SAP releases its Q1 2023 Results
Germany's WALLDORF, April 21, 2023 /PRNewswire/ -- The financial results for the first quarter ending March 31, 2023, were released by SAP SE (NYSE: SAP).
- Cloud revenue increased by 24% and by 22% in constant currency, up 1% over the previous quarter. S/4HANA cloud revenue increased by 77% overall and by 75% in constant currency.
- At nominal and constant currencies, the current cloud backlog is up by 25%, representing a 1% improvement in sequential growth.
- IFRS cloud gross profit increased by 28%, non-IFRS cloud gross profit increased by 28%, and at constant currencies, gross profit increased by 27%.
- Operating profit under IFRS fell by 45%, whereas operating profit under non-IFRS increased by 12% and by 12% at constant currencies.
- Updated forecast for 2023 to account for the anticipated sale of Qualtrics. SAP updates its view for ongoing business, noting that it expects top line and operating profit growth to pick up.
- According to IFRS 5, the Qualtrics consolidated group ("Qualtrics") was categorised as ceased activities in Q1 2023. As a result, Qualtrics' contribution is not reported as part of SAP's ongoing operations.
The first quarter of 2023
At constant exchange rates, the current cloud backlog increased by 25% to €11.15 billion, representing a 1% improvement in sequential growth. At constant exchange rates, the backlog for SAP S/4HANA's current cloud increased by 79% to €3.42 billion, or 78%.
Cloud sales increased by 24% to €3.18 billion in the first quarter and by 22% at constant currencies, up 1% from the previous quarter. Revenue from SAP S/4HANA cloud increased 77% to €716 million and 75% when measured in constant currencies.
Software licence sales declined by a manageable 13% to €276 million and was down 13% at constant currencies, helped by a few significant purchases. Revenue from the cloud and software increased by 10% to €6.36 billion and by 8% in constant currency. Revenue from services increased by 11% in constant currency and 12% to €1.08 billion. The whole revenue increased 9% in constant currency terms and 10% to €7.44 billion.
In the first quarter, the percentage of more predictable revenue rose by 1 point to 82%.
Operating profit according to IFRS fell by 45% to €803 million. The increase in share-based compensation, which represents the gain in share price during the first quarter as compared to the decline over the same period last year, is the main cause of the decline. Restructuring costs related to the targeted restructuring programme and costs attributable to a provision for prior regulatory compliance issues also had an impact on IFRS operating profit (see section (D) Basis of Non-IFRS Presentation). At constant exchange rates, non-IFRS operating profit increased by 12% to €1.87 billion.
IFRS basic earnings per share thus fell by 60% to €0.35. The basic non-IFRS earnings per share rose 8% to €1.08. With IFRS, the effective tax rate was 40.5%, while without IFRS, it was 28.3%. For IFRS, the adjustments in non-deductible expenses and valuation allowances on deferred tax assets were the main causes of the year-over-year increase. Due to corresponding modifications to pre-tax data, the changes in non-deductible expenses do not apply for non-IFRS.
The impact of the sale of trade receivables in the fourth quarter of last year, which weighed on Q1, caused free cash flow to decline by 9%.
Cloud gross profit increased by 28 percent (IFRS) to €2.24 billion, 28 percent (non-IFRS) to €2.27 billion, and 27 percent (non-IFRS at constant currencies).
Enterprise Highlights
Customers from all around the world kept selecting "RISE with SAP" to power their end-to-end business transformations in the first quarter. BMW Group, DOLCE & GABBANA, GAMA, GlasfaserPlus, The Government of Manitoba, Henkel, KANSAI PAINT CO, Lingong Heavy Machinery, MLS, NEC Networks & System Integration Corporation, Pastificio Rana, Sempra Infrastructure, Sodexo BRS, Sri Intellectual, Thales Defence & Security Inc, VEM Conveniência, and Zagis were some of these clients.
For the fiscal year 2022, SAP recommended a dividend of €2.05 per share, which would represent a 5% increase from the usual dividend paid for the fiscal year 2021. The dividend must be approved by shareholders at the forthcoming AGM on May 11, 2023.
On March 21, SAP unveiled GROW with SAP, a fresh service designed to assist midsize clients in adopting cloud ERP that promotes quickness, predictability, and ongoing innovation. It is a comprehensive service built on the SAP Business Technology Platform and SAP S/4HANA Cloud, public edition.
