SAP(US:SAP)2024-02-28 16:00Revenue Performance - The company reported cloud revenue as a key performance measure, which includes fees from software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS) [31] - Total revenue is measured in both actual and constant currencies, with cloud revenue and software support revenue being the two largest revenue streams [33] - Total revenue for 2023 reached €31,207 million, a 5.7% increase from €29,520 million in 2022 [68] - Cloud revenue increased to €13,664 million in 2023, a 19.5% rise from €11,426 million in 2022 [68] - Software licenses revenue decreased to €1,764 million in 2023, down 14.2% from €2,056 million in 2022 [68] Profitability Metrics - Operating profit (non-IFRS) is used to measure overall operational process efficiency and business performance [39] - Non-IFRS operating profit for 2023 was €9,548 million, reflecting a 12% increase compared to €8,516 million in 2022 [69] - Operating profit for 2023 was €5,787 million, with a non-IFRS operating profit of €8,722 million, reflecting a significant increase from €7,989 million in 2022 [70] - Profit after tax from continuing operations reached €3,600 million, resulting in a non-IFRS profit of €5,850 million, compared to €4,517 million in 2022 [70] - Attributable profit to owners of the parent was €3,634 million, with a non-IFRS profit of €5,880 million [70] Cash Flow and Expenses - Free cash flow is a key measure for managing overall financial performance, calculated as net cash from operating activities minus capital expenditures [44] - Free cash flow for 2023 was €5,093 million, up 16% from €4,388 million in 2022 [63] - Operating expenses (non-IFRS) totaled €22,485 million in 2023, a decrease of 11.4% from €25,420 million in 2022 [69] - Total operating expenses for 2023 were €25,420 million, with non-IFRS adjustments leading to a total of €22,485 million [71] - Research and development expenses (non-IFRS) were €5,613 million in 2023, a reduction from €5,629 million in 2022 [69] - Research and development costs amounted to €6,324 million, with a non-IFRS adjustment resulting in €5,613 million [71] Future Outlook and Strategic Initiatives - The company anticipates that starting in 2024, SAP S/4HANA Cloud revenue will be replaced by the Cloud ERP Suite revenue metric [34] - The company plans to stop excluding share-based payment expenses from operating profit (non-IFRS) starting in 2024 [60] - The company aims to enhance transparency in financial reporting by providing both IFRS and non-IFRS measures for better comparability [67] - The company aims to achieve carbon neutrality in its operations by 2023, with net carbon emissions being a key performance metric [51] - The company plans to use gross greenhouse gas emissions as a new metric starting in 2024 to measure emissions along the value chain as part of its Net Zero by 2030 commitment [51] Customer and Employee Metrics - The Customer Net Promoter Score (NPS) is used to assess customer loyalty, with adjustments made in 2023 to improve data quality [45] - The Employee Engagement Index is measured as a percentage of favorable responses from employee surveys, reflecting employee satisfaction and commitment [50] Tax and Earnings - The effective tax rate for 2023 was 32.6%, slightly higher than 32.0% in 2022 [70] - Basic earnings per share from continuing operations increased to €3.11 in 2023, up from €2.80 in 2022 [70] Other Financial Metrics - The total contractually committed cloud revenue (TCB) and current cloud backlog (CCB) are valuable indicators of the company's go-to-market success [37] - Constant currency measures indicate that revenue growth was impacted by currency fluctuations, with adjustments made for foreign currency effects [62] - The operating margin for 2023 was 18.5%, compared to 20.6% in 2022 [70] - The company incurred restructuring costs of €215 million, which were fully adjusted in the non-IFRS figures [71]