SAP SE — Investor Presentation 2021

Jan 29, 2021

January 29, 2021

Fourth-Quarter & Full-Year 2020 Results Presentation

Christian Klein CEO

Luka Mucic CFO

Stefan Gruber Investor Relations

SAFE HARBOR STATEMENT

Any statements contained in this document that are not historical facts are forward-looking 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 forward-looking 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 forwardlooking statements, which speak only as of their dates.

Christian Klein CEO

Full Year 2020: Topline Exceeds, Profit Hits Upper End of Revised Outlook

+27% (@cc)

SaaS/PaaS cloud revenue growth excl. Intelligent Spend

72% (+4.4 ppt. @cc) more predictable revenue share

€7.2bn (+14% @cc) current cloud backlog

69.6% (+1.3 ppt. @cc) Non-IFRS cloud gross margin

Relentless focus on customer value: Q4 highlights and TY customer metrics

Customer metrics TY2020

25,000 Net new customers

>35,000
Go-lives

~16,000 (+16%) S/4HANA Customers

Executing our Strategy to reinvent how businesses run

Relentless focus on customer value to help the world run better & improve people's lives

Accelerating our customers' business transformation in the cloud

▪ NET PROMOTER SCORE INCREASE: +10 pts ▪ COVID-19 VACCINE DISTRIBUTION powered by SAP

• "RISE WITH SAP" LAUNCHED: Our new offering for Business Transformation as a Service
• SIGNAVIO ACQUISTION for business process intelligence

Focus in our core portfolio and continuous investment in innovation close to our core

• MICROSOFT TEAMS PARTNERSHIP for collaboration
• QUALTRICS IPO, differentiating product bundles with SAP

COVID-19 contact tracing, vaccine production & distribution supported by SAP

Examples only

Corona Warn App downloads are helping to curb the COVID-19 pandemic

CONTACT TRACING VACCINE PRODUCTION DISTRIBUTION

17/20

© 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 8

top 20 global vaccine manufacturers run SAP

has chosen SAP solutions to plan and manage the vaccination logistics

Executing our Strategy to reinvent how businesses run

Relentless focus on customer value to help the world run better & improve people's lives

Accelerating our customers' business transformation in the cloud

▪ NET PROMOTER SCORE INCREASE: +10 pts

▪ COVID-19 VACCINE DISTRIBUTION powered by SAP

• "RISE WITH SAP" LAUNCHED: Our new offering for Business Transformation as a Service
• SIGNAVIO ACQUISTION for business process intelligence

Focus in our core portfolio and continuous investment in innovation close to our core

• MICROSOFT TEAMS PARTNERSHIP for collaboration
• QUALTRICS IPO, differentiating product bundles with SAP

RISE with SAP: Business Transformation as a Service

I n t e l l i g e n t

E N T E R P R I S E

Executing our Strategy to reinvent how businesses run

Relentless focus on customer value to help the world run better & improve people's lives

Accelerating our customers' business transformation in the cloud

▪ NET PROMOTER SCORE INCREASE: +10 pts

▪ COVID-19 VACCINE DISTRIBUTION powered by SAP

• "RISE WITH SAP" LAUNCHED: Our new offering for Business Transformation as a Service
• SIGNAVIO ACQUISTION for business process intelligence

Focus in our core portfolio and continuous investment in innovation close to our core

• MICROSOFT TEAMS PARTNERSHIP for collaboration
• QUALTRICS IPO, differentiating product bundles with SAP

Microsoft Partnership: Teams integration with first use cases in Q2 2021

Expanded partnership in 2021

Integration of Microsoft Teams and SAP solutions to facilitate remote collaboration and enable the frictionless enterprise

Simplification of the move from on-premise editions of SAP ERP to SAP S/4HANA in the cloud

Expanded joint engagements with partners to help customers on their journey to the cloud

First collaboration use cases coming in Q2 2021

Qualtrics: Independence to capture full potential, strong product bundles with SAP

		Live Dashbaard Text Sertiment Analysis Product Optimizer Product Cocipit Product Requirements		Integrated Business Planning
T112 Compact In Research Last Edit: 1 minute ago			1 0	Innovation Scere
	T112 Compact	Key Requirements: Push-Button Start (40), Adaptive Cruise Control (18), Automatic		78 Current Configuration	67 T112 Compact V2	51 T112 Campact V3
	High Beams (17) Overall Version: V.32	Compare with:		Autonomous Driving Features		88
	Aporover: Cara Stone	T111 Compact V100 Mide-size		Range per Charge		74
Conjoint Analysis Samarcha Holmes	Customer Requests ব	IBP Forecast C BP Forecas Added by you . 2 others		Sustainable Materials		65
SKU Planning	4 of 8	Feature Sentiment Scores		Innovative Design		હક
In Research (1) Live (3) Draft (4)		02 2020
T112 Compact BP-1232-1323	In Research			Performance Benchmark
T111 Compact 2588-ILUS2	Live
V100 Mide-size BP-1117-6293	Live

Shift the market narrative from LoB feature comparisons to smart end-to-end journeys since acquisition

HUMAN EXPERIENCE MANAGEMENT

(Hire to Retire)

SMART SPEND (Travel & Expense) COMMERCE-FIRST EXPERIENCE (Lead to cash)

CUSTOMER CENTRIC SUPPLY CHAIN

(Design to operate)

INTELLIGENT TRADING PARTNER NETWORK (Source to pay)

valuation increase

We will continue to execute our strategy with a strengthened team

Luka Mucic CFO

Topline exceeds revised full year outlook

Operating profit and Free Cash Flow up strongly

FY Other Financial & Non-financial Highlights

• Current cloud backlog: +14% @cc to €7.2bn
• Share of more predictable revenue now at 72%
• Cloud gross margin (Non-IFRS): +1.4pp to 69.6%
• Earnings per share (Non-IFRS): +6% to €5.41
• Earnings per share (IFRS): +56% to €4.35
• Approximately 16,000 S/4HANA customers, up 16%
• Greenhouse gas emissions reduced to 135 kilotons
• Overall employee retention rate remains high at 95.3%
• Women in management increased to 27.5%
• Employee engagement index increased to a record 86%

Regional revenue

Solid performance across all regions

AMERICAS
Q4/20	FY/20
Cloud revenue
+3%	+10%
+11% cc	+13% cc
Cloud and	software revenue
-5%	+0%
+3% cc	+3% cc

Canada was a highlight, while the U.S. and Mexico had a robust performance in cloud revenue for the full year. The U.S., Brazil and Mexico had a solid year in software licenses revenue

EMEA				APJ
Q4/20		FY/20	Q4/20	FY/20
	Cloud revenue			Cloud revenue
+11% +14% cc		+23% +25% cc	+17% +22% cc	+18% +21% cc
	Cloud and software revenue			Cloud and software revenue
-3% -1% cc		+2% +3% cc	-4% 0% cc	0% +2% cc
	For the full year, Germany, Switzerland and France were highlights in cloud revenue. In addition, Saudi Arabia and Sweden			For cloud revenue, Japan, South Korea and Singapore were highlights for the full year. Japan, Australia and India had a

In addition, Saudi Arabia and Sweden had a strong year in software licenses revenue

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

robust performance in software licenses revenue

Margin development

Non-IFRS at constant currencies as reported	FY/19	Q1/20	Q2/20	Q3/20	Q4/20	FY/20
Cloud	68.2	69,3	69,3	69,7	69,8	69.5
Intelligent Spend Group	78.1	78,7	79,7	78,3	78,9	78.9
Private Cloud (IaaS)	28.9	30,7	35,6	33,0	35,9	33.8
Public Cloud (SaaS/PaaS)	68.5	70,3	69,5	71,4	70,7	70.5
Software Licenses & Support	87.4	85,9	87,4	88,2	88,9	87.7
Cloud & Software	81.6	79,7	81,0	81,6	82,9	81.4
Services	25.0	22,3	25,6	31,4	28,9	27.0
Total Gross Margin	72.3	69,9	72,5	74,0	76,0	73.3

FY/20 Non-IFRS Operating Margin at 30.5% Highest level since 2015

Tax rate, EPS, Cash Flow & CapEx

EFFECTIVE TAX RATE

Actuals FY/20

• IFRS: 26.9% | +0.2pp
• Non-IFRS: 26.5% | +0.3pp

EPS

Actuals FY/20

• IFRS: €4.35 | +56%
• Non-IFRS: €5.41 | +6%

CASH FLOW

Operating Cash Flow FY/20 €7.2bn | +106%

Free Cash Flow FY/20 €6.0bn | +164%

CAPEX • €0.8bn | 0% IFRS tax rate came in below and Non-IFRS tax rate at the lower end of our tax range guidance

Reflecting a strong contribution from Sapphire Ventures

Operating Cash Flow approximately doubling year-over-year; Free Cash Flow significantly above raised outlook

Cash flow positively impacted by lower tax and restructuring payments and a successful working capital management

More of SAP's cloud assets run on hyperscalers' infrastructure

Outlook 2021

2020 Actuals (Non-IFRS)

Cloud Revenue €8.09bn

Cloud & Software Revenue €23.23bn

Total Revenue €27.34bn

Operating Profit €8.28bn

2021 Outlook (Non-IFRS @cc)

Cloud Revenue in a range of €9.1 – 9.5bn Growth: 13.0% to 18.0%

Cloud and Software Revenue in a range of €23.3 – 23.8bn Growth: Flat to up 2%

Operating Profit in a range of €7.8 – 8.2bn Growth: -1.0% to -6.0%

Share of more predictable revenue to reach approx. 75%

Operating Cash Flow approx. €6.0bn

Free Cash Flow above €4.5bn

Appendix

Q4 2020: Strong year end performance

Cloud revenue increase by +13% at constant currency

Share of more predictable revenue grew by approximately 4pp to approximately 65%

IFRS operating margin up 9.1pp to 35.2% | Non-IFRS up 1.5pp to 36.8% at constant currency

IFRS Earnings per share up 19% to €1.62 | Non-IFRS down 7% to €1.69

Income statement: Fourth quarter

	IFRS			Non-IFRS
€ millions, unless otherwise stated	Q4/20	Q4/19	∆ %	Q4/20	Q4/19	∆ %	∆ % at cc
Cloud	2,041	1,896	8	2,044	1,907	7	13
Software licenses	1,703	2,002	-15	1,703	2,002	-15	-11
Software support	2,835	2,948	-4	2.835	2,948	-4	0
Software licenses and support	4,538	4,950	-8	4,538	4,950	-8	-4
Cloud and software	6,579	6,846	-4	6,582	6,857	-4	1
Services	960	1,195	-20	960	1,195	-20	-16
Total revenue	7,538	8,041	-6	7,541	8,052	-6	-2
Total operating expenses	-4,884	-5,938	-18	-4,774	-5,212	-8	-4
Operating profit (loss)	2,655	2,102	26	2,768	2,839	-3	3
Financial income, net	107	127	-16	107	127	-16
Profit (loss) before tax	2,705	2,219	22	2,817	2,956	-5
Income tax expense	-773	-582	33	-795	-766	4
Profit (loss) after tax	1,932	1,637	18	2,022	2,190	-8
Operating margin (in %)	35.2%	26.1%	9.1pp	36.7%	35,3%	1.4pp	1.5pp
Earnings per share, basic (in €)	1.62	1.36	19	1.69	1.82	-7

Income statement: Full year 2020

		IFRS			Non-IFRS
€ millions, unless otherwise stated	FY/20	FY/19	∆ %	FY/20	FY/19	∆ %	∆ % at cc
Cloud	8,080	6,933	17	8,085	7,013	15	18
Software licenses	3,642	4,533	-20	3,642	4,533	-20	-17
Software support	11,506	11,547	0	11,506	11,548	0	1
Software licenses and support	15,148	16,080	-6	15,148	16,080	-6	-4
Cloud and software	23,228	23,012	1	23,233	23,093	1	3
Services	4,110	4,541	-9	4,110	4,541	-9	-8
Total revenue	27,338	27,553	-1	27,343	27,634	-1	1
Total operating expenses	-20,717	-23,081	-10	-19,060	-19,426	-2	0
Operating profit (loss)	6,621	4,473	48	8,283	8,208	1	4
Financial income, net	776	198	>100	776	198	>100
Profit (loss) before tax	7,218	4,596	57	8,880	8,331	7
Income tax expense	-1,938	-1,226	58	-2,350	-2,180	8
Profit (loss) after tax	5,280	3,370	57	6,529	6,152	6
Operating margin (in %)	24.2%	16.2%	8.0pp	30.3%	29,7%	0.6pp	0.8pp
Earnings per share, basic (in €)	4.35	2.78	56	5.41	5,11	6

Gross margin development

Non-IFRS, in percent as reported	FY/18	Q1/19	Q2/19	Q3/19	Q4/19	FY/19	Q1/20	Q2/20	Q3/20	Q4/20	FY/20
Cloud	63.1	66,2	67,9	69,0	69,5	68.2	69,3	69,5	69,7	70,0	69.6
Intelligent Spend	77.8	78,0	78,1	78,0	78,0	78.1	78,8	79,9	78,3	79,2	78.9
Private Cloud (IaaS)	12.2	32,0	22,4	25,3	36,3	28.9	31,0	36,0	33,4	36,9	34.3
Public Cloud (SaaS/PaaS)	60.0	63,8	69,0	70,5	70,0	68.5	70,2	69,5	71,4	70,8	70.7
Software Licenses & Support	87.4	85,7	87,1	87,6	88,8	87.4	85,7	87,4	87,6	88,4	87.4
Cloud & Software	81.5	79,6	81,1	81,7	83,4	81.6	79,6	81,0	81,2	82,7	81.2
Services	22.9	20,3	23,9	26,9	28,1	25.0	22,8	26,3	31,5	28,7	27.2
Total Gross Margin	71.8	69,5	71,4	72,3	75,2	72.3	69,8	72,6	73,7	75,8	73.1

Operating profit: Fourth quarter 2020

IFRS

Non-IFRS

Total revenue	• Non-IFRS operating profit (loss)
€8,052m	-3% to €2,768m (Q4/19: €2,839m) +3% to €2,916m at cc
	• Non-IFRS operating margin
€7,541m	+1.4pp to 36.7% (Q4/19: 35.3%)
	+1.5pp to 36.8% at cc

Operating profit: Full year 2020

IFRS

	Total operating expenses Operating profit (loss)		Total revenue	• IFRS operating profit (loss) +48% to €6,621m (FY/19: €4,473m)
FY/19	23,081	4,473	€27,553m	• IFRS operating margin +8.0pp to 24.2% (FY/19: 16.2%)
FY/20	20,717	6,621	€27,338m

Non-IFRS

	Total operating expenses Operating profit (loss)		Total revenue
FY/19	19,426	8,208	€27,634m
FY/20	19,060	8,283	€27,343m

• Non-IFRS operating profit (loss) +1% to €8,283m (FY/19: €8,208m) +4% to €8,500m at cc

• Non-IFRS operating margin +0.6pp to 30.3% (FY/19: 29.7%) +0.8pp to 30.5% at cc

Cost ratios: Fourth quarter 2020

€7.5bn Total revenue, Non-IFRS

€1.6bn

*Non-IFRS at constant currencies

Cost ratios: Full year 2020

€27.3bn Total revenue, Non-IFRS

Balance sheet condensed: December 31, 2020 – IFRS

Assets			Equity and liabilities
€ millions	12/31/20	12/31/19	€ millions	12/31/20	12/31/19
Cash, cash equivalents and other financial assets	6,946	5,611	Trade and other payables	1,213	1,581
Trade and other receivables	6,593		Provisions	73	247
		7,908	Other liabilities	7,431	8,367
Other current assets	1,545	1,694	Contract liabilities, current	4,150	4,266
Total current assets	15,085	15,213	Total current liabilities	12,868	14,462
Goodwill	27,560	29,159	Financial liabilities	13,606	12,923
			Provisions	368	335
Intangible assets	3,784	4,491	Contract liabilities, non-current	36	89
Property, plant, and equipment	5,042	5,496	Other non-current liabilities	1,673	1,582
Other non-current assets	7,006	5,853	Total non-current liabilities	15,684	14,929
			Total liabilities	28,552	29,390
Total non-current assets	43,392	44,999	Total equity	29,925	30,822
Total assets	58,476	60,212	Total equity and liabilities	58,476	60,212

Due to rounding, numbers may not add precisely

Record year for cash flow in 2020

€ millions, unless otherwise stated	FY/20	FY/19	∆
Operating cash flow	7,193	3,496	+106%
- Capital expenditure	-816	-817	0%
- Payments of lease liabilities	-378	-403	-6%
Free cash flow	6,000	2,276	+164%
Free cash flow in percent of total revenue	22	8	+14pp
Free cash flow conversion rate	1.14	0.68	+0.46
Days sales outstanding (DSO in days, Dec. 31)	78	71	7

Net debt

Net Liquidity = cash and cash equivalent plus current time deposits and debt securities minus financial debt

Other = mainly purchase and sales of equity or debt instruments of other entities, proceeds from sales of non-current assets, and effects of foreign currency rates on cash and cash equivalents – for more information see our 2019 integrated report

Additional outlook information and Non-IFRS adjustments

SAP expects a full-year 2021 effective tax rate (IFRS) of 27.5% to 28.5% (2020: 26.9%) and an effective tax rate (non-IFRS) of 24.5% to 25.5% (2020: 26.5%)

Non-IFRS adjustments	Actual Amounts FY/19	Actual Amounts FY/20	Est. Amounts for FY/21
Revenue adjustments	€81m	€5m	€0m to €30m
Acquisition-related charges	€689m	€577m	€540m to €640m
Share-based payment expenses	€1,835m	€1,082m	€2,000m to €2,500m
Restructuring charges	€1,130m	-3m	€150m to €200m
Sum of all adjustments	€3,735m	€1,661m	€2,690m to €3,370m

Expected currency impact 2021

Expected Currency Impact 2021 Based on December 2020 Level for the Rest of the Year
in percentage points	Q1	FY
Cloud Revenue	-6pp to -8pp	-3pp to -5pp
Cloud and software	-5pp to -7pp	-2pp to -4pp
Operating profit	-7pp to -9pp	-2pp to -4pp

SAP S/4HANA customer count

Main categories added include Digital Supply Chain Management and Finance and Risk Management. This change affected the S/4HANA customer count as the customers of the added categories (as far as not also S/4HANA customer) have been included in the S/4HANA customer number. Prior period customer count numbers have been adjusted to conform with the updated definition.

Key cloud metrics: Fourth quarter

All figures are Non-IFRS and growth rates at constant currencies unless otherwise stated
Cloud Revenue	Cloud Backlog1 Current	Global Commerce2	Cloud Applications Total Subscribers
+13% €2,044m	+14% €7.15bn	>\$4.1 trillion	~238m
Concur – Segment Revenue	Qualtrics – Segment Revenue	Number of end users book travel and/or process expense with SAP Concur	New workers started on SAP Fieldglass platform
-15% €341m	+26% €183m	>71m	>1m

1) Current Cloud Backlog replaces our previous disclosure of 'New Cloud Bookings'. The 'Current Cloud Backlog' – or CCB for short gives you the contractually committed cloud revenue we expect to recognize over the upcoming twelve months. The CCB is thus a subset of our Remaining Performance Obligations: Cloud only and 12 months only. Its expansion between two key dates reflects our success in both, contracting new cloud business as well as renewing existing business. So compared to New Cloud Bookings, it is a better, more holistic indicator of our cloud progress.

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