SAP SE

Investor Presentation • Oct 30, 2024

Third Quarter 2024 Results

Christian Klein, CEO
Dominik Asam, CFO
October 21, 2024

Safe Harbor Statement

During this presentation we will make forward-looking statements which are predictions, projections, or other statements about future events. These statements are based on current expectations, forecasts, and assumptions that are subject to risks and uncertainties that could cause actual results and outcomes to materially differ. Additional information regarding these risks and uncertainties may be found in our filings with the Securities and Exchange Commission, including but not limited to the risk factors section of SAP's 2023 Annual Report on Form 20-F.

Christian Klein CEO

We're ahead of our plans for 2024

Our progress in Business AI is accelerating

SAP Knowledge Graph connects language \& data allowing GenAI to deeply understand SAP systems

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We're raising our outlook for 2024

Illustrative | Numbers in €bn | Continuing operations
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Dominik Asam

CFO

SAP Q3 2024 Financial Results

Current cloud backlog € millions	Total revenue € millions	Cloud \& software revenue € millions	Cloud revenue € millions	Cloud ERP Suite revenue € millions
15,377	8,470	7,429	4,351	3,636
$\Delta+25 \%(+29 \%$ @cc)	$\Delta+9 \%(+10 \%$ @cc)	$\Delta+11 \%(+12 \%$ @cc)	$\Delta+25 \%(+27 \%$ @cc)	$\Delta+34 \%(+36 \%$ @cc)
Cloud gross profit (Cloud gross margin in\%) € millions	Gross profit (Gross margin in \%) € millions	Operating profit € millions
FRS	Non-IFRS	IFRS	Non-IFRS
3,184	3,209	6,212	6,236	2,214
$73.2 \%$	$73.7 \%$	$73.3 \%$	$73.6 \%$
$\Delta+26 \%$	$\Delta+27 \%(+28 \%$ @cc)	$\Delta+10 \%$	$\Delta+10 \%(+11 \%$ @cc)	$\Delta+29 \%$

Regional revenue performance

Revenue and gross profit development

	Revenue			Gross Profit (Gross margin \%)
Non-IFRS in € millions, unless otherwise stated	Q3 2024	$\Delta$ in \%	$\Delta$ in \% @cc	Q3 2024	$\Delta$ in \%	$\Delta$ in \% @cc
Cloud	4,351	25	27	$\begin{gathered} \hline \text { 3,209 } \ (73.7) \end{gathered}$	27	28
SaaS/PaaS	4,234	29	30
laaS	117	$-35$	$-34$
Software licenses and support	3,078	$-4$	$-3$	$\begin{gathered} \hline \text { 2,772 } \ (90.1) \end{gathered}$	$-4$	$-3$
Cloud and software	7,429	11	12	$\begin{gathered} \hline \text { 5,981 } \ (80.5) \end{gathered}$	10	11
Services	1,041	$-2$	$-2$	$\begin{gathered} \hline \text { 256 } \ (24.6) \end{gathered}$	13	13
Total	8,470	9	10	$\begin{gathered} \hline \text { 6,236 } \ (73.6) \end{gathered}$	10	11

Tax rate, Cash flow, and Earnings per share

Effective tax rate		Free cash flow	Earnings per share (in €)
percent		€ billions	IRR		Non-IFR
			basic	diluted	basic
IFRS	Non-IFRS
33.0	33.4	1.25	1.25	1.24	1.23
$\Delta+5.3$ pp	$\Delta+6.3$ pp	$\Delta+44 \%$	$\Delta+15 \%$	$\Delta+15 \%$	$\Delta+6 \%$

2024 Financial outlook

Q8A

Appendix

Income statement: Third quarter 2024

• from continuing and discontinued operations

€ millions, unless otherwise stated	Q3 24	Q3 23	IFRS		Q3 23	Non-IFRS
			$\Delta \%$	Q3 24		$\Delta \%$	$\Delta \%$ @cc
Cloud	4,351	3,472	25	4,351	3,472	25	27
Software licenses	285	335	$-15$	285	335	$-15$	$-14$
Software support	2,793	2,872	$-3$	2,793	2,872	$-3$	$-2$
Software licenses and support	3,078	3,208	$-4$	3,078	3,208	$-4$	$-3$
Cloud and software	7,429	6,679	11	7,429	6,679	11	12
Services	1,041	1,065	$-2$	1,041	1,065	$-2$	$-2$
Total revenue	8,470	7,744	9	8,470	7,744	9	10
Total operating expenses	$-6,256$	$-6,022$	4	$-6,226$	$-5,978$	4	5
Operating profit (loss)	2,214	1,723	29	2,244	1,767	27	28
Financial income, net	$-1$	$-75$	$-99$	$-24$	$-25$	$-3$
Profit (loss) before tax from continuing operations	2,151	1,761	22	2,157	1,855	16
Income tax expense	$-710$	$-489$	45	$-720$	$-502$	43
Profit (loss) after tax from continuing operations	1,441	1,272	13	1,437	1,352	6
Profit (loss) after tax from discontinued operations	0	0	N/A	0	0	N/A
Profit (loss) after tax*	1,441	1,272	13	1,437	1,352	6
Operating margin (in \%)	26.1	22.2	3.9pp	26.5	22.8	3.7pp	3.5pp
Earnings per share, basic (in €) from continuing operations	1.25	1.09	15	1.23	1.16	6
Earnings per share, basic (in €)*	1.25	1.09	15	1.23	1.16	6

Income statement: First nine months 2024

• from continuing and discontinued operations

€ millions, unless otherwise stated	Q1-Q3 24	Q1-Q3 23	IFRS				Non-IFRS
			$\Delta \%$	Q1-Q3 24	Q1-Q3 23	$\Delta \%$	$\Delta \%$ @cc
Cloud	12,433	9,965	25	12,433	9,965	25	26
Software licenses	716	927	$-23$	716	927	$-23$	$-22$
Software support	8,414	8,651	$-3$	8,414	8,651	$-3$	$-2$
Software licenses and support	9,130	9,577	$-5$	9,130	9,577	$-5$	$-4$
Cloud and software	21,563	19,542	10	21,563	19,542	10	11
Services	3,236	3,197	1	3,236	3,197	1	2
Total revenue	24,798	22,739	9	24,798	22,739	9	10
Total operating expenses	$-22,150$	$-18,842$	18	$-19,081$	$-18,193$	5	5
Operating profit (loss)	2,648	3,897	$-32$	5,717	4,546	26	27
Financial income, net	124	$-363$	N/A	$-23$	$-272$	$-92$
Profit (loss) before tax from continuing operations	2,557	3,532	$-28$	5,479	4,271	28
Income tax expense	$-1,023$	$-1,132$	$-10$	$-1,819$	$-1,252$	45
Profit (loss) after tax from continuing operations	1,534	2,399	$-36$	3,660	3,019	21
Profit (loss) after tax from discontinued operations	0	2,363	N/A	0	1,782	N/A
Profit (loss) after tax*	1,534	4,763	$-68$	3,660	4,801	$-24$
Operating margin (in \%)	10.7	17.1	$-6.5 p p$	23.1	20.0	3.1pp	3.2pp
Earnings per share, basic (in €) from continuing operations	1.31	2.07	$-37$	3.13	2.59	21
Earnings per share, basic (in €)*	1.31	4.21	$-69$	3.13	4.39	$-29$

Gross margin development

Non-IFRS, in percent as reported	Q1 23	Q2 23	Q3 23	Q4 23	FY 23	Q1 24	Q2 24	Q3 24
Cloud	70.8	71.4	73.0	72.2	71.9	72.5	73.3	73.7
Software licenses \& support	88.9	90.2	90.1	89.8	89.8	89.2	89.7	90.1
Cloud \& software	79.9	80.6	81.2	81.0	80.7	79.8	80.2	80.5
Services	21.0	17.8	21.2	21.9	20.5	20.3	24.8	24.6
Total gross margin	71.3	71.9	73.0	73.4	72.4	71.8	72.7	73.6

Appendix

Cost ratios: Third quarter 2024 | Total revenue: $€ 8.5$ bn

Non-IFRS as percent of total revenue

Appendix

Cost ratios: First nine months 2024 | Total revenue: $€ 24.8 \mathrm{bn}$

Non-IFRS as percent of total revenue

Balance sheet condensed: September 30, 2024 - IFRS

Due to rounding, numbers may not add up precisely

Assets

€ millions
Cash, cash equivalents and other financial assets
Trade and other receivables
Other current assets
Total current assets
Goodwill
Intangible assets
Property, plant, and equipment
Other non-current assets
Total non-current assets
Total assets

09/30/24	$12 / 31 / 23$
12,072	11,468
5,481	6,322
2,953	2,781
20,506	20,571
29,487	29,088
2,708	2,505
4,239	4,276
12,708	11,895
49,142	47,763
69,648	68,335

Equity and liabilities

$€$ millions	09/30/24	$12 / 31 / 23$
Trade and other payables	1,932	1,783
Provisions	2,149	235
Other liabilities	8,585	7,649
Contract liabilities, current	5,989	4,975
Total current liabilities	18,655	14,642
Financial liabilities	7,039	7,941
Provisions	442	433
Contract liabilities, non-current	67	33
Other non-current liabilities	1,978	1,879
Total non-current liabilities	9,526	10,286
Total liabilities	28,181	24,928
Total equity	41,467	43,406
Total equity and liabilities	69,648	68,335

Cash flow development

Due to rounding, numbers may not add up precisely

€ millions, unless otherwise stated	9M 24	9M 23	$\Delta$ in \%
Operating cash flow	5,772	4,284	35
- Capital expenditure	$-528$	$-595$	$-11$
- Payments of lease liabilities	$-213$	$-266$	$-20$
Free cash flow	5,031	3,423	$+47$
Free cash flow in percent of total revenue	20\%	15\%	$+5 p p$
Free cash flow in percent of profit after tax (IFRS)	328\%	143\%	$+185 p p$

Appendix

Net debt

Due to rounding, numbers may not add up precisely

€ millions, unless otherwise stated	2024	2023
Net liquidity (+)/Net Debt (-)	3,521	$-2,070$
Operating cash flow	5,772	4,284
Capital expenditure	$-528$	$-595$
Payments of lease liabilities	$-213$	$-266$
Business combinations	$-1,104$	0
Dividends	$-2,565$	$-2,395$
Treasury shares	$-1,625$	$-718$
Net proceeds from Qualtrics sale	0	5,625
Other	$-398$	$-188$
Net liquidity (+)/Net Debt (-)	09/30/2024	PY: 09/30/2023

Appendix

Additional outlook information and Non-IFRS adjustments

Due to rounding, numbers may not add up precisely

The Company expects a full-year 2024 effective tax rate (non-IFRS) of around 32\% (2023: 30.3\%).

Non-IFRS adjustments	Actual Amounts Q3 23	Actual Amounts Q3 24	Est. Amounts FY 24
Acquisition-related charges	€80m	€90m	€320m to €400m
Restructuring charges	-€36m	-€52m	Approximately €3bn
Adjustment for regulatory compliance matter expenses	€0m	-€8m	-€8m
Adjustment for gains and losses from equity securities, net	€50m	-€24m	N/A ${ }^{1}$

[^0]
[^0]: ${ }^{1)}$ Due to the uncertainty and potential variability of gains and losses from equity securities, we cannot provide an estimate for the full year without unreasonable efforts. This item could however have a material impact on our non-IFRS measures below operating profit

Expected currency impact

Expected currency impact based on September 30, 2024 Level applied for 2024

in percentage points	Q4 24	FY 24
Cloud revenue growth	-3.0 pp	-1.0 pp
Cloud and software revenue growth	-2.0 pp	-1.0 pp
Operating profit growth (non-IFRS)	-2.0 pp	-2.0 pp