (2012: 32.0%), or 33.5% at constant currencies, an increase of 0.6 percentage points (1.5 percentage points at constant currencies). Non-IFRS operating margin in 2013 was negatively impacted affected by approximately 50 basis points (2012: 100 basis points) due to acquisitions.

IFRS profit after tax was €3.33 billion (2012: €2.82 billion), an increase of 18%. Non-IFRS profit after tax was €4.02 billion (2012: €3.61 billion), an increase of 12%. IFRS basic earnings per share was €2.79 (2012: €2.37), an increase of 18%. Non-IFRS basic earnings per share was €3.37 (2012: €3.03), an increase of 11%. The IFRS and non-IFRS effective tax rates for the twelve months ending December 31, 2013 were 24.3% (2012: 26.2%) and 25.9% (2012: 27.5%), respectively.

Operating cash flow was €3.83 billion (2012: €3.82 billion), increasing slightly year-over-year. Free cash flow was €3.27 billion (2012: €3.28 billion), decreasing slightly year-over-year. Free cash flow was 19% of total revenue (2012: 20%). At December 31, 2013, SAP had a total group liquidity of €2.84 billion (December 31, 2012: €2.49 billion), which includes cash and cash equivalents and short term investments. Net liquidity at December 31, 2013 was -€1.47 billion compared to -€2.50 billion at December 31, 2012.

BUSINESS OUTLOOK 2014

The Company is providing the following outlook for the full-year 2014:

- The Company expects full year 2014 non-IFRS cloud subscription and support revenue to be in a range of €950 – €1,000 million at constant currencies (2013: €758 million). The upper end of this range represents a growth rate of 32% which is similar to the respective 2013 growth rate after adjusting for acquisitions.
- The Company expects full year 2014 non-IFRS software and software-related service revenue to increase by 6% - 8% at constant currencies (2013: €14.03 billion).
- The Company expects full-year 2014 non-IFRS operating profit to be in a range of €5.8 billion – €6.0 billion at constant currencies (2013: €5.51 billion).

MID-TERM OUTLOOK

With SAP HANA as the single platform for our entire product portfolio, delivered on-premise or in the Cloud, SAP will drive simplicity and business outcomes for its customers.

SAP expects the combination of a stable, highly-profitable core and fast-growing cloud business to deliver continued growth and margin expansion. The Company still aims to increase its total revenue to at least €20 billion and total revenue from its cloud business including cloud-related professional services to approximately €2 billion by 2015.

Looking beyond 2015, SAP is now introducing new 2017 targets. SAP aims to increase total revenue to at least €22 billion and total revenue from its cloud business to €3.0 - €3.5 billion by 2017. The Company retains its non-IFRS operating margin goal of 35%. In order to capture the growth opportunities in the cloud, SAP now expects this target to be reached by 2017 rather than in 2015 as previously stated. SAP anticipates the fast-growing cloud business along with growth in support revenue will drive a higher proportion of more predictable, recurring revenue in the future.

Additional Information

2013 revenue and profit figures include the revenue and profits from Ariba, SuccessFactors and hybris. The comparative numbers for 2012 do not include SuccessFactors until February 21, 2012 and Ariba until October 1, 2012.The hybris acquisition closed on August 1, 2013.

For a more detailed description of all of SAP’s non-IFRS measures and their limitations as well as our constant currency and free cash flow figures see Explanation of Non-IFRS Measures online.

2013 Annual Report

SAP’s 2013 Annual Report to Shareholders and 2013 Annual Report on Form 20-F are scheduled to be published on March 21, 2014, and will be available for download at www.sap.com/investor.

Webcast

SAP senior management will host a press conference in Walldorf today at 10:00 AM (CET) /

9:00 AM (GMT) / 4:00 AM (Eastern) / 1:00 AM (Pacific), followed by an investor conference at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00 AM (Eastern) / 5:00 AM (Pacific). Both conferences will be web cast live on the Company’s website at www.sap.com/investor and will be available for replay. Supplementary financial information pertaining to the full-year and quarterly results can be found at www.sap.com/investor.

Investor Symposium

In addition, the Company will host an Investor Symposium in New York on February 4nd at 3 PM CET 2:00 PM (GMT) / 9:00 AM (Eastern) / 6:00 AM (Pacific). This conference will be web cast live on the Company’s website at www.sap.com/investor and will be available for replay.

[1] Beginning in Q1 2013, SAP discloses non-IFRS deferred cloud subscription and support revenue, which is a subset of the total, non-IFRS deferred revenue number reported on the balance sheet. The opening balance for Ariba deferred cloud subscription and support revenue at October 1st, 2012 was €118 million (Non-IFRS) and €53 million (IFRS).

[2] Cloud subscription and support backlog represents expected future cloud subscription and support revenue that is contracted but not yet invoiced and thus not recorded in deferred revenue.

[3] The annual revenue run rate is the fourth quarter 2013 cloud division revenue of €266 million multiplied by 4.

[4] Network spend volume is the total value of purchase orders transacted on the Ariba Network in the trailing 12 months.

SAP AG

As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device - SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 253,500 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.



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