Business Outlook 2022
SAP is executing on its cloud-led strategy, which is driving accelerated cloud growth through both new business and cloud adoption by existing customers. The pace and scale of SAP’s cloud momentum places the Company well on track towards its mid-term ambition.
Financial Outlook
For 2022, SAP continues to expect:
- €11.55 – 11.85 billion cloud revenue at constant currencies (2021: €9.42 billion), up 23% to 26% at constant currencies.
- €25.0 – 25.5 billion cloud and software revenue at constant currencies (2021: €24.08 billion), up 4% to 6% at constant currencies.
- €7.6 – 7.9 billion non-IFRS operating profit at constant currencies (2021: €8.23 billion), down 4% to 8% at constant currencies.
- The share of more predictable revenue (defined as the total of cloud revenue and software support revenue) is expected to reach approximately 78% (2021: 75%).
For 2022, SAP now expects:
- Free cash flow of approximately €4.5 billion (2021: €5.01 billion). The previous outlook was above €4.5 billion.
The current market environment and volatility in capital markets also lead to a lower level of predictability regarding the full-year 2022 effective tax rate outlook (IFRS and non-IFRS). Based on current estimates, we now expect a full-year 2022 effective tax rate for IFRS of around 45.0% (previously: 34.0% to 38.0%) and for non-IFRS of around 30.0% (previously: 23.0% to 27.0%). As the further development of our effective tax rate (IFRS and non-IFRS) strongly depends on the 2022 financial income contribution of Sapphire Ventures, we may face major deviations from the current estimate in either direction given current market conditions.
While SAP’s full-year 2022 business outlook is at constant currencies, actual currency reported figures are expected to be impacted by currency exchange rate fluctuations as the Company progresses through the year.
See the table below for the Q4 and FY 2022 expected currency impacts.
Expected Currency Impact Assuming September 2022 Rates Apply for the Rest of the Year
|
In percentage points |
Q4 2022 |
FY 2022 |
|
Cloud revenue growth |
+10pp to +12pp |
+9pp to +11pp |
|
Cloud and software revenue growth |
+6pp to +8pp |
+6pp to +8pp |
|
Operating profit growth (non-IFRS) |
+6pp to +8pp |
+4pp to +6pp |
Non-Financial Outlook
For 2022, SAP continues to expect:
- Employee Engagement Index to be in a range of 80% to 84% (2021: 83%)
For 2022, SAP now expects:
- Customer Net Promoter Score of 3 to 8 (2021: 10) after reviewing the year-to-date survey results. The previous range was 11 to 15.
- Net carbon emissions of 90 to 95 kt (2021: 110 kt). The previous value was 70 kt.
Ambition 2025
SAP reiterates its mid-term ambition published in its Q3 2020 Quarterly Statement including the commitment to double-digit growth of operating profit in 2023. In light of its strong cloud momentum and most recent favorable currency exchange rate development, SAP expects to update its mid-term ambition in the upcoming quarters.
The full Q3 2022 Quarterly Statement can be downloaded from: https://www.sap.com/investors/sap-2022-q3-statement.