SAP SE — Earnings Release 2017

Feb 28, 2018

Fourth-Quarter and Full-Year 2017 Preliminary Results Release

Walldorf, Germany Tuesday, January 30, 2018

Luka Mucic CFO

In 2017 SAP continued history of hitting raised outlook Multiple guidance raises in the last three years including 2017

Other financial and non-financial highlights:

• IFRS EPS up 10% | Non-IFRS up 14% to €4.44 per share
• Operating cash flow up 9% to €5.0 billion

• Share of more predictable revenue now at 63%

• Greenhouse gas emissions reduced to 325 kilotons, hitting our 2020 target already in 2017

• Employee Engagement Index remains high at 85%
• Overall retention rate improved to 94.6%

© 2018 SAP SE Investor Relations. All rights reserved. 3 Non-IFRS figures and growth rates at constant currencies

Fast growing cloud and resilient core drive total revenue to high end of guidance in 2017

Cloud and software revenue +6% to €19.55bn (+8% cc) in FY

Software license and cloud subscription order entry*

+14% to €9.42bn (+17% cc) in FY

© 2018 SAP SE Investor Relations. All rights reserved. 4 *(SW Order Entry + Cloud TCV Order Entry) / All revenue figures are non-IFRS

SAP's global breadth

Strength across all geographies in 2017

© 2018 SAP SE Investor Relations. All rights reserved. 5 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

Cloud investments paving the way to margin expansion in 2018 and beyond

Non-IFRS; in percent	FY/16	Q3/17	Q4/17	FY/17
Cloud Subscriptions & Support	64.4	60.8	61.0	62.2
Business Network	75.9	75.9	77.2	76.7
Private Cloud (IaaS)	-6.0	-3.0	6.6	5.7
Public Cloud (PaaS/SaaS)	61.3	56.1	55.7	57.0
Software & Support	87.4	87.3	88.6	87.0
Cloud & Software	83.7	82.0	83.9	82.2
Services	18.2	25.3	24.7	23.5
Total Gross Margin	72.9	72.5	75.2	72.5

• Q4 cloud gross margin improved sequentially this helped initiate the operating margin turnaround in Q4
• Business network margin and private cloud margin increased in Q4 both yoy and sequentially
• Investments in converged cloud platform began to stabilize in 2017 hence public cloud margin declines steadily improved throughout 2017: while FY was down 4pp, Q4 was only down 2pp with a sequential decline of only 40bps
• Cloud and software margin was only down yoy at constant currencies due to revenue mix shift from fast growing cloud business
• Services gross margin expansion driven by the continued efficiency gains from our one service initiative

Continued operating profit expansion

Operating margin turnaround successfully under way

• Operating profit (Non-IFRS)
• Q4/17: €2.36bn | +6% cc
• FY/17: €6.77bn | +4% cc

2018 and beyond:

• Cloud investments paying off. Highly standardized "converged platform"
• Cloud revenue will overtake software revenue
• Efficiency improvements in each business
• Leverage from scaling cloud and an ever higher renewal base

Non-IFRS at constant currencies

Strong bottom line and cash flow enabled SAP to return €2.0 billion to shareholders in 2017

Effective tax rate

• Actuals FY/17
• IFRS: 19.3% | -6.0pp
• Non-IFRS: 22.6% | -4.2pp
• Substantial one-time effects from the transfer of IP rights and effects from U.S. tax reform

EPS

• Actuals FY/17
• IFRS: €3.36 | +10%
• Non-IFRS: €4.44 | +14%
• Driven by strong operating performance, contribution from Sapphire Ventures and the positive effective tax rate development

Cash flow and liquidity

• Strong operating cash flow enabled SAP to return €2.0 billion to shareholders (share buy back and dividend)
• Net liquidity improved by more than €6 billion in the last three years

^© 2018 SAP SE Investor Relations. All rights reserved. 8

IFRS 15 adopted as of January 1, 2018 Expected impact

• SAP changed its accounting policies to adopt IFRS 15
• Under the IFRS 15 adoption approach chosen by SAP prior year numbers are not restated therefore, 2018 growth rates will be impacted by the new policies
• Expected impact of the policy change:
• Revenues are expected to be higher by substantially less than €0.1 billion mainly impacting software revenue
• Cost of sales and marketing are expected to be lower by approximately €0.2 billion from higher capitalization of sales commissions
• Other policy changes result in higher operating expenses, but substantially less than €0.1 billion
• The above mentioned effects will result in a net positive impact on operating profit of approx. €0.2 billion
• Link to video: https://broadcast.co.sap.com/video/180129\_IFRS15?hash=565881

SAP reiterates its 2020 ambition

Fast cloud, robust overall topline and profitability growth

• Cloud Subscription Revenue €3.77bn
• Cloud and Software Revenue €19.55bn
• Total Revenue €23.46bn
• Operating Profit €6.77bn

▪ Cloud Subscription Revenue in a range of €4.8 – 5.0bn Growth: 27% to 33%

2018 outlook*

• Cloud and Software Revenue in a range of €20.7 – 21.1bn Growth: 6% to 8%
• Total Revenue in a range of €24.6 – 25.1bn Growth: 5% to 7%
• Operating Profit in a range of €7.3 – 7.5bn Growth: 8% to 11%

▪ Cloud Subscription Revenue in a range of €8.0 – 8.5bn

2020 ambition

• Total Revenue in a range of €28.0 – 29.0bn
• Operating Profit in a range of €8.5 – 9.0bn
• Share of more predictable revenue 70% to 75%

Outlook 2018 and ambition 2020 do not include any contribution from Callidus

Non-IFRS; *Non-IFRS at constant currencies

Fourth-Quarter and Full-Year 2017 Preliminary Results Release

Walldorf, Germany Tuesday, January 30, 2018

Q&A

Appendix

Key cloud metrics

Q4/17 unless otherwise stated	All figures are Non-IFRS and growth rates at constant currencies unless otherwise stated	* Cloud subscriptions and support revenue
Cloud Subscriptions and Support Revenue	New Cloud Bookings1		Cloud Applications Total Subscribers
+28% €997m	+31% €591m	€7.5bn +38%	~150m
SAP Business Network – Segment Revenue*	Over 3.1m connected companies trade on Ariba network	Number of end users processing travel and expense with Concur	Flexible workers managed with Fieldglass platform
€571m +18%	>\$1 trillion spend volume3	~50m	>4.3m annually

• 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-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.
• 2) Cloud subscriptions and support backlog represents expected future cloud subscriptions and support revenue that is contracted but not yet invoiced and thus not recorded in deferred revenue (as of Dec 31, 2017)
• 3) Network spend volume is the total value of purchase orders transacted on the Ariba Networks in the trailing 12 months.

2015 – 2017 Gross margin development

Non-IFRS	FY/15	Q1/16	Q2/16	Q3/16	Q4/16	FY/16	Q1/17	Q2/17	Q3/17	Q4/17	FY/17
Cloud*	65.6	65.9	64.8	64.5	62.7	64.4	64.6	62.4	60.8	61.0	62.2
Business Network*	74.9	75.4	76.3	76.8	75.3	75.9	76.9	77.0	75.9	77.2	76.7
Software & Support	86.6	85.9	87.4	87.4	88.4	87.4	85.1	86.6	87.3	88.6	87.0
Cloud & Software	83.8	82.3	83.6	83.4	84.7	83.7	80.8	81.8	82.0	83.9	82.2
Services	22.7	13.9	17.9	20.5	20.3	18.2	20.7	23.5	25.3	24.7	23.5
Total gross margin	73.3	69.6	72.6	72.7	75.5	72.9	69.9	71.5	72.5	75.2	72.5

* Subscriptions and support

Q4 2017 – Income Statement

€ millions, unless otherwise stated		IFRS			Non-IFRS
Revenue Numbers	Q4/17	Q4/16	∆ %	Q4/17	Q4/16	∆ %	∆ % at cc
Cloud subscriptions and support	995	827	20	997	827	21	28
Software licenses	2,058	2,177	-5	2,058	2,177	-5	-1
Software support	2,754	2,756	0	2,754	2,756	0	5
Software licenses and support	4,813	4,933	-2	4,813	4,934	-2	2
Cloud and software	5,807	5,760	1	5,809	5,761	1	6
Services	998	963	4	998	963	4	8
Total revenue	6,805	6,724	1	6,807	6,724	1	6
Total operating expenses	-4,840	-4,773	1	-4,442	-4,349	2	7
Operating profit	1,964	1,950	1	2,364	2,375	0	6
Financial income, net	126	67	89	126	67	89
Profit before tax	2,060	1,963	5	2,460	2,388	3
Income tax expense	-193	-437	-56	-324	-561	-42
Profit after tax	1,867	1,526	22	2,136	1,826	17
Operating margin (in %)	28.9	29.0	-0.1pp	34.7	35.3	-0.6pp	-0.1pp
Earnings per share, basic (in €)	1.55	1.27	21	1.77	1.53	16

FY 2017 – Income Statement

€ millions, unless otherwise stated		IFRS			Non-IFRS
Revenue Numbers	FY/17	FY/16	∆ %	FY/17	FY/16	∆ %	∆ % at cc
Cloud subscriptions and support	3,769	2,993	26	3,771	2,995	26	28
Software licenses	4,872	4,860	0	4,872	4,862	0	2
Software support	10,908	10,571	3	10,908	10,572	3	4
Software licenses and support	15,780	15,431	2	15,781	15,434	2	4
Cloud and software	19,549	18,424	6	19,552	18,428	6	8
Services	3,911	3,638	8	3,911	3,638	8	8
Total revenue	23,461	22,062	6	23,464	22,067	6	8
Total operating expenses	-18,584	-16,928	10	-16,694	-15,434	8	9
Operating profit	4,877	5,135	-5	6,769	6,633	2	4
Financial income, net	185	-38	<-100	185	-38	<-100
Profit before tax	5,026	4,863	3	6,918	6,361	9
Income tax expense	-970	-1,229	-21	-1,563	-1,703	-8
Profit after tax	4,056	3,634	12	5,356	4,658	15
Operating margin (in %)	20.8	23.3	-2.5pp	28.9	30.1	-1.2pp	-0.9pp
Earnings per share, basic (in €)	3.36	3.04	10	4.44	3.90	14

Dec 31, 2017 – Balance Sheet IFRS

Assets			Equity and liabilities
€ millions	12/31/17	12/31/16	€ millions	12/31/17	12/31/16
Cash, cash equivalents and other financial assets	5,001	4,826	Trade and other payables	1,151	1,281
Trade and other receivables	5,899	5,924	Provisions	184	183
			Other liabilities	6,105	5,827
Other non-financial assets	1,030	814	income, current1) Deferred	2,771	2,383
Total current assets	11,930	11,564	Total current liabilities	10,210	9,674
Goodwill	21,274	23,311	Financial liabilities	5,034	6,481
			Provisions	303	217
Intangible assets	2,967	3,786	Deferred income, non-current1)	79	143
Property, plant, and equipment	2,967	2,580	Other non-current liabilities	1,332	1,365
Other non-current assets	3,358	3,037	Total non-current liabilities	6,747	8,205
			Total liabilities	16,958	17,880
Total non-current assets	30,567	32,713	Total equity	25,540	26,397
Total assets	42,497	44,277	Total equity and liabilities	42,497	44,277

2017: Operating cash flow up 9%, exceeding €5 billion for the first time

€ millions, unless otherwise stated	12/31/16 – 12/31/17	12/31/15 – 12/31/16	∆
Operating cash flow	5,045	4,628	+9%
- Capital expenditure	-1,275	-1,001	+27%
Free cash flow	3,770	3,627	+4%
Free cash flow as a percentage of total revenue	16	16	0pp
Cash conversion rate	1.24	1.27	-2%
Days sales outstanding (DSO in days, December 31)	70	74	-4

Net liquidity

Group Liquidity = cash and cash equivalent + current investments

Other = mainly purchase and sales of equity or debt instruments of other entities, purchase of and proceeds from treasury shares, transactions with non-controlling interests and effects of FX rates on cash and cash equivalents Net Liquidity = group liquidity minus financial debt - for more information see our 2016 integrated report

FY 2018 – Additional outlook information and non-IFRS adjustments

The Company expects a full-year 2018 effective tax rate (IFRS and non-IFRS) of 27.0% to 28.0% (2017: 19.3% (IFRS) and 22.6% (non-IFRS))

Non-IFRS adjustments	Actual Amounts FY/16	Actual Amounts FY/17	Est. Amounts for FY/18*
Revenue adjustments	€5m	€3m	<€20m
Share-based payment expenses	€785m	€1,120m	€800m to €1,100m
Acquisition-related charges	€680m	€587m	€500m to €540m
Restructuring charges	€28m	€182m	€30m to €50m
Sum of all adjustments	€1,498m	€1,892m	€1,350m to €1,710m

*The amounts above do not include announced acquisitions that have not yet closed

Fourth-Quarter and Full-Year 2017 Preliminary Results Release

Walldorf, Germany Tuesday, January 30, 2018