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SAP – Leading the Digital Transformation

Richard McLean Regional CFO, SAP Asia Pacific Japan Morgan Stanley 2017 Annual Asia Pacific SummitNovember 15, 2017

2© 2017 SAP SE or an SAP affiliate company. All rights reserved.

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 forward-looking statements, which speak only as of their dates.

Safe Harbor Statement


Agenda

An introduction to SAP

Helping customers win in the new digital economy

SAP’s long-term financial ambition

Why invest in SAP


Percent Global 2000 that Run SAP

25+industries

~365,000customers

A compelling customer base Unmatched vertical expertise

The world’s leading business software company

https://www.google.nl/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjKoOGF0rTRAhUOlxQKHQY1BBYQjRwIBw&url=https://en.wikipedia.org/wiki/File:AkzoNobel_Logo.svg&psig=AFQjCNH7zBeohNdX9nBGVBmO-bDegBppvQ&ust=1484036801757615


In APJ, we are driving sustainable growth in Rising Asia

42 offices in31 countries

18,000 employees

37,000 customers

2,700 partners

28 years in region APJ vision 2020 Deep industry expertise

▪ Financial Services▪ Consumer Products▪ Public Services▪ Telecommunications

▪ Energy & Resources▪ Discrete Manufacturing▪ Services/Media

▪ Sports & Entertainment▪ Healthcare

Employerof Choice

SME Focus

#1 in Cloud

DX Leadership

Customers for Life

Social Impact


Helping customers in APJ run better and grow sustainably


Agenda




Why invest in SAP


In the age of digital disruption, companies need to transform to thrive

The most rooms booked. No properties owned 2B+ rides.

0 cars owned

80M subscribers watching 10B hours per month From apparel

company to fitness platform

From traditional luxury retailer to personalized digital experiences

From Tractor manufacturing to Smart Farming

From traditional motorcycles to building highly customized vehicles


SAP Cloud Platform is THE Digital Business Platform

Best in Class

Line of business and industry capabilities

Vibrant Ecosystem

Providing complementary solutions

End-to-End and Integrated

Broadest portfolio and out-of-the-box integrations

Scalable and Flexible

Modular approach to digital transformation

CustomerExperience

IoT& Supply Chain

WorkforceEngagement

SpendManagement

BusinessTransactions

Digital Core

IntelligentInsights

SAP HANA SAP Cloud Platform


SAP Digital Boardroom provides integrated real-time dataOne source of truth

Total Transparency

Across entire business operations and all SAP apps from Digital core to LoB apps

Rapid Time to Value

Leveraging predefined best practices and prebuilt integrations for fast deployment

Instant Data-Driven Insights

Ability to drive ad hoc analyses and simulation in real-time leveraging SAP BusinessObjects Cloud

Financials

Procurement

Payroll & Headcount

Contingent Labor

Sales & Marketing

Travel & Entertainment


Solution Ideation & Vision Global Leonardo Design Thinking and Innovation to ideate on new business models

Rapid PrototypingBring ideas to life, leveraging SAP Innovations (e.g. Machine Learning, IoT) on the SAP Cloud Platform

Digital Blueprint Create a Technology Roadmap, Identify Dependencies & Remediate Risks

Solution Accelerators Leverage industry expertise and SAP Business Content to accelerate implementation of prototypes

SAP Leonardo enables companies to re-imagine new business modelsTurns systems of record into systems of intelligence - gives customers the ability to sense, analyze, and respond


Agenda




Why invest in SAP


39%

61%

€22.1bn

2016

70-75%

25-30%€28–29bn

2020ambition

+9pp to +14pp

Support + Cloud subscriptions revenue as share of total revenue All other revenue

Pushing towards a larger more predictable business

All figures are non-IFRS


20152016

2017

All figures Non-IFRS at constant currencies

* Beginning of year Outlook

2015 2015 2017 2020 2016 2016 2017 2020 2017 2017 2020

Outlook* Actual Ambition Ambition Outlook* Actual Ambition Ambition Outlook* Outlook Ambition

Raised

Cloud Subs €Bn 1.95-2.05 2.00 3.5 - 3.6 7.5 - 8 2.95-3.05 3.01 3.8 - 4.0 7.5 - 8 3.8 - 4.0 3.8 - 4.0 8.0 - 8.5

Cloud & SW growth 8 - 10% 12% 6 - 8% 8% 6 - 8% 7.0 - 8.5%

Total Revenue €Bn 21 - 22 26 - 28 23 - 23.5 26 - 28 23.2 - 23.6 23.4 - 23.8 28 - 29

Op Profit €Bn 5.6 - 5.9 5.903 6.3 -7 8 - 9 6.4 - 6.7 6.6 6.7 - 7.0 8 - 9 6.8 - 7.0 6.85 - 7.0 8.5 - 9.0

Continued strong S/4HANA momentum reflected in raised 2017 outlook and 2020 ambition


Driving increased profitability Highly profitable cloud business in the long term

2016 2018 – 2020

▪ Mix shift effects

▪ Cloud investments

▪ Services margin dampened by strategic co-innovation

▪ Cloud investments paying off. Highly standardized “converged platform” drives:

Gross margin improvement

R&D leverage (away from “any DB”)

▪ Cloud overtakes software

▪ Efficiency in each business improving and cost ratios start to improve

▪ Cloud at scale contributes to profit acceleration through increased share of renewal base

2017

▪ Mix shift effects

▪ Cloud investments

▪ Services margin improving


Agenda




Why invest in SAP


SAP’s innovation leadership is helping customers win in the digital economy▪ SAP runs the world’s mission-critical business processes

and is perfectly positioned at the top of the IT stack –close to the end user where the business value is generated

▪ In addition, SAP has developed the most advanced in-memory platform available today: SAP HANA

▪ SAP is in the early stages of a powerful multi-year innovation cycle with SAP S/4HANA as the digital core coupled with the most comprehensive, best-in-class cloud & network portfolio

▪ SAP offers choice of deployment model (cloud, on premise or hybrid) and seamless integration

▪ SAP Leonardo’s combination of tools powered by HANA helps customers to become intelligent enterprises

SummaryWhy invest in SAP

SAP is outpacing the market▪ SAP’s broad global footprint provides resilience in an

uncertain world

▪ Powerful combination of a rapidly expanding cloud business and a growing core

▪ Successful business transformation – improve efficiency and effectiveness in each and every business

▪ Growing overall operating profit even as we continue to hire in fast growth areas such as S/4HANA, HCM, CEC, SAP Cloud Platform (PaaS), Networks, SAP Leonardo (IoT, AI/Machine Learning, Blockchain, Big Data etc)

SAP is pushing relentlessly towards a much more predictable business in the long term

Thank You

Richard McLean Regional CFO, SAP Asia Pacific Japan Morgan Stanley 2017 Annual Asia Pacific SummitNovember 15, 2017


Appendix


Regional performance* Q3 2017

Strong performance in the EMEA region with an especially strong quarter in Germany and Spain in cloud revenue. In addition, we had strong double-digit software revenue growth in Germany, Russia and the MENA*** region.

Strong performance in both cloud and software revenue and cloud revenue in the APJ region. Japan and Australia were very strong in cloud revenue. For software revenue, Australia had triple digit growth and China had strong double-digit growth.

Solid growth in the Americas region, despite the natural disasters in both the United States and Mexico. In Cloud revenue, Brazil was a highlight, while the United States had a strong quarter in software revenue.

*Revenues calculated based on customer location; All numbers are non-IFRS if not otherwise stated ** at constant currency; ***Middle East and North Africa

EMEA

8% (+9% cc**)cloud and software revenue

42% (+46% cc**)cloud subscriptions

and support revenue

Americas



and support revenue

APJ



and support revenue


Q3 2017 – Another strong quarter in our rock solid core business and fast growing cloud business, despite severe currency headwinds

€ millions, unless otherwise stated IFRS Non-IFRS

Revenue Numbers Q3/17 Q3/16 ∆ % Q3/17 Q3/16 ∆ % ∆ % at cc

Cloud subscriptions and support 937 769 22 938 769 22 27

Software licenses 1,033 1,034 0 1,033 1,034 0 3

Software support 2,687 2,653 1 2,687 2,653 1 4

Software licenses and support 3,720 3,686 1 3,720 3,687 1 4

Cloud and software 4,657 4,455 5 4,658 4,456 5 8

Services 932 920 1 932 920 1 5

Total revenue 5,590 5,375 4 5,590 5,375 4 8

Total operating expenses -4,276 -4,272 0 -3,953 -3,738 6 9

Operating profit 1,314 1,103 19 1,637 1,638 0 4

Financial income, net 73 -46 <-100 73 -46 <-100

Profit before tax 1,390 1,013 37 1,714 1,548 11

Income tax expense -398 -288 38 -500 -459 9

Profit after tax 993 725 37 1,214 1,089 11

Operating margin (in %) 23.5 20.5 3.0pp 29.3 30.5 -1.2pp -0.9pp

Earnings per share, basic (in €) 0.82 0.61 35 1.01 0.91 10


9M 2017 – Our overall strong business performance led to an improved share of more predictable business, now at a 66% share of revenue

€ millions, unless otherwise stated IFRS Non-IFRS

Revenue Numbers 9M/17 9M/16 ∆ % 9M/17 9M/16 ∆ % ∆ % at cc

Cloud subscriptions and support 2,775 2,166 28 2,775 2,168 28 28

Software licenses 2,814 2,682 5 2,814 2,685 5 5

Software support 8,154 7,815 4 8,154 7,815 4 4

Software licenses and support 10,968 10,497 4 10,968 10,500 4 4

Cloud and software 13,742 12,663 9 13,743 12,668 8 8

Services 2,914 2,675 9 2,914 2,675 9 8

Total revenue 16,656 15,339 9 16,657 15,343 9 8

Total operating expenses -13,743 -12,154 13 -12,252 -11,085 11 10

Operating profit 2,913 3,184 -9 4,405 4,258 3 3

Financial income, net 59 -105 <-100 59 -105 <-100

Profit before tax 2,966 2,900 2 4,458 3,973 12

Income tax expense -777 -792 -2 -1,238 -1,142 8

Profit after tax 2,189 2,108 4 3,220 2,832 14

Operating margin (in %) 17.5 20.8 -3.3pp 26.4 27.8 -1.3pp -1.2pp

Earnings per share, basic (in €) 1.81 1.77 3 2.67 2.37 13


Balance sheet, condensedSeptember 30, 2017, IFRS

Assets€ millions

09/30/17 12/31/16

Cash, cash equivalents and other financial assets

5,233 4,826

Trade and other receivables 4,869 5,924

Other non-financial assets 1,117 814

Total current assets 11,219 11,564

Goodwill 21,353 23,311

Intangible assets 3,038 3,786

Property, plant, and equipment 2,806 2,580

Other non-current assets 3,016 3,037

Total non-current assets 30,212 32,713

Total assets 41,430 44,277

Equity and liabilities€ millions

09/30/17 12/31/16

Trade and other payables 1,089 1,281

Provisions 266 183

Other liabilities 4,621 5,827

Deferred income, current1) 3,531 2,383

Total current liabilities 9,507 9,674

Financial liabilities 5,811 6,481

Provisions 211 217

Deferred income, non-current1) 84 143

Other non-current liabilities 1,447 1,365

Total non-current liabilities 7,553 8,205

Total liabilities 17,060 17,880

Total equity 24,370 26,397

Total equity and liabilities 41,430 44,277

1) SAP is in the final stage of migrating its processes and customer contracts to IFRS 15. At this point of the migration, there is no reliable way to report deferred cloud revenue any longer, therefore the separate disclosure of the cloud portion of deferred income is discontinued. SAP will continue to disclose new cloud bookings as the key metric to measure SAP’s sales success in the cloud.


Non-IFRS adjustmentsActual Amounts

9M/16Actual Amounts

9M/17Est. Amounts

for FY 2017

Revenue adjustments €4m €1m <€20m

Share-based payment expenses €545m €868m €1,000m to €1,150m

Acquisition-related charges €504m €449m €580m to €610m

Restructuring charges €20m €174m €150m to €200m

Sum of all adjustments €1,073m €1,492m €1,730m to €1,980m

9M 2017 – Additional outlook information and non-IFRS adjustments

The Company now expects its full-year 2017 effective tax rates (IFRS and non-IFRS) to be below the previous outlook. The previous outlook for the effective tax rate (IFRS) was 26.0% to 27.0% (2016: 25.3%) and for the effective tax rate (non-IFRS) 27.0% to 28.0% (2016: 26.8%). The decrease in comparison to the previous outlook mainly results from a one-time tax benefit relating to an intra-group transfer of intellectual property rights expected to be executed in the fourth quarter. As soon as the impact can be determined the Company will update the effective tax rate outlook.

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