SAP SE — Earnings Release 2015

Jan 22, 2016

Preliminary Q4 and FY 2015 Results

Luka Mucic CFO and COO, SAP SE

Walldorf – January 22nd, 2016

01 2015 Preliminary Results

SAP outpaces market with record 2015 cloud and software revenue decisively beating guidance

	Outlook FY 2015	Actual performance 2015
Cloud subscription and support revenue (Non-IFRS at cc)	€1.95bn to €2.05bn	€2.00bn
Cloud and software revenue (Non-IFRS at cc)	+ 8% to 10%	+ 12%
Operating profit (Non-IFRS at cc)	€5.6bn to €5.9bn	€5.903bn
Effective tax rate (IFRS)	25% to 26%	+ 23.3%

Effective tax rate (IFRS)	25% to 26%	+ 23.3%
Effective tax rate (Non-IFRS)	26.5% to 27.5%	+ 26.0%

All 2015 figures in this presentation are non-IFRS approximate due to its preliminary nature

Exceptional momentum in 2015 – SAP is unique in combining a rapidly expanding cloud business and a growing core

Cloud and software revenue

• 20% to €17.23bn (+12% at cc) in FY

Cloud

• Cloud subscription and support: +109% to €2.30bn (€2.00bn at cc) in FY
• New cloud bookings: tremendous momentum with +103% (€0.88bn) in FY; +75% (€0.34bn) in Q4
• Cloud subscription and support backlog: +45% yoy €3.7bn at year-end
• Combination of deferred and backlog: € 1.0bn+ €3.7bn = €4.6bn

Core

• SAP S/4HANA provides companies with the digital core
• Adoption surges: >2,700 customers, more than doubling the number of customers in Q4
• Software license: +10% to €4.84bn (+4% at cc)
• Resilient software support: +14% to €10.09bn (+7% at cc)

All revenue figures are Non-IFRS reported

Software license and cloud subscription order entry*

Q4: €3.2bn or +25% yoy at cc | FY: €7.2bn or +18% yoy at cc | 1/3 from cloud subscription

Strong growth across all regions FY 2015

Americas

Cloud +120% Cloud and software +31%

EMEA Cloud +83% Cloud and software +12%

APJ

Cloud +99% Cloud and software +20%

All revenue figures are Non-IFRS reported

A fast growing cloud business changes SAP's revenue mix

Much larger cloud business in 2020 relative to core business – change in revenue mix weighs on blended operating margin for the group in short/medium term

Cloud subscription and support revenue

All other revenue

Share of more predictable revenue

Share of more predictable revenue is expected to increase to 70-75% by 2020

Support + Cloud subs – share of revenue All other revenue

Both core and cloud gross margins expand – Mix shift weighs on blended cloud and software gross margin

• Continued fast growth in the cloud cloud revenue share increases versus software and support
• Bigger cloud revenue share combined with lower profitability weighs on blended cloud and software gross margin (mix shift effect)

Gross margin development

With the strong top line and the success of our business transformation we generated the highest non-IFRS operating profit in SAP's history

• Beating high end of operating profit outlook due to the success of our business transformation and improving profitability of our cloud offering
• Continued focus on increasing absolute operating profit – SAP has a broader portfolio of business models compared to pure play competitors
• SAP is driving both traditional and cloud business more effectively and efficiently – both are contributing to continuous profit expansion

02 Outlook

FY 2016/2017 outlook – Raising 2017 ambition to reflect current currency environment and excellent business momentum

Our completeness of vision in the cloud and soaring adoption of SAP S/4HANA gives us tremendous confidence in our business in 2016 and beyond.

• Cloud and software revenue €17.23bn
• Operating profit €6.35bn
• * All numbers non-IFRS
• ** All numbers non-IFRS and at constant currency

2016

• Cloud subscriptions and support revenue in a range of €2.95 - €3.05bn. Upper end represents a growth rate of 33%
• Cloud and software revenue to increase by 6% - 8%

• Operating profit in a range of €6.4 - €6.7bn

• guidance** Cloud subscriptions and support revenue in a range of €3.8 - €4.0bn. Upper end represents a 2015 to 2017 CAGR of 32%

• Total revenue in a range of €23bn - €23.5bn
• Operating profit in a range of €6.7 - €7.0bn
• Support + cloud subs share of revenue 63% to 65%

SAP is not adjusting its long term, high level 2020 ambition (communicated in 2015) at this time.

03 Appendix

Operating cash flow exceeded €3.6bn while free cash flow marked an 9% increase year-over-year

€ millions, unless otherwise stated	01/01/15 - 12/31/15	01/01/14 - 12/31/14	∆
Operating cash flow	3,639	3,499	+4%
- Capital expenditure	-637	-737
Free cash flow	3,001	2,762	+9%
Free cash flow as a percentage of total revenue	14%	16%	-2pp
Cash conversion rate	1.19	1.07	+11%
Days sales outstanding (DSO in days)	71	65	+6

Stable total group liquidity while significantly repaying debt and paying dividend

FY 2015 – Non-IFRS adjustments

IFRS Profit Measure	Actual Amounts FY/2014	Actual Amounts FY/2015	Est. Amounts for FY/2015
Revenue adjustments	€19m	€11m	<€20m
TomorrowNow and Versata Litigation	€309m	€0m	€0m
Share-based payment expenses	€290m	€724m	€550m to €590m
Acquisition-related charges	€562m	€738m	€730m to €780m
Restructuring charges	€126m	€621m	€585m to €615m
Sum of all adjustments	€1,307m	€2,095m	€1,885m to €2,005m

FY 2016 – Additional outlook information and non-IFRS adjustments

The company expects a full-year 2016 effective tax rate (IFRS) between 22.5% to 23.5% (2015: 23.3%) and an effective tax rate (non-IFRS) between 24.5% to 25.5% (2015: 26.0%).

IFRS Profit Measure	Actual Amounts FY/2015	Est. Amounts for FY/2016
Revenue adjustments	€11m	<€20m
Share-based payment expenses	€724m	€600m to €640m
Acquisition-related charges	€738m	€690m to €740m
Restructuring charges	€621m	€40-60m
Sum of all adjustments	€2,095m	€1,350m to €1,460m