sap q2 2011 presentation e

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Second Quarter 2011Results Release

Walldorf, GermanyWednesday, July 27, 2011



© 2011 SAP AG. All rights reserved. 2

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 of1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,”“may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as theyrelate to SAP are intended to identify such forward-looking statements. SAPundertakes no obligation to publicly update or revise any forward-looking

statements. All forward-looking statements are subject to various risks anduncertainties that could cause actual results to differ materially from expectations.The factors that could affect SAP’s future financial results are discussed more fullyin 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 Securitiesand Exchange Commission. Readers are cautioned not to place undue reliance onthese forward-looking statements, which speak only as of their dates.




Agenda

Income Statement

Balance Sheet and Cash Flow Analysis

Outlook

Appendix




6th Consecutive Quarter of Double-Digit Non-IFRSSSRS Revenue Growth

Operating Margin (%)

IFRS Non-IFRS

Q2/11Q2/10 Q2/11 Q2/10

-0.7pp 1.3pp

(1.5pp*)

Basic Earnings Per Share (€)

IFRS Non-IFRS

Q2/11Q2/10 Q2/11 Q2/10

20% 26%

30.826.7 29.526.0 0.590.41

0.470.49

Software Revenue (€ bn)

IFRS Non-IFRS

26%

(35%*)

SW & SW-Related Service Revenue (€ bn)

IFRS Non-IFRS

Q2/10 Q2/11

26%

Q2/10 Q2/11Q2/11Q2/10 Q2/11 Q2/10

* at constant currencies

14% 15%

(20%*)

0.800.64

0.800.64

2.26 2.58 2.26 2.59




Strong Top-Line Performance in First Half 2011 ShowsThat SAP is on Track to Achieve Fiscal Year Targets

Operating Margin (%)

IFRS Non-IFRS

H1/11H1/10 H1/11 H1/10

-1.6pp 1.1pp

(1.2pp*)

Basic Earnings Per Share (€)

IFRS Non-IFRS

H1/11H1/10 H1/11 H1/10

12% 24%

28.324.6 27.223.0 1.040.74 0.840.83

Software Revenue (€ bn)

IFRS Non-IFRS

26%

(31%*)

SW & SW-Related Service Revenue (€ bn)

IFRS Non-IFRS

H1/10 H1/11

26%

H1/10 H1/11H1/11H1/10 H1/11 H1/10


17% 17%

(19%*)

1.391.10

1.391.10 4.21

4.914.21

4.93




Successful Quarter with Double-Digit Top-Line Growthand Strong Non-IFRS Margin Expansion

€ millions, unless otherwise stated Q2/11 Q2/10%

Q2/11 Q2/10% %

at cc

Software revenue 802 637 26 802 637 26 35

Support revenue 1,681 1,526 10 1,689 1,526 11 15

Subscription & other SW-rel. serv. rev. 96 95 1 96 95 1 3

SSRS revenue 2,579 2,258 14 2,587 2,258 15 20

Consulting revenue 579 528 10 579 528 10 15

Other service revenue 142 108 31 142 108 31 37

Professional services & other serv. rev. 721 636 13 721 636 13 19

Total revenue 3,300 2,894 14 3,308 2,894 14 20

Total operating expenses -2,443 -2,120 15 -2,289 -2,040 12 17

Operating profit 857 774 11 1,019 854 19 26

Finance income, net -18 -12 50 -18 -12 50

Profit before tax 804 676 19 966 767 26

Income tax expense -216 -185 17 -263 -205 28

Profit after tax 588 491 20 703 562 25

Basic earnings per share, in € 0.49 0.41 20 0.59 0.47 26

IFRS Non-IFRS




Top-Line Growth in First Half 2011 Combined withOperational Excellence Results in Strong Profitability

€ millions, unless otherwise stated H1/11 H1/10%

H1/11 H1/10% %

at cc

Software revenue 1,385 1,101 26 1,385 1,101 26 31

Support revenue 3,336 2,920 14 3,361 2,920 15 16

Subscription & other SW-rel. serv. rev. 185 184 1 185 184 1 0

SSRS revenue 4,906 4,205 17 4,931 4,205 17 19

Consulting revenue 1,148 1,007 14 1,148 1,007 14 15

Other service revenue 270 191 41 270 191 41 42

Professional services & other serv. rev. 1,418 1,198 18 1,418 1,198 18 20

Total revenue 6,324 5,403 17 6,349 5,403 18 19

Total operating expenses -4,870 -4,072 20 -4,551 -3,933 16 17

Operating profit 1,454 1,331 9 1,798 1,470 22 24

Finance income, net -32 -12 >100 -32 -12 >100

Profit before tax 1,388 1,197 16 1,732 1,354 28

Income tax expense -397 -319 24 -501 -354 42

Profit after tax 991 878 13 1,231 1,000 23

Basic earnings per share, in € 0.83 0.74 12 1.04 0.84 24

IFRS Non-IFRS




Non-IFRS Operating Margin Expanded 130 Basis Pointsin the Second Quarter 2011 Despite Currency Headwind

30.8% | 31.0%*+1.3pp | +1.5pp*

29.5%


Strong top-line growth paired withcontinued focus on operationalexcellence resulted in further marginexpansion.

In Q2 2011, non-IFRS operatingmargin increased 1.3 percentagepoints to 30.8% yoy, which exceededexpectations.

Currency affected operating marginnegatively by 0.2 pp.

TotalRevenue

€2.9bn

TotalOperatingExpenses

€2.0bn

TotalRevenue

€3.3bn


€2.3bn

Q2/10 Q2/11




Non-IFRS Operating Margin Expanded 110 Basis Pointsin the First Half 2011

28.3% | 28.4%*+1.1pp | +1.2pp*

27.2%


Strong top-line growth paired withcontinued focus on operationalexcellence resulted in further marginexpansion.

In H1 2011, non-IFRS operatingmargin increased 1.1 percentagepoints to 28.3% yoy.

Currency affected operating marginnegatively by 0.1 pp.

TotalRevenue

€5.4bn


€3.9bn

TotalRevenue

€6.3bn


€4.6bn

H1/10 H1/11




Gross Margin Increased by 70 Basis Points

Gross Margin

70.6% | +0.7ppSSRS Margin

83.5% | +0.1ppProfessional Services*

Margin24.1% | +1.9pp

Q2/10 Q2/11

€0.4bn€0.4bn€0.5bn

€0.5bn

Q2/10 Q2/11Q2/10 Q2/11

€0.6bn €0.7bn

SSRS +Services*Expenses

€0.9bn

SSRSRevenue

€2.3bn

Services*Revenue

Services*Revenue

SSRS

Expenses

SSRS

Expenses

Services*

Expenses

Services*Expenses

TotalRevenue

€2.9bn

TotalRevenue

€3.3bn


€1.0bn

SSRSRevenue

€2.6bn

* Professional services and other services

Non-IFRS, Second Quarter 2011




Gross Margin Expansion Supported by All Line Items

Gross Margin

69.2% | +0.3ppSSRS Margin

82.9% | +0.3ppProfessional Services*

Margin21.7% | +0.6pp

H1/10 H1/11

€0.8bn€0.7bn€0.9bn

€1.1bn

H1/10 H1/11H1/10 H1/11

€1.2bn €1.4bn


€1.7bn

SSRSRevenue

€4.2bn

Services*Revenue

Services*Revenue

SSRS

Expenses

SSRS

Expenses

Services*

Expenses

Services*Expenses

TotalRevenue

€5.4bn

TotalRevenue

€6.3bn


€2.0bn

SSRSRevenue

€4.9bn

* Professional services and other services

Non-IFRS, First Half 2011




Cost Ratios

R&Das a % of Total Revenue

S&Mas a % of Total Revenue

G&Aas a % of Total Revenue

13.6%+0.2pp

13.4% 21.3%-0.8pp

22.1% 5.0%+/-0.0pp

5.0%

R&DExpenses

€0.4bn

TotalRevenue

€3.3bnTotalRevenue

€2.9bn

R&D

Expenses

€0.5bn

TotalRevenue

€2.9bn

TotalRevenue

€2.9bn

TotalRevenue

€3.3bn

TotalRevenue

€3.3bn

S&M

Expenses€0.6bn

S&MExpenses

€0.7bnG&A

Expenses

€0.1bn

G&AExpenses

€0.2bn

Q2/10 Q2/11 Q2/10 Q2/11Q2/10 Q2/11

Non-IFRS, Second Quarter 2011




Cost Ratios

R&Das a % of Total Revenue

S&Mas a % of Total Revenue

G&Aas a % of Total Revenue

14.6%+0.2pp

14.4% 21.2%-0.7pp

21.9% 5.2%-0.2pp

5.4%

R&DExpenses

€0.8bn

TotalRevenue

€6.3bnTotalRevenue

€5.4bn

R&D

Expenses

€0.9bn

TotalRevenue

€5.4bn

TotalRevenue

€5.4bn

TotalRevenue

€6.3bn

TotalRevenue

€6.3bn

S&M

Expenses€1.2bn

S&MExpenses

€1.3bnG&A

Expenses

€0.3bn

G&AExpenses

€0.3bn

H1/10 H1/11 H1/10 H1/11H1/10 H1/11

Non-IFRS, First Half 2011




Agenda

Income Statement


Outlook

Appendix




Balance Sheet

June 30, 2011, IFRS

Assets€ millions

06/30/11 12/31/10

Cash, cash equivalents andother financial assets

4,563 3,676

Trade and other receivables 2,738 3,099

Other non-financial assets andtax assets

379 368

Total current assets 7,680 7,143

Goodwill 8,213 8,428

Intangible assets 2,107 2,376

Property, plant, and equipment 1,463 1,449

Other non-current assets 1,433 1,443

Total non-current assets 13,216 13,696

Total assets 20,896 20,839

Equity and liabilities€ millions

06/30/11 12/31/10

Financial liabilities 136 142

Deferred income 2,161 911

Provisions 1,287 1,287

Other liabilities 2,004 2,813

Current liabilities 5,588 5,153

Financial liabilities 3,945 4,449

Provisions 244 292

Other non-current liabilities 1,122 1,121

Non current liabilities 5,311 5,862

Total liabilities 10,899 11,015

Total equity 9,997 9,824

Equity and liabilities 20,896 20,839




Highest Operating Cash Flow for a First Half Yearin SAP’s History

1) Defined as cash and cash equivalents + short-term investments less bank loans, private placements and bonds2) Defined as cash and cash equivalents + short-term investments

1) cash and cash equivalents + current investments – (bank loans, private placement transactions, and bonds)

€ millions, unless otherwise stated 06/30/11 06/30/10

Operating cash flow 2,270 1,282 77%

- Capital expenditure -248 -125 98%

Free cash flow 2,022 1,157 75%

Free cash flow as a percentage of total revenue 32% 21% 11pp

Cash conversion rate 2.29 1.46 57%

Days sales outstanding (DSO) 63 73 -10days




Successful Second US Private Placement

Well-balanced financial debt maturity profile

* Defined as cash and cash equivalents + restricted cash + short-term investments

On June 1, 2011, we successfully completed a private placement with a volume of US$750 million

This enhances Group's financial flexibility by broadening its investor base and extending its maturity profile

Proceeds of issue were used to repay existing Group financial debt incurred to finance Sybase acquisition

A group of 16 institutional investors participated in the two tranches• US$600 million tranche with a five-year term

• US$150 million tranche with a seven-year term.

• coupon was less than 3.5% on both tranches

1.023

600 774208

415

11%

638 104

3%

26%

16% 20% 5%

17%

0

250

500

750

1,000

1,250

2012 2013 2014 2015 2016 2017 2018

EUR million (in % of total financial debt)

100 3%

% Variable interest rate% Fixed interest rate




Agenda

Income Statement


Outlook

Appendix




+0.5pp to +1.0pp

SSRS Revenue(Non-IFRS at cc)

SAP Refines Outlook for Non-IFRS SSRS Revenue at CCand Non-IFRS Operating Profit at CC

+ 10% to 14%

Operating Margin(Non-IFRS at cc)

SAP’s OutlookFY 2011

* Impacted by 4.7pp due to increased provisions for TomorrowNow Litigation

32.0%

€ 9.87bn

Basis for comparisonFY 2010

27.0% to 28.0%Effective Tax Rate(IFRS) 22.5%*

€4.45bn to €4.65bnOperating Profit(Non-IFRS at cc)

€ 4.01bn

27.5% to 28.5%Effective Tax Rate(Non-IFRS)

27.3%

Company now expectsto reach the high endof the range.

Company now expectsto reach the high endof the range.




Agenda

Income Statement


Outlook

Appendix




Explanations of Non-IFRS Measures

Adjustments in the revenue line items are for support revenue that entities acquired by SAPwould have recognized had they remained stand-alone entities but that SAP is not permittedto recognize as revenue under IFRS as a result of business combination accounting rules.Adjustments in the operating expense line items are for acquisition-related charges, share-based compensation expenses, restructuring expenses and discontinued activities.

Constant currency revenue figures are calculated by translating revenue of the current periodusing the average exchange rates from the previous year's respective period instead of thecurrent period. Constant currency period-over-period changes are calculated by comparing thecurrent year's non-IFRS constant currency numbers with the non-IFRS number of the previousyear's respective period.

For a more detailed description of these adjustments and their limitations as well as ourconstant currency and free cash flow figures see Explanations of Non-IFRS Measures online(www.sap.com/corporate-en/investors/reports and web message non-IFRS an web messagecurrency effects).




Explanations of Currency Impact

1) Defined as cash and cash equivalents + short-term investments less bank loans, private placements and bonds2) Defined as cash and cash equivalents + short-term investments

* These exchange rates are rates SAP used in its financial statements** Currency impacts on past performance are not a prediction of future performance resulting from currency impacts.For a more detailed description of these adjustments and their limitations as well as our constant currency and free cash f low figures see

‘Explanation of non-IFRS Measures’ which is available at http://www.sap.com/investor

Currency 2010 Q2*

USD per € 1.27GBP per € 0.85

JPY per € 117.38

CHF per € 1.41

CAD per € 1.31

AUD per € 1.44

SAP’s guidance formatSAP provides a yearly outlook, which is based on non-IFRSat constant currencies

because these numbers are used as a basis for SAP’sinternal management reporting

since we cannot influence currency movements, and

it helps prevent frequent changes in guidance due tofluctuations in currency

The elimination of currency effects is achieved by translatingforeign currencies using the average exchange rates fromthe previous year’s period (i.e. quarter) instead of thecurrent year

Currency impact on past performanceHistorically, every 1% impact on total revenue resulting from

foreign currency movements has resulted in a 10-15 basispoint movement in margin.

Overview on the majorcurrencies for Q2 2010

sap q2 2011 presentation e

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