SAP SE

Investor Presentation • Jul 18, 2019

Second Quarter and Half Year 2019 Financial Highlights

SAP SE July 18, 2019

CONFIDENTIAL

Safe Harbor Statement

Any statements contained in this document that are not historical facts are forwardlooking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forwardlooking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20- F filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

Q2 2019 – Key performance metrics

The share of more predictable revenue reached 69% in the second quarter of 2019 (+3 percentage points)

© 2019 SAP SE or an SAP affiliate company. All rights reserved.

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Q2 2019 – Key performance metrics

Financial Highlights

• Cloud revenue grew to €1.7bn +40% (IFRS), +40% (Non-IFRS), +35% (Non-IFRS cc)
• Cloud gross margin up 4pp
• New cloud bookings up 17% to €494m (+15% cc), excluding IaaS up 27%
• Software license revenue down 5% to €948m (-6% cc)
• New cloud and software order entry up 3% to €2.40bn (+1% cc)
• Earnings per share were €0.48 (IFRS) (Q2/2018: €0.60) and up 11% at €1.09 (Non-IFRS)
• Operating cash flow down <100% to -€0.12bn | Free cash flow down <100% to -€0.41bn
• S/4HANA customers up 29% to >11.500 customers, approximately 50% were net new

H1 2019 – Key performance metrics

The share of more predictable revenue reached 70% in the first half of 2019 (+2 percentage points)

© 2019 SAP SE or an SAP affiliate company. All rights reserved.

5

H1 2019 – Key performance metrics

Financial Highlights H1 2019

• Cloud revenue grew to €3.3bn +42% (IFRS), +43% (Non-IFRS), +37% (Non-IFRS cc)
• New cloud bookings up 23% to €818m (+19% cc)
• Software license revenue down 1% to €1.6bn (-3% cc)
• New cloud and software order entry up 8% to €3.99bn (+5% cc)
• Earnings per share were €0.38 (IFRS) (H1/2018: €1.19) and up 17% at €1.99 (Non-IFRS)
• Operating cash flow down 10% to €2.7bn | Free cash flow down 10% to €1.96bn
• S/4HANA Customers up 29% to >11.500 customers, approximately 50% were net new

Q2 2019 – Regional performance

Revenues calculated based on customer location; All numbers are Non-IFRS unless otherwise stated. Individual country highlights are based on Non-IFRS at constant currencies

Q2 2019 – Double digit growth in cloud & software revenue and total revenue

€ millions, unless otherwise stated		IFRS			Non-IFRS
Revenue Numbers	Q2/19	Q2/18	∆ %	Q2/19	Q2/18	∆ %	∆ % at cc
Cloud	1,692	1,213	40	1,717	1,227	40	35
Software licenses	948	996	-5	948	996	-5	-6
Software support	2,854	2,735	4	2,854	2,735	4	2
Software licenses and support	3,802	3,731	2	3,802	3,731	2	0
Cloud and software	5,495	4,944	11	5,520	4,958	11	8
Services	1,136	1,056	8	1,136	1,056	8	5
Total revenue	6,631	5,999	11	6,656	6,014	11	8
Total operating expenses	-5,803	-4,955	17	-4,840	-4,374	11	8
Operating profit (loss)	827	1,044	-21	1,816	1,640	11	8
Financial income, net	29	56	-48	29	56	-48
Profit (loss) before tax	815	1,019	-20	1,804	1,615	12
Income tax expense	-233	-301	-23	-487	-444	10
Profit (loss) after tax	582	718	-19	1,317	1,171	12
Operating margin (in %)	12.5%	17.4%	-4.9pp	27.3%	27.3%	0.0pp	0.0pp
Earnings per share, basic (in €)	0.48	0.60	-21	1.09	0.98	11

H1 2019 – Cloud & software revenue, total revenue and non-IFRS operating profit up double-digit

€ millions, unless otherwise stated		IFRS			Non-IFRS
Revenue Numbers	H1/19	H1/18	∆ %	H1/19	H1/18	∆ %	∆ % at cc
Cloud	3,247	2,283	42	3,299	2,299	43	37
Software licenses	1,599	1,621	-1	1,599	1,621	-1	-3
Software support	5,692	5,391	6	5,692	5,391	6	3
Software licenses and support	7,291	7,012	4	7,291	7,012	4	1
Cloud and software	10,538	9,295	13	10,589	9,311	14	10
Services	2,184	1,965	11	2,184	1,965	11	8
Total revenue	12,722	11,260	13	12,773	11,276	13	10
Total operating expenses	-12,031	-9,192	31	-9,490	-8,401	13	10
Operating profit (loss)	691	2,069	-67	3,283	2,876	14	10
Financial income, net	29	28	3	29	28	3
Profit (loss) before tax	675	2,006	-66	3,267	2,813	16
Income tax expense	-201	-580	-65	-870	-774	12
Profit (loss) after tax	475	1,426	-67	2,397	2,039	18
Operating margin (in %)	5.4%	18.4%	-12.9pp	25.7%	25.5%	0.2pp	0.0pp
Earnings per share, basic (in €)	0.38	1.19	-68	1.99	1.71	17

Q2 2019 – Non-IFRS operating profit up 11% benefitting from operational discipline and increased cloud efficiency

H1 2019 – Expansion of non-IFRS operating margin by 20 basis points

Q2 2019 – Cost ratios

€6.7bn Total revenue, Non-IFRS

*Non-IFRS at constant currencies

H1 2019 – Cost ratios

€12.8bn Total revenue, Non-IFRS

*Non-IFRS at constant currencies

Balance Sheet, Condensed June 30, 2019, IFRS

Assets
€ millions	06/30/19	12/31/18
Cash, cash equivalents and other financial assets	5,569	9,075
Trade and other receivables	6,074	6,362
Other current assets	1,908	1,183
Total current assets	13,551	16,620
Goodwill	28,801	23,736
Intangible assets	4,730	3,227
Property, plant, and equipment	5,405	3,553
Other non-current assets	5,221	4,366
Total non-current assets	44,156	34,881
Total assets	57,707	51,502

Equity and liabilities
€ millions	06/30/19	12/31/18
Trade and other payables	1,472	1,491
Provisions	952	110
Other liabilities	6,231	5,857
Contract liabilities, current	5,558	3,028
Total current liabilities	14,213	10,486
Financial liabilities	14,067	10,553
Provisions	337	270
Contract liabilities, non-current	99	88
Other non-current liabilities	1,349	1,227
Total non-current liabilities	15,853	12,138
Total liabilities	30,066	22,624
Total equity	27,641	28,877
Total equity and liabilities	57,707	51,502

H1 2019 – Operating cash flow and free cash flow

€ millions, unless otherwise stated	H1/19	H1/18	∆
Operating cash flow	2,679	2,985	-10%
- Capital expenditure	-539	-818	-34%
- Payments of lease liabilities	-185	-	-
Free cash flow	1,956	2,167	-10%
Free cash flow in percent of total revenue	15	19	-4pp
Free cash flow conversion rate	4.12	1.52	>100%
Days sales outstanding (DSO in days, June 30)	70	68	2

Group Liquidity

FY 2019 – Additional outlook information and non-IFRS adjustments

The Company expects a full-year 2019 effective tax rate (IFRS) of 26.5% to 27.5% (2018: 27.0%) and an effective tax rate (non-IFRS) of 26.0% to 27.0% (2018: 26.3%)

Non-IFRS adjustments	Actual Amounts H1/18	Actual Amounts H1/19	Est. Amounts for FY/19
Revenue adjustments	€16m	€51m	€70m to €120m
Acquisition-related charges	€278m	€341m	€650m to €750m
Share-based payment expenses	€491m	€1,114m	€1,650m to €1,900m
Restructuring charges	€22m	€1,085m	€950m to €1,100m
Sum of all adjustments	€807m	€2,592m	€3,320m to €3,870m

Due to rounding, numbers may not add precisely

SAP reiterates its outlook

▪ Cloud Revenue ^{2018 2019}

• €5.03bn
• Cloud and Software Revenue €20.66bn
• Total Revenue €24.74bn
• Operating Profit €7.16bn

▪ Cloud Revenue in a range of €6.7 – 7.0bn Growth: 33.0% to 39.0%

outlook*

• Cloud and Software Revenue in a range of €22.4 – 22.7bn Growth: 8.5% to 10.0%
• Operating Profit in a range of €7.85 – 8.05bn Growth: 9.5% to 12.5%
• Total Revenue to increase strongly at a rate lower than Operating Profit

2020 ambition

• Cloud Revenue in a range of €8.6 – 9.1bn
• Total Revenue in a range of €28.6 – 29.2bn
• Operating Profit in a range of €8.8 – 9.1bn
• Share of more predictable revenue 70% to 75%

2023

ambition

• More than triple Cloud Revenue
• More than €35.0bn Total Revenue
• Reach a Non-IFRS Cloud gross margin of 75%
• Increase non-IFRS Operating margin by 1pp per year on average*, representing a total expansion of approx. 500bp
• Share of more predictable revenue approaching 80%

* from 2018 through 2023

	strongly at a rate lower than		Expected Currency Impact Based on June 2019 Level for the Rest of the Year
	Operating Profit	in percentage points	Q3	FY
© 2019 SAP SE or an SAP affiliate company. All rights reserved.		Cloud revenue	+2pp to +4pp	+3pp to +5pp
	Non-IFRS; *Non-IFRS at constant currencies.	Cloud and software revenue	+1pp to +3pp	+1pp to +3pp
		Operating profit	+2pp to +4pp	+1pp to +3pp

Appendix

Q2 2019 – Key cloud metrics

Q2/19 unless otherwise stated

All figures are Non-IFRS unless otherwise stated

Cloud Revenue	New Cloud Bookings1	Global Commerce2	Cloud Applications Total Subscribers
+40% €1,717m	+17% €494m	~\$3.34 trillion	~200m
Intelligent Spend Group – Segment Revenue	Customer and Experience Management – Segment Revenue	Number of end users processing travel and expense with SAP Concur	Flexible workers managed with SAP Fieldglass platform
+22% €786m	+81% €365m	>61m	5.9m

1) New cloud bookings are the total of all orders received in a given period the revenue from which is expected to be classified as cloud revenue and that result from purchases by new customers and from incremental purchases by existing customers. Consequently, orders to renew existing contracts are not included in this metric. The order amount must be committed. Consequently, due to their pay-per-use nature, business network transaction fees which do not include a committed minimum consumption are not reflected in the bookings metric (e.g. SAP Ariba and SAP Fieldglass transaction-based fees). Amounts included in the measures are generally annualized (annualized contract value ACV).

20 © 2019 SAP SE or an SAP affiliate company. All rights reserved.

2) Global commerce is the total commerce volume transacted on the SAP Ariba, SAP Concur and SAP Fieldglass Networks in the trailing 12 months. SAP Ariba commerce includes procurement and sourcing spend

Gross margin development 2015 – YTD

Non-IFRS	FY/15	Q1/16	Q2/16	Q3/16	Q4/16	FY/16	Q1/17	Q2/17	Q3/17	Q4/17	FY/17	Q1/18	Q2/18	Q3/18	Q4/18	FY/18	Q1/19	Q2/19
Cloud	66	66	65	65	63	64	65	62	61	61	62	63	64	64	62	63	66	68
Intelligent Spend Group*	75	75	76	77	75	76	77	77	75	77	77	77	77	78	78	78	78	78
Software license & Support	87	86	87	87	88	87	85	87	87	89	87	86	87	87	89	87	86	87
Cloud & Software	84	82	84	83	85	84	81	82	82	84	82	81	81	81	83	82	80	81
Services	23	14	18	20	20	18	21	23	25	25	24	20	26	22	24	23	20	24
Total gross margin	73	70	73	73	76	73	70	71	73	75	72	70	71	71	74	72	69	71

* Gross margins as reported. Changes in profit center structure may lead to changes in previous quarters.

Second Quarter and Half Year 2019 Financial Highlights

SAP SE July 18, 2019

CONFIDENTIAL