SAP SE

Earnings Release • Apr 24, 2019

First Quarter 2019 Financial Highlights

SAP SE April 24, 2019

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.

Q1 2019 – Key performance metrics

The share of more predictable revenue reached 72% in the first quarter of 2019 (+1 percentage point)

Stellar start to the year across cloud and core business

• Cloud revenue exceeds €1.5bn for the first time in a quarter +45% (IFRS), +48% (Non-IFRS), +41% (Non-IFRS cc)
• New cloud bookings up 32% to €324m (+26% cc)
• Software license revenue up 4% to €650m (+1% cc)
• New cloud and software order entry up 17% to €1.58bn (+13% cc)
• Earnings per share were -€0.10 (IFRS) (Q1/2018: €0.59) and up 24% at €0.90 (non-IFRS)
• Operating cash flow up 9% to €2.80bn | Free cash flow up 10% to €2.37bn
• S/4HANA Customers up 30% to >10.900 customers

Q1 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

Q1 2019 – Cloud and software revenue and total revenue up double-digit

€ millions, unless otherwise stated		IFRS			Non-IFRS
Revenue Numbers	Q1/19	Q1/18	∆ %	Q1/19	Q1/18	∆ %	∆ % at cc
Cloud	1,555	1,070	45	1,581	1,072	48	41
Software licenses	650	625	4	650	625	4	1
Software support	2,838	2,656	7	2,838	2,656	7	4
Software licenses and support	3,489	3,281	6	3,489	3,281	6	3
Cloud and software	5,044	4,351	16	5,070	4,353	16	12
Services	1,048	910	15	1,048	910	15	11
Total revenue	6,091	5,261	16	6,118	5,262	16	12
Total operating expenses	-6,228	-4,236	47	-4,651	-4,027	15	12
Operating profit (loss)	-136	1,025	<-100	1,467	1,235	19	13
Financial income, net	0	-28	-99	0	-28	-99
Profit (loss) before tax	-140	987	<-100	1,463	1,198	22
Income tax expense	33	-280	<-100	-383	-330	16
Profit (loss) after tax	-108	708	<-100	1,080	868	25
Operating margin (in %)	-2.2%	19.5%	-21.7pp	24.0%	23.5%	0.5pp	0.2pp
Earnings per share, basic (in €)	-0.10	0.59	<-100	0.90	0.73	24

Q1 2019 – Operating loss (IFRS) of -136m due to previously announced restructuring Operating profit (Non-IFRS) up 19%

Q1 2019 – Cost ratios

€6.1bn Total revenue, Non-IFRS

*Non-IFRS at constant currencies

Balance Sheet, Condensed March 31, 2019, IFRS

Assets
€ millions	03/31/19	12/31/18
Cash, cash equivalents and other financial assets	7,923	9,075
Trade and other receivables	6,755	6,362
Other current assets	1,384	1,183
Total current assets	16,062	16,620
Goodwill	29,074	23,736
Intangible assets	4,953	3,227
Property, plant, and equipment	5,523	3,553
Other non-current assets	4,985	4,366
Total non-current assets	44,534	34,881
Total assets	60,596	51,502

Equity and liabilities
€ millions	03/31/19	12/31/18
Trade and other payables	1,646	1,491
Provisions	980	110
Other liabilities	5,960	5,857
Contract liabilities, current	6,064	3,028
Total current liabilities	14,650	10,486
Financial liabilities	14,735	10,553
Provisions	408	270
Contract liabilities, non-current	107	88
Other non-current liabilities	1,468	1,227
Total non-current liabilities	16,718	12,138
Total liabilities	31,368	22,624
Total equity	29,228	28,877
Total equity and liabilities	60,596	51,502

Q1 2019 – Operating cash flow and free cash flow

€ millions, unless otherwise stated	3M/19	3M/18	∆
Operating cash flow	2,802	2,578	9%
- Capital expenditure	-359	-427	-16%
- Payments of lease liabilities	-78	-	-
Free cash flow	2,365	2,151	10%
Free cash flow in percent of total revenue	39	41	-2pp
Free cash flow conversion rate	-21.98	3.04	-823%
Days sales outstanding (DSO in days, March 31)	69	68	+0.9

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 Q1/18	Actual Amounts Q1/19	Est. Amounts for FY/19
Revenue adjustments	€2m	€26m	€70m to €120m
Acquisition-related charges	€129m	€174m	€650m to €750m
Share-based payment expenses	€70m	€517m	€1,350m to €1,550m
Restructuring charges	€11m	€886m	€800m to €950m
Sum of all adjustments	€211m	€1,603m	€2,870m to €3,370m

Due to rounding, numbers may not add precisely

SAP has updated its 2019 outlook and its mid-term ambition Targeting on average 1 percentage point of Non-IFRS operating margin expansion per year from 2018 through 2023

▪ Cloud Revenue in a range of €6.7 – 7.0bn Growth: 33.0% to 39.0% ▪ Cloud and Software Revenue in a range of €22.4 – 22.7bn Growth: 8.5% to 10.0% ▪ 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 ▪ Cloud Revenue €5.03bn ▪ Cloud and Software Revenue €20.66bn ▪ Total Revenue ^{2018 2019} outlook* 2020 ambition 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

▪ Operating Profit €7.16bn

€24.74bn

• 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

• Share of more predictable revenue 70% to 75%

• 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 March 2019 Level for the Rest of the Year
	Operating Profit	in percentage points	Q2	FY
© 2019 SAP SE or an SAP affiliate company. All rights reserved.		Cloud revenue	+3pp to +5pp	+3pp to +5pp
	Non-IFRS; *Non-IFRS at constant currencies.	Cloud and software revenue	+1pp to +3pp +1pp to +3pp
		Operating profit	+1pp to +3pp	+1pp to +3pp

Appendix

Q1 2019 – Key cloud metrics

Q1/19 unless otherwise stated

All figures are Non-IFRS and growth rates at constant currencies unless otherwise stated

Cloud Revenue	New Cloud Bookings1	Total Network Commerce2	Cloud Applications Total Subscribers
+41% €1,581m	+26% €324m	~\$3.18 trillion	~195m
Business Network – 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
+18% €740m	>100% €305m	~55m	5.9m

1) New cloud bookings – key measure for SAP's sales success in the cloud – consist of order entry of a given period that is expected to be classified as cloud subscription and support revenue and results from purchases by new customers and from incremental purchases by existing customers. Consequently, orders to renew existing contracts are not included. The order amount must be committed. Consequently, due to their pay-peruse 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.

2) SAP Business Network commerce is the total commerce transacted on the SAP Ariba, SAP Concur and SAP Fieldglass Networks in the trailing 12 months. 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
Cloud	66	66	65	65	63	64	65	62	61	61	62	63	64	64	62	63	66
Business Network	75	75	76	77	75	76	77	77	75	77	77	77	77	78	78	78	78
Software license & Support	87	86	87	87	88	87	85	87	87	89	87	86	87	87	89	87	86
Cloud & Software	84	82	84	83	85	84	81	82	82	84	82	81	81	81	83	82	80
Services	23	14	18	20	20	18	21	23	25	25	24	20	26	22	24	23	20
Total gross margin	73	70	73	73	76	73	70	71	73	75	72	70	71	71	74	72	69

First Quarter 2019 Financial Highlights

SAP SE April 24, 2019