SAP Announces 2012 First Quarter Results

WALLDORF, Germany, April 25, 2012 /PRNewswire/ --

• 9th Consecutive Quarter of Double-Digit Growth in Non-IFRS Software and Software-Related Service Revenue
• First Quarter 2012 Non-IFRS Software and Software-Related Service Revenue Increased 12% to euro 2.63 Billion (10% at Constant Currencies)
• First Quarter 2012 Software Revenue Increased 4% to euro 637 Million (1% at Constant Currencies)
• First Quarter 2012 Non-IFRS Operating Profit Increased 7% to euro 834 Million (3% at Constant Currencies)
• First Quarter 2012 Non-IFRS Earnings Per Share Increased 11% to euro 0.49
• Free Cash Flow Up 35% to euro 2 Billion
• Strong Growth for Key Innovations: SAP HANA and Mobile euro 49 Million, Accelerating Momentum in Cloud Business With 69% Growth from New Business in Billings for SuccessFactors Stand-Alone

SAP AG (NYSE: SAP) today announced its financial results for the first quarter ended March 31, 2012.

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"We reported our ninth consecutive quarter of double-digit growth in non-IFRS software and software-related service revenue, with a strong contribution from SuccessFactors to our cloud business," said Werner Brandt, CFO of SAP. "Free cash flow was very strong in the first quarter, increasing by 35% to euro 2 billion. This enabled us to return to positive net liquidity faster than expected."

"We see strong momentum for our flagship in-memory platform SAP HANA, our cloud and mobile solutions, and our core applications and analytics products," said Bill McDermott and Jim Hagemann Snabe, Co-CEOs, SAP. "Customers are embracing our high speed of innovation and the ability to orchestrate solutions across our entire portfolio. SAP continues to help companies run like never before – helping to solve fundamental business challenges with unmatched industry expertise. We're confident that we'll deliver on our business outlook for Q2 and the full year."

FINANCIAL RESULTS IN DETAIL

FINANCIAL HIGHLIGHTS – First Quarter 2012

1) All figures are preliminary and unaudited.

2) Adjustments in the revenue line items are for the revenue that would have been recognized had acquired entities remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges, share-based compensation expenses, restructuring and discontinued activities. 

3) Constant currency revenue and operating profit figures are calculated by translating revenue and operating income of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period.

Revenue – First Quarter 2012

• IFRS software revenue was euro 637 million (2011: euro 615 million), an increase of 4% (1% at constant currencies).
• IFRS software and software-related service revenue was euro 2.62 billion (2011: euro 2.33 billion), an increase of 13%. Non-IFRS software and software-related service revenue was euro 2.63 billion (2011: euro 2.34 billion), an increase of 12% (10% at constant currencies).
• IFRS total revenue was euro 3.35 billion (2011: euro 3.02 billion), an increase of 11%. Non-IFRS total revenue was euro 3.36 billion (2011: euro 3.04 billion), an increase of 10% (8% at constant currencies).

First quarter 2012 non-IFRS software and software-related service revenue and total revenue exclude a deferred revenue write-down from acquisitions of euro 7 million (2011: euro 17 million).

Profit – First Quarter 2012

• IFRS operating profit was euro 631 million (2011: euro 597 million), an increase of 6%. Non-IFRS operating profit was euro 834 million (2011: euro 779 million), an increase of 7% (3% at constant currencies).
• IFRS operating margin was 18.8% (2011: 19.7%), a decrease of 0.9 percentage points. Non-IFRS operating margin was 24.8% (2011: 25.6%), or 24.5% at constant currencies, a decrease of 0.8 percentage points (a decrease of 1.1 percentage points at constant currencies).
• IFRS profit after tax was euro 444 million (2011: euro 403 million), an increase of 10%. Non-IFRS profit after tax was euro 583 million (2011: euro 528 million), an increase of 10%. IFRS basic earnings per share was euro 0.37 (2011: euro 0.34), an increase of 9%. Non-IFRS basic earnings per share was euro 0.49 (2011: euro 0.44), an increase of 11%.
• The IFRS and non-IFRS effective tax rates in the first quarter of 2012 were 26.9% (2011: 30.9%) and 28.1% (2011: 31.0%), respectively.

First quarter 2012 non-IFRS software and software-related service revenue and non-IFRS operating profit excludes a deferred revenue write-down from acquisitions of euro 7 million (2011: euro 17 million). Non-IFRS operating profit additionally excludes acquisition-related charges of euro 120 million, profit from discontinued activities of euro 7 million, share-based compensation expenses of euro 83 million and restructuring expenses of euro 0 million (2011: euro 112 million, expenses of euro 2 million, euro 52 million and euro 0 million).First quarter 2012 non-IFRS profit after tax and non-IFRS basic earnings per share exclude a deferred revenue write-down from acquisitions of euro 5 million, acquisition-related charges of euro 79 million, profit from discontinued activities of euro 4 million, share-based compensation expenses of euro 59 million and restructuring expenses of euro 0 million (2011: euro 11 million, euro 76 million, expenses of euro 1 million, euro 37 million and euro 0 million) net of tax.

Cash Flow – First Quarter 2012
Operating cash flow was euro 2.07 billion (2011: euro 1.59 billion), an increase of 30%. Free cash flow was euro 1.96 billion (2011: euro 1.45 billion), an increase of 35%. Free cash flow was 58% of total revenue (2011: 48%). At  March 31, 2012, SAP had a total group liquidity of euro 5.18 billion (December 31, 2011: euro 5.60 billion), which includes cash and cash equivalents and short term investments. Net liquidity at March 31, 2012 was euro 845 million compared to euro 1.64 billion at December 31, 2011. This decrease in net liquidity was mainly due to the acquisition of SuccessFactors and was partially offset by increased operating cash flow in the first quarter 2012.

SuccessFactors
On February 16, 2012, The Company announced the successful closing of its cash tender offer for all issued and outstanding shares of common stock of SuccessFactors, Inc.

On a stand-alone basis, SuccessFactors achieved a 69% increase in its 12 month billings from new business in the first quarter (compared to their first quarter 2011). SAP's strong combination with SuccessFactors is allowing the Company to accelerate its strategy to become the leading cloud provider. SuccessFactors' solutions are highly complementary to SAP's core HCM offerings as well as SAP's strong cloud assets: SAP Business ByDesign for the suite cloud market and SAP's line of business cloud offerings for large enterprises such as SAP Sales on Demand.

Business Outlook
SAP reiterates the following outlook for the full-year 2012:

• The Company expects full-year 2012 non-IFRS software and software-related service revenue to increase in a range of 10% – 12% at constant currencies (2011: euro 11.35 billion). This includes a contribution of up to 2 percentage points from SuccessFactors' business.
• The Company expects full-year 2012 non-IFRS operating profit to be in a range of euro 5.05 billion – euro 5.25 billion at constant currencies (2011: euro 4.71 billion). Full-year 2012 non-IFRS operating profit excluding SuccessFactors is expected to be in a similar range.
• The Company projects a full-year 2012 IFRS effective tax rate of 26.5% – 27.5% (2011: 27.9%) and a non-IFRS effective tax rate of 27.0% – 28.0% (2011: 26.6%).

In addition to the full-year outlook, SAP is providing the following outlook for the second quarter 2012:

• The Company expects second quarter 2012 software revenue to increase in a range of 15% – 20% at constant currencies (2011: euro 838 million).
• The Company expects second quarter 2012 non-IFRS software and software-related service revenue to increase in a range of 14% – 16% at constant currencies (2011: euro 2.59 billion).

Major Customer Wins
In the first quarter of 2012, SAP closed the following major contracts.

EMEA
EADS N.V., GlaxoSmithKline Biologicals SA, Kenya Ports Authority, Prada S.p.A., RAK Ceramics, RAYNET SNC

Americas
BJ's Wholesale Club, Boston Scientific Corporation, Grupo Pao de Acucar, Nutrisystem, Inc., Petroleos del Peru S.A.

Asia Pacific Japan
Australia and New Zealand Banking Group Limited, China Shenhua Energy Co., Ltd., Hyosung Corporation, Syarikat Prasarana Negara Berhad

HANA
Banco Compartamos, S.A., Integrated Utility Holding, Joeone Company Limited, United Breweries Ltd.

Cloud
CEVA Logistics, LRS Lufthansa Revenue Services GmbH, Optimal, Rio Tinto, Sobeys, Stulz Air Technology Inc.

Additional Information     
First quarter 2012 revenue, profit and cash flow figures include the revenue, profits and cash flows from SuccessFactors starting on February 21, 2012. For the prior-year period those numbers were not included.

TomorrowNow litigation update: Late last year Oracle filed a motion seeking an early appeal from the ruling vacating the jury's damages award. The early appeal was denied by the judge on January 6, 2012, and Oracle had the choice to accept the reduced damages of USD 272 million or seek a new trial to determine damages. Oracle elected to proceed with a new trial. The new trial date is currently scheduled for June 18, 2012.

In light of SAP's strong focus on the cloud market, SAP realigned its income statement to provide additional transparency on cloud-related revenue streams. On February 17, 2012, SAP published a Webmessage discussing this change. For more details see More Transparency On Cloud Revenue: SAP Realigns Its Income Statement (Webmessage) online.

Additionally, SAP has provided estimates of the projected differences between its 2012 non-IFRS measures and the comparable IFRS measures, and widened the range of revenues for which acquisition-related deferred revenue write-downs are adjusted in determining SAP's non-IFRS revenue and profit numbers. On March 23, 2012, SAP published a Webmessage discussing this change. For more details see SAP`s Non-IFRS financial measures: 2012 estimates of the differences between IFRS and Non-IFRS (Webmessage) online.

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

First Quarter 2012 Interim Report
SAP's first quarter 2012 Interim Report was published today and is available for download at www.sap.com/investor. The interim report includes an update on SAP's sustainability performance.

Webcast
SAP senior management will host a conference call for financial analysts and media on Wednesday, April 25th at 2:00 PM (CEST) / 1:00 PM (GMT) / 8:00 AM (EDT) / 5:00 AM (PDT). The conference call will be web cast live on the Company's website at www.sap.com/investor and will be available for replay.

2011 Annual Report
SAP's 2011 Annual Report was published on March 23, 2012, and is available for download at www.sap.com/investor.

About SAP
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 190,000 customers (includes customers from the acquisition of SuccessFactors) to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

© 2012 SAP AG. All rights reserved.

SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP BusinessObjects Explorer, StreamWork, SAP HANA,  and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries.

Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects Software Ltd. Business Objects is an SAP company.Sybase and Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere, and other Sybase products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Sybase, Inc. Sybase is an SAP company.

Crossgate, m@gic EDDY, B2B 360 Degrees, and B2B 360 Degrees Services are registered trademarks of Crossgate AG in Germany and other countries. Crossgate is an SAP company.

SuccessFactors, Execution is the Difference, BizX Mobile Touchbase, It's time to love work again, Jam and BadAss SaaS are trademarks or registered trademarks of SuccessFactors Inc. in the United States and other countries. SuccessFactors is an SAP company.

All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary.

These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

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Appendix – Financial Information to Follow

Financial Statements (IFRS)

CONSOLIDATED INCOME STATEMENT
For the three months ended March 31
(Unaudited)

*  for the three months ended March 31, 2012 and 2011 the weighted average number of shares were 1,190 million (diluted: 1,191million) and 1,188 million (diluted: 1,189 million), respectively (treasury stock excluded).

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at March 31, 2012 and December 31, 2011
(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31
(Unaudited)

Supplementary Financial Information

RECONCILIATIONS FROM NON-IFRS NUMBERS TO IFRS NUMBERS
(Unaudited)

The following table presents a reconciliation from our non-IFRS numbers (including our non-IFRS at constant currency numbers) to the respective most comparable IFRS numbers. Note: Our non-IFRS numbers are not prepared under a comprehensive set of accounting rules or principles.

* Adjustments in the revenue line items are for support revenue, cloud subscription 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. Adjustments in the operating expense line items are for acquisition-related charges, share-based compensation expenses, restructuring expenses and discontinued activities.

** 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 period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period.

Differences may exist due to rounding.

REVENUE BY REGION
(Unaudited)

The following table presents our IFRS and non-IFRS revenue by region based on customer location. The table also presents a reconciliation from our non-IFRS revenue (including our non-IFRS revenue at constant currency) to the respective most comparable IFRS revenue. Note: Our non-IFRS revenues are not prepared under a comprehensive set of accounting rules or principles.

* Adjustments in the revenue line items are for support revenue, cloud subscription 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 period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period.

Differences may exist due to rounding.

For a more detailed description of these adjustments and their limitations as well as our constant currency and free cash flow figures see Explanations of Non-IFRS Measures online (www.sap.com/corporate-en/investors/reports).

SOURCE SAP AG