Ladies and gentlemen, thank you for standing by. I'm Anna, your call operator. Welcome, and thank you for joining the SAP Debt Investor Conference Call. Throughout today's recorded presentation, all participants will be in listen-only mode. The presentation will be followed by a question and answer session. If you'd like to ask a question, you may press star followed by one. If any participant has difficulty hearing the conference, please press star followed by zero for operator assistance. I would now like to turn the conference over to Steffen Diel. Please go ahead, sir.
Hi, everybody. Very warm welcome to SAP's Debt Investor Call for Q1 2016. My name is Steffen Diel. I'm heading the Global Treasury Department. Thank you very much for participating. Today's call will be led through by Scott Smith from our Investor Relations department and Jim Donnelly, a Director at SAP ILM U.S. Financial Services. In the first part, we will talk about the financial performance and the outlook for 2016. Whereas in the second part, we will go into more detail on the financial profile of SAP. At the end, we will open up for additional questions that you might have. With that, I hand it over to Scott.
That's great. Thanks, Steffen. Before we get started on the financial details, I'd just like to I think you see the slide there on the safe harbor statement. A few words about forward-looking statements. Briefly, please note that matters discussed today may contain forward-looking statements which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Factors that could affect the company's future financial results are discussed more fully in the company's most recent filing with the SEC. To Q1, following an outstanding finish to 2015, SAP had a solid performance in the first quarter, our seasonally smallest quarter. The results show that even as the world economy is changing fast, SAP represents the innovation, strength, and stability of a business software market leader. If you move on to slide four, we talk about top-line momentum.
Our cloud results is what I wanted to talk about first of all. This quarter leaves no doubt that this business continues on its fast growth path. Cloud revenue came in at 33% this quarter, which marks the 12th quarter in a row with a 30%-plus growth rate excluding acquisitions. This is at the high end of our implied guidance range and ticking well ahead of our CAGR through 2020. New cloud bookings saw robust growth, up 23% or 26% at constant currencies. With our strong cloud backlog and our strong bookings performance in 2015, we are on track to deliver on our midterm growth ambitions. In addition, we now have approximately 100 million total cloud subscribers. For the business networks, they continue to gain momentum. We had a 22% growth to EUR 451 million in the first quarter.
As you can see on the slide, there are some key highlights for the three individual networks, Ariba, Concur, and Fieldglass. Continuing with a few comments on the top-line results. The other piece of our more predictable revenue, support revenue, was solid for the quarter, up 5% in line with our plan. We continue to see very high renewal rates, signaling a healthy growth rate going forward. In fact, in the first quarter, 99.5% of SAP's net new customers selected SAP Enterprise Support. As a result of the cloud and support performance, as previously mentioned, our more predictable revenue as a combination of cloud and support revenue was 69% of our total revenue in the first quarter. That means our business has become more stable, which is key, especially in times when certain markets are becoming more volatile.
Overall, our cloud and software business was solid in the first quarter. We grew by 6% at constant currencies, which is within our guidance range for the full year. We do recognize some volatility in the markets, but our strong pipeline gives us confidence to iterate our outlook for the full year. Moving on to the next slide. We wanted to talk a little bit about the regions. First of all, in EMEA, the company had a solid performance with an 8% increase in cloud and software revenue. Cloud subscriptions and support revenue grew by 49%. In EMEA, we had solid growth in software licenses overall. In the Americas region, the company grew cloud and software revenue by 4% and cloud subscriptions and support revenue by 29%.
North America, coming off a very strong fourth quarter in 2015, had a slower than anticipated start to the year. In Latin America, in particular in Brazil, the continuing political and macroeconomic instability weighed on our first-quarter performance. In APJ, cloud and software revenue was up 1%, with cloud subscriptions and support revenue growing by 26%. SAP software revenue performance in the region was in line with the company's expectations, given a tough prior year comparison. China was a highlight with double-digit software revenue growth. Moving to the bottom line, to the next slide. Where we are able to manage an exceptional result in light of a slower than anticipated start of our software business. Before I get to the operating profit, let me first discuss our gross margin development for the quarter.
The cloud gross margin improved nicely to 66.3%, an increase of 120 basis points year-over-year. We achieved this result even as we continue to invest heavily in cloud delivery and personnel in our fast growth business. The software and support gross margin was 85.9%, up 80 basis points from the prior year. This positive result was due to the solid performance in the core, the combination of software and support revenue, and the positive impact from our company-wide transformation program. Our cloud and software gross margin was 82.4%, slightly up year-over-year. This is yet another strong proof point of our steady improvement in efficiency with our business models, and our share of cloud revenue increased by 3.7 percentage points to 17.6%.
To the operating profit, which was EUR 1.1 billion for the quarter, an increase of 5%. This profit result was a real bright spot in this quarter for sure. It was largely due to the positive impact from the company-wide transformation in 2015, where we are now managing our costs much more effectively and investing in areas which we see fast growth. For example, our headcount grew by 1,245 employees in the first quarter. Roughly 80% of the incremental hires were in sales, cloud, and our research and development organization. Moving to the next slide seven, just kind of in summary, an overview of our income statement.
I just wanted to point out that our earnings per share on the IFRS side grew by 38% to EUR 0.48, and our non-IFRS EPS grew by 9% to EUR 0.64 per share. Moving on to the outlook for the full year. As you can tell by the comments, we still see a strong pipeline. As I said, we are reiterating our outlook for the full year. The cloud subscription and support revenue, we still expect to grow by EUR 2.95 billion-EUR 3.05 billion for the full year. Cloud and software revenue we expect to grow in a range of 6%-8%, and our operating profit should come in at a range of EUR 6.4 billion-EUR 6.7 billion.
You can see, just as a quick explanation on the non-IFRS, you can see what the difference is as we adjust from IFRS to non-IFRS disclosure as it explains our outlook for the full year 2016. Moving on to slide 11, you just see a quick summary of where you can get more details on the non-IFRS disclosures on our webpage. In summary, I just wanted to close by letting you say that this was a solid quarter, and there is a lot we can take from it. We proved that our business transformation was successful. We had strong growth in operating profit despite the fact that our license performance was slower than anticipated. We again expanded our cloud margin while we continue to grow cloud revenue by more than 30%. Our fundamental growth drivers are rock solid.
HANA has become the industry standard in-memory data platform and is the key enabler of our entire innovation portfolio. This puts us on a strong path for the future. At this point, I'd like to pass it on, colleagues can talk about the balance sheets and the cash flow. Thank you.
Thanks very much, Scott. This is Dympna Donnelly here. I would just like to start off by taking you through the balance sheet there on slide 13. On the asset side, as you can see, there has been a very substantial increase in cash and other financial assets. It's now more than EUR 6 billion, up from EUR 3.76 billion at the year-end. This is made up predominantly of cash, actually, of over EUR 5.74 billion, and financial assets of EUR 360 million. We are accumulating cash at this stage in the year because of a significant dividend payment that will occur later this month and also some debt repayments that will occur in Q2.
Meanwhile, of course, we at all times want to maintain our minimum operating liquidity as a group, and hence we have increased the accumulated cash at this stage in the year. On the liability side of the balance sheet, you can see the provisions have decreased from EUR 300 million down to EUR 196 million. That reflects a reduction in the provision for restructuring costs since year-end. In relation to other liabilities, this reflects a reduction in the employee liabilities and is due to the reduction because the employee bonuses were paid earlier on this year. The deferred income has increased very, very substantially from EUR 2 billion at the end of the year through to EUR 5.2 billion.
However, this is largely cyclical because of the way the maintenance revenue, so much of it occurs in the first quarter, and that gives rise to a large deferred income on the balance sheet, which then is written off over the remainder of the year. You can also see the significant impact that that has when looking at the cash conversion ratio on the next slide. At the end of the period then, what we have is a market capitalization of EUR 85 billion, which is slightly down on the EUR 90 billion at year-end, but is up very substantially over where it was this time last year. The decline just really reflects a change in the marketplace. There has also been a slight change in the debt-equity ratio at the end of March due to the increase in deferred income, and that now stands at 46.5%.
If we go to the next slide 14. The substantial increase in deferred income is reflected in the cash and the operating cash flow, which leads to a high cash conversion ratio of 4.36. This is slightly down from the equivalent in the year ended in 2015, at the quarter end March 2015, and that is largely due to the increase in the days sales outstanding, which has increased by six days from 67 to 73. The decline in DSO is due to a number of factors, macroeconomic environment in a number of jurisdictions, particularly in MENA, Africa, and also a legal restructuring in China, and a general shift in the business model and portfolio, but is of concern to the group and is being worked on. The next slide 15, shows the movement in cash over the quarter.
As can be seen, it's fairly straightforward. There hasn't been any acquisitions. Therefore, there has been a substantial reduction in net debt, down to just over EUR 3 billion at the end of the quarter. Obviously, there has been a significant increase in the cash of the group. This is made up of cash of EUR 5.74 billion and cash investments of another EUR 112 million, giving rise to total group liquidity of EUR 5.85 billion. If we look at slide 16, this is looking at the maturity profile of the group, in relation to that debt and the debt repayments. As can be seen in 2016, the gray area there refers to the US private placement debt, which is due in Q2. Also, we're planning to pay at least EUR 600 million of the term loan that was taken out as part of the Concur acquisition.
However, I would like to stress that the potential maturity profile of the term loan is flexible. We can adjust depending on the cash flow of the group over the next, between 2016 and 2017. Overall, our fixed floating mix for 2016 will be in the region of a fixed debt of 37% and floating of 63%. The U.S. dollar euro mix is a U.S. dollar figure of 23% and a euro debt of 77%. I would now like to open it up for questions. Slide 17 just contains the contact details if there is any further questions that you have and would like to ask any of us directly. Now I'd like to open up the call to Steffen and for questions. Okay. Thank you, everybody.
Ladies and gentlemen, if you'd like to ask a question, please press star followed by one at this time. If you wish to remove yourself from the question queue, you may press star followed by two. One moment for the first question. First question is from the line of Elizabeth Henderson of AAM. Please go ahead.
SAP is on the ECB's approved collateral list. Has that program and clearly the very attractive yields changed your capital allocation strategy, at least over the near term? If you could just talk about how that may affect your decisions going forward. Thanks.
Hi, Elizabeth. It's Steffen. Great question, as this is definitely a very important development in the European bond market. Obviously, this opens up additional demand for a lot of corporate issuers in the European space
We still don't know exactly how the ECB will approach the primary market. It is expected that they take EUR 3 billion-EUR 5 billion per month from the market, not only in the primary market, but more of that volume in the secondary market. As I said, it provides a general, even better financing environment for investment-grade issuers. As far as SAP is concerned, this positive development for the overall financing environment does not change our concrete plans on going forward on the capital structure. We continue to pay back our maturing debt in the next 1 to 2 years. No change to our prior plans.
Thank you.
If there are any further questions, please press star followed by one. We have a question from Rebecca Dance of Unum. Please go ahead.
Hi. Thanks, guys. This is Rebecca Dance. Thanks for the update. I was just wondering if we could get a little color on the margin development over the next couple of years. It's come down since the highs in 2014. I'd just like to get your sense on if you expect margins to improve from here, and where you think the sustainable level is long-term. If it will improve, just a sense for what those drivers will be of improvement. Thanks.
Sure. This is Scott. Yeah, I can take that. From a margin perspective, you heard me talk a little bit about the gross margins. That's right now our focus area, and we're looking very closely at that. We definitely see margin progression through 2020, as you can see in our midterm outlook. Some of the drivers of that you were already seeing in the first quarter come from our company-wide transformation in 2015, where we basically decided that we would stop investing in areas of no growth or very low growth and switch over those investments into the fast growth areas such as cloud. That's why you start to already see some savings there. We did say at the end of last year, we'd have a mid to triple digits annualized run rate savings based on that.
Obviously, you won't see that exact number in the 2016 results and beyond just because we take some of that savings and we invest it in those areas where we do have that strong growth. That's basically what we're looking at. Some of those fast growth areas are in a lot of businesses, like SuccessFactors and Business Networks, and the private cloud, S/4HANA, obviously, we continue to invest in those. The other thing we continue to do is continue to increase our efficiency across the board. As the cloud business, as you can see, cloud revenue was higher in Q1 than software revenue for the first time. As a result, we still improved our operating profit quite nicely.
That was, for us, a real big takeaway from this quarter, the fact that we can still improve our operating profit and improve across the board our gross margins individually with having a lower software revenue this quarter. Not only lower than cloud, but lower than expected by the analysts. Therefore, we feel pretty confident coming out of that. You can see from the operating margin standpoint, although that's not necessarily our focus area now, it's still very close to breaking even. You see that progressing. As we get through 2016 and 2017 and into 2018, we see our operating margin slowly expanding forward through 2020.
Great. Thank you.
There are no further questions at this time. There are no further questions at this time. I would like to pass back to Christoph and you.
Yes. Thank you very much for those questions, and thank you very much for attending this call. I would like to wish you a very nice rest of the day. Thank you.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.