William McDermott - CEO
Thank you very much, Stefan, and hello, everyone. I hope you're doing well. What a quarter, what a year. In our 47th year and beginning my 10th as CEO, there's been one constant. It's all been about pride in engineering and empathy for the customer. Since 2010, we've doubled or nearly tippled our addressable market, revenue and operating income. Not to mention, SAP is now the fastest-growing cloud company at scale in the business software industry. The true measure of a company goes beyond financial metrics alone. 93% of our employees are proud to work for SAP, our colleagues volunteer to 0.25 million hours and touched 4 million lives in 2018 alone. While growing the entire size of the company by 10%, we beat our ambition to shrink our carbon footprint by nearly 5%. Among many others, these make me proud to report that SAP is a strong, sustainable, profitable growth company.
You've heard me say trifecta in past quarters to describe our growth in three key areas. Well, last year, SAP delivered double-digit growth in five key pillars of our business. You could call it our pentafecta. I'm going to give you a few stats from Q4 and the full year. Cloud revenue grew 40% in Q4 and 38% for the full year. Cloud and software revenue, up 11% in Q4, 10% for the full year. Cloud and software new order entry, up 18% in Q4, 14% for the full year. Total revenue, 13% in Q4 and plus 11% for the full year. Our operating profit was also up an impressive 10% for the full year. As you know, SAP raised our guidance on multiple occasions in 2018 and with these results, we hit or exceeded all of those raised metrics. Our customers, employees, partners and products are in total alignment to deliver the intelligent enterprise. By any measure, 2018 was a major success for the company. Our commitment for 2019 is the best of our best, once again.
We continue to move the company where our customers need us to go. If you look at the macro environment right now, SAP's strategy is uniquely suited for the moment. CEOs are focused on delivering 4 key experiences: customer, product, brand, and employee. With the acquisition of Qualtrics, which closed last week, SAP now combines market leadership and experienced management with end-to-end operational power in 25 industries. And why does this matter? Businesses are losing $1.6 trillion every year when their customers leave them for a competitor. This is a direct result of an experienced gap. People are just tired of being disappointed. SAP has engineered our portfolio to bridge this gap, because of 5% improvement in retention is equivalent to a 95% improvement in profit. After all, it's 5x more expensive to get a new customer than to keep the one you already have. Experience has never been more important. With Qualtrics, we give business of every size the human sentiment about their experience. The business has never had this insight before. We call this experience X Data. With SAP, that sentiment becomes operational outcomes like better experiences, higher retention and faster growth.
This is O or O-Data. By combining X and O-Data, SAP will help businesses revolutionize how they compete in the experienced economy. So what's the takeaway? Remember, your Xs and Os. And don't be surprised if I sign my e-mails XO, XO Bill, it's not just because I like you, although I do. This is the only strategy for SAP as we look at our bright future. And we know it's where the world is going. Experienced management is the future and SAP owns it. Because we consistently embrace new innovation, our underlying business model is rock-solid.
SAP has only winning businesses in the portfolio. Every strategic asset in the company is growing. And looking back, the belief was enterprise customers would only want to rent software. But SAP embraced the software-as-a-service business model early on and we're growing the cloud faster than competition and that includes Oracle, Salesforce.com and Workday to name a few.
We also have more cloud users than any company in our industry, 180 million and growing fast. It's also why there's 3 trillion in commerce running through our business networks. Just to give you a sense of scale, a wonderful company like Amazon has 250 billion running through its network.
Now some customers will choose to buy the software, capitalize it and amortize it over its lifetime value. What you're seeing in these results, SAP was right to protect customer choice even as cloud has overtaken the license, which some skeptics openly doubted would happen, our core business is rock-solid, returning to software growth in Q4 and ahead of everyone's expectations for the full year.
When you look at the business mix, the diversification of SAP de-risks us from many of the macro challenges facing other companies. Customers can run on-premise, in a private cloud or in the public cloud. It's their choice. SAP's business model has been built to deliver the promise. The same applies as company shift their infrastructure away from all legacy databases and data centers.
SAP has strong partnerships with Microsoft, Google, Amazon, Alibaba and others to embrace this value creation opportunity. Our growing echo system shows the wide appeal of SAP's HANA architecture, as the de facto business platform for businesses of all sizes. Overall, this is a business model built for scale, growth and resilience. The SAP portfolio is beyond compare, database, applications, business networks, cloud platform for integration, AI reshaping every business process and now Qualtrics to build a bridge between experienced management and the intelligent enterprise.
We actually couldn't be happier with the state of the company. The results showcase our ultimate pride. The customer who gave us their trust. You're seeing brands like Prada, Volvo, Dyson, Uber, Cargill, Sonos, Volkswagen, Hitachi, Infosys, Haribo, Verizon Wireless, JetBlue Airways and many others standardizing on SAP. They're choosing solutions from C/4HANA to S/4HANA, SAP Cloud Platform, Analytics Cloud, SAP SuccessFactors and total spend management with Ariba, Fieldglass and Concur. SAP LAN Auto not only powers advances in machine learning, we're already pushing forward with 5G and the edges of quantum computing. This is a company that never gets stuck in corners, we actually see around them.
I'll leave you with a few key points to highlight our confidence in the road ahead. The legacy classification of addressable markets in the enterprise is no longer valid. Experienced management is the category most relevant to the CEO agenda. Research consistently shows that trust between people and institutions is in steep decline. We will help our customers rebuild it, one experience at a time. The highly synergistic combination of X plus O will elevate our entire portfolio, differentiating every solution we offer to every line of business leader in the enterprise. Our geographic coverage model is stronger than ever.
SAP is the only true global business software company. We now have 425,000 customers and counting worldwide. We were ahead of our competition in China. We made it our second home. We continue to invest in the future of this amazing dynamic economy. We'll continue to take share from our competition, especially with experienced management, redefining 20th century categories as also-rans. Our 2019 guidance sets us up nicely to once again meet the opportunities before us. And I can only remind you our track record shows that SAP is seldom satisfied to only meet any business objective. Even as we look back on the past 10 years, we're even hungrier for the next 10. We expect to grow cloud revenue more than 3x, 3x reaching more than €35 billion in total revenue by 2023.
In case there are any skeptics out there, SAP will remain the fastest growing business software company in the cloud at scale. I remember the early days in 2010, since then piece by piece this company has been systematically transformed. We've made big pro[REMOVIDO] and we've kept those pro[REMOVIDO]. We evolved the business model even as we protected our maintenance base. We brought companies together and created a unified culture focused on helping the world run better and improving people's lives. This company takes nothing for granted. We fight for every inch with a warrior spirit. We're ready to seize our latest greatest opportunity, not because it's easy but because it's hard. We say the best run SAP for a reason, because we're so proud to help them be the best. Now we'll do with market-leading solutions that no competitor has. X plus O is the essential equation for winning in this experienced economy. Nearly 100,000 women and men are fired up and ready to go.
https://seekingalpha.com/article/4236392-sap-se-sap-ceo-william-mcdermott-q4-2018-results-earnings-call-transcript
