SAP SE (SAP) 27 Jan 222021 Q4 Earnings call transcript

Good day and welcome to the SAP Quarter Four 2021 Earnings Conference Call. [Operator Instructions] Today’s conference is being recorded. And at this time, I would like to turn the conference over to Anthony Coletta, Chief Investor Relations Officer. Please go ahead, sir.

Thank you. afternoon, a good welcome. and morning everyone big and Good to earnings QX XXXX. Thanks our today discuss for for joining results call SAP’s year and full our deck find call. you Relations to supplement today’s On a Investor website, intended can available well. as It’s be download replay and will for uploaded a opening are make me who today CFO, Mucic, Christian CEO, With and Klein Luka will remarks.

have joining Q&A. us Scott who our leads Russell also for We Customer Organization Success

the do let’s Safe Now, Harbor.

statements about are statements, forward-looking on During results this could differ. future are materially or and events. the will cause to These subject and forecasts call, expectations, which statements are to based projections current make actual that uncertainties outcomes we assumptions and risks that

but are constant of measures as XXXX. Unless maybe IFRS. are on or and information in performance non-IFRS. on be considered and with or percentage a this non-IFRS for our not these rates in accordance SAP’s provide Form the prepared XX-F not all financial filings stated, including, changes we the to The measures Securities limited Factors currencies. for Risk annual and point Additional to Growth regarding report section should call at of uncertainties substitute numbers financial found the otherwise year-over-year with non-IFRS Commission, risks financial Exchange

with taking with start before to Now questions, remarks. to we Christian. a And turn opening few will that, over I’d like

creating critical thanks future change, will We global focus Anthony chain all you today for issues, additional start of and everywhere. the on you, to this sustainable year and move supply from make hope pandemic certainly people XXXX. Yes. is climate more disruptions that welcome to Thank to on a for joining and the and we

we in very SAP, excited about Here are we have accomplished what XXXX. at

results the end look for year, or quarter, our hitting What exceeding a of revised high QX. at a outlook. what our Let’s

in led to percentage fantastic from Current XX% strongly, has €X.X Current up backlog, Cloud and nearly accelerated We quarters now standing in XX% of an sequential cloud. acceleration impressive the XX%, for in X Cloud four XX% which have backlog grew QX, points. with tremendous offering have a QX adoption QX. which a we ever the highest at This Cloud cloud in for grew revenue, in seen backlog QX, SAP, Current billion. acceleration of driven our reported. also supported This of stellar in revenue S/XHANA Cloud up was grew S/XHANA business by XX% by growth transformation RISE signature

all and every perfect that’s backlog growth go. solution across product For well categories. This sets for what performance cloud to a our And double-digit XXXX. indeed with needs up major revenue quarter, happened us

have continued in in customers them expect address our with an revenue, SAP challenges. a our are challenging They We very time demonstrate of we businesses. set in the results the reflected unprecedented growth confidence to up unique value strong XX% during These most guidance. of cloud for and offer acceleration in helping

are results turning the Customers help about from intelligent platform become and year stronger this sustainable track time. of introduced optimistic on to to achieving and well solutions and are our the even our we disruptive are We them outcome months XX we XXXX These ambitions. strategy ahead the network emerge are to and ago. more

analysts moving for customers SAP spend XXXX. as their at to designed are Our time, RISE support SAP to offering with while cloud. forecast the upgrading the our is same businesses, they this, transform Reflecting

with RISE RISE the we for about January over over have in seen €X to of QX fourfold deals number UBS increase number Just previous of in XXXX, we significant the million. QX, more In doubled increases years. predicted we with from Xx growth Since IT the launched quarter. XX% deals each recently, X% customer in new adoption than SAP up in budget a SAP XXXX,

of benefits key three service. the business describe offering the as briefly for signature me a transformation Let

business with the against from XXX,XXX best redesign, we practices business customers. have we working developed processes customers’ about First, process our benchmark

and we in move public migration, modular do standard to cloud agile a help a more Second, to the than our cloud. technical migration. ERP to back We customers

also like customers and our offer sustainable to with customers. business more single Third, for from SAP innovation, enterprises. to means the connect our with we accountability club, industry We to innovations partner RISE end-to-end with solutions total even integrated This deeply latest that infrastructure cloud our applications. us our our network enables

run-rate €XXX getting revenue a than S/XHANA €X at And we approaches started. backlog. now our billion, just result, we in our success ERP a are cloud blockbuster added QX cloud the Clearly, alone, €X billion up modular year. million of In for to from is the As beginning more the the RISE market.

a massive the integrated cloud. modular At the because Our same offering opportunity than with these a nature significant for more ERP significant RISE presents new many comes of the of their XX,XXX It customers our as cross-sell begin installed on-premise ERP. opportunity base RISE of transformation with cloud customers SAP to our customers. attracts time,

and platform for dollar ERP all momentum I of spent additional discussed line tremendous RISE SAP with momentum for core the the business every terms performance $X opportunity For cloud QX, for our line have of our earlier. the in and up-sell business an of delivered across on of we solutions. outstanding applications In

at our businesses, key Let’s take with look S/XHANA. a starting

S/XHANA wins create and support against number chains supply improve available. to Many to XX%. to moving We legacy leading have includes and is replace more transformation and Chartered by drive to will healthcare solution RISE Technology S/XHANA customers Airlines, value, large their provide journey customers and Jungheinrich. cloud CVS, widely effort, with excellent Siemens, digital operational chosen cloud health QX including make of companies This ERP the RISE the using Panasonic, RISE systems of which Philippine Allianz Bank customer more win SAP in a now led and competitors a X,XXX one several than S/XHANA enabled has RISE overall, affordable nearly more capabilities. with CVS, are our SAP. success and IBM and with to to was Panasonic Our rate Standard momentum. optimize

markets expedite finance XXXX. and commitment pharma transformation largest standardize the RISE one their across example, core in emissions S/XHANA Another achieve Novartis, of by SAP net-zero Bank with the Chartered XX ERP and to companies their consolidate Standard SAP world, to has to to their chose chosen platform.

return. operations Finally, Factors Doc Petronas workforce the Success significant also They ERP. support SuccessFactors continues of transform recently this over supermarket including TCO XX% selected in seeing over operations. of and British is part their moving Commerce that footwear SAP has They reduction experience business the customer their chosen cloud XX,XXX from Spend quarter, to positive SAP chain. indications Martens, famous Management, Cloud, in our to our starting S/XHANA we Workday, SAP recently win Intelligent the portfolio. simplifying invested HR growth expect employees. and brand to discount a business to are

in analysis process for solutions. of solutions travel. key identify chain intelligent on customers, ready boost act Chain They Signavio One recovery help Hitachi in process to SAP take business agility opportunities. using new for advantage chose and Philippine its for expanding to business supply and SAP’s the Inc. solutions. the in anticipated is courses. of Airlines, Digital invested Supply is our SAP SAP to will its medical industrial quickly and them be advanced They understanding industry HP its investment comprehensive of our airline

business and double-digits. various platform Our chosen an by both trade cloud excellent of to strong BTP growing the to Angel priorities, foundation backlog very individualized sales Current the integration cloud, SAP revenue has quarter with support In modular cloud BTP enable and Cloud management. had offering. business the and extensibility technology is our [ph] promotion including

announced news exciting some Let’s turn today. to we

Our intent Taulia, Taulia is to finance. working focused chain and a market-leading on management fintech supply capital acquire company

to network procurement them expect portfolio. We our be great to a and business addition

our joint finance Nissan with and be customers are Two AstraZeneca. improve we will to with cash billions customers Icertis, as existing complement One operational our offers than designed SAP partnerships. sustainability helps have powered example Hana portfolio, is performance week, our margins to touch contract goals. partnership their with bring Earlier well transactions contract Taulia This our Icertis. number of recent is that to to overall terms expands as SAP of of AWS from market time, to our strong opportunity strength Cloud is such forces AWS expanded sales own gross able solutions massive as procurement us and Airbus, multiple optimize on This support a from which [indiscernible] one. our Icertis the to same chain to partnership this the a announcements solution players. AI. and an partner our with having great already from of underscores joining a HR. the supply announcement management ecosystem software portfolio, financing through and partnership announced investment better with At the Our contract extended flow. to a enhanced partnership processes, favorable market ERP cloud in our seamless management and systems leading provider intelligence by and of points leading and we Taulia many and

sustainability. me change imperative an no question strategic SAP, priority at an So, on us another for There is today. is for businesses action is let for SAP. climate to that turn imperative It certainly

A just been listed just companies three worldwide. CDP as of one by have We software

represent Our to a that actually added not belief an sustainability It’s cost advantage. competitive is does business.

It can may it requires time. no a across It’s in also opportunity value of achieve chain. clear greatest our fact, organization economic be In silo. that the coordination the sustainability

learning and like this on [ph] many working customers Hitachi, issue been for and with Anglian have Colgate, BMW. We FiSCA Water, years,

progress. business advantage supports the your supply to is full neutrality to outside economic and sustainability unique inside have travel. and data organization foundation. we from and business procurement approach the critical Transparency, social chains the see customers as the This customers, our that such a are across and manufacturing, the impact processes insight and unique our carbon offer to warehouses, across of We spectrum ability

sustainably. Our sustainability helps supports and portfolio work more run directly businesses this

record actions of on for any as accelerated for accomplish we to manage customers. makes their example, are to through continue released had recently sustainability ESG for data think is a SAP create sustainable introduction as transformation, our helping as much and for the the This for focused with to the bright provides recent sustainable SAP we line. future and strategy and these become our growth. five Collectively, just top which customers business for have of importance our opportunities company at will The business our concrete transparent enterprises, for efforts business. sustainability goals. this line year steps our green bottom We to beginning. any their For cloud, continued guidance every In Cloud a is closing, size and

in the more our today. us joining results Luka XXXX over And We long-term let see given our strength are now very greater again to detail. guidance. ambition and for talk potential me you in hand confident of Luka? through ahead to Thank our

much, Yes. very Thank XXXX side, you also and you. all a Christian healthy new year happy to my from and of

outstanding Let that of year. by the me I saying also am proud finish start to our very

delivered team raising beat in far year top multiple strong we the results our to line exceeding our XXXX. the exceptional after bottom own line an promises, initial both guidance and on our with expectations kept combined Our times and it

Let cloud by strong clearly a This by goal of points up the million contributed see particular, way the cloud amplify choosing the also them SAP, as from from what and number greater than our €X at that in more cloud. business, you in least year. SAP saw Orders last exceeded increasing. their with can clearly the end of around across to That QX, We the enterprises customers large we couple of resilient order important reflected But by move companies XX% is of me with transactions and the X,XXX become larger transform of are is Christian. in SAP. supply heard chains significantly RISE sustainable We more entry, to companies driven build our adoption help year. XX% just they all of RISE geographies. more was

it. momentum cover S/XHANA’s our Now, already more in contribution spectacular cloud our about to let and results talked me detail. Christian

intelligence all intelligence the growth. regional cloud throughout model, a healthy SaaS/PaaS our From low that me of during cloud further revenue And data across the was let balance in This spend some geographies the increased to perspective, revenue double-digit Cloud Concur had rate revenue and excellent strength XX%, outside accelerated cloud business Driven scale So, matched SaaS/PaaS spend in is EMEA within the this growth performance our QX. by entire to by a year. Asia surged and XX%. accelerating also add points. XX%. other We cloud its strong by in to XX% any cloud in hardly XX%, momentum portfolio, by Americas returned year. just growth a by vendor. at

the top quarterly For please parameters, to refer statement. the line remaining

Now, total bottom due investment billion a guidance. as slightly XX%. where our performance that our gross year, aided and in our XX This for our for bigger XXXX. Conversely, as down high-margin ahead into X% program had was both cloud, move to shift operating by dampening margin to delivery accelerated line, let our a full which was of on by the approximately This the improvement was full year, increased margin. well cloud and nice our cloud year-over-year. points still the the throughout Despite €X.X to business updated fact software the me profit the part next-generation Concur to to basis the expanded our our of services was by margin support

significantly XX.X%, into by to were XX%. product to to XXXX to innovation, by Our basis, points SAP’s increased our impacted IPO basis expenses operating IFRS by and XX% decreased XX our by compensation and margin points share of Qualtrics basis share-based driven profit margin mainly profit by On points price operating IFRS higher XXX approximately which our mainly operating during XX.X%. R&D investments to percentage year. operating appreciation margin strategic IFRS the and an compared X.X declined due the ratio the

the a Sapphire tax EPS, supported bottom X% cash line from XX% me now rate. non-IFRS to and reduced true IFRS Ventures contribution decent had in was turn EPS XXXX, flow. This the and performance We Let in a in growing by terms. strong and

As had €X.X flow cash outlook cash above and exceeding approximately the as was another cash strong billion, of in we €X outlook well. billion, flow billion. billion at of slightly flow above expected, of year the Operating €X €X.X free came

beyond. So, let me to XXXX now turn and

are seen As and very we of and you in our today’s preannouncement the mid-term release, short have confident in prospects.

as XXXX our stone Cloud continue mid-term stepping see ambition. backlog growth. QX our towards to growth Current another to revenue expect We accelerate We XXXX cloud in significantly and our important

Let me cloud leg of point. now we the are inflection transformation look an XXXX, next into the approaching Entering details. into moving and are our

should closely growth the We in expect our At double-digit to first, into ever operating beyond for become growth accelerate by revenue time, and same more XXXX followed total territory move further resilient. profit, we that.

by €XX Our share in XXXX. of or billion should to more revenue expand absolute predictable more than approximately XX% terms

business backlog. value and quickly Let we extraordinary our success years me deliver impressive why characteristics for so model in powerful current tremendous XXXX, the strong be new beyond of are what share transformation in just the the returns already total seen to our to cloud XXXX of In cloud deals, contract growth search of far of our can come. observed a the

products, time, extra in renewal our cloud operating benefit our profit increasing double-digits for absolutely operating XXXX it cloud on should complete defy sharp the our accelerate growth to growth our At slightly rates DRAMs, beyond in in short-term. see we cloud Next will backlog That in and us increase even the profit share growth means a as continue and up maximizing durations and first, program why contracts and for of growth to us to ever the help a cloud to by factors: additional while and of more expect this course a stepping volume two more our push we sense pronounced in of We revenue. of XXXX. sales initial was second delivery beyond our focus why cloud get is factors nutshell for in contract increasing jump our importantly, law fully next-generation anticipate the and the over both and driven same to expenses demand makes that their term. those an which business from as declining

to Now I’d sustainability like non-financials. to turn and

We into have business been at our sustainability the strategy. forefront of integrating

reflecting approach we you this As tenth X, leads holistic decisions to and March know, approach. truly operations we a publish and believe business integrated on to strategy better report will that our

emissions to our while of XXX XXXX, in metrics, kilotons a overall, remained engagement at net increased which a level decrease. to down non-financial score despite net modest decrease area our year-over-year. high In carbon XX was in XXXX, promoter at continue kilotons Looking COX, very employee the customer significantly,

being our own net is which goal our have XX zero of to XXXX, XXXX, addition we net by by originally our across to achieve also In goal our neutral chain operations in announced than entire carbon years earlier emissions anticipated. value

entry people. will cloud mid-term our enterprises. XXXX, So in without helping the order to our the that we strong. the summarize, was a of promises exceptionally on not great is continue But of with guidance This to our possible perfect the cloud anniversary. and spirit ambition. our was year now XXXX be enter innovative accelerated we along efficiency. And have continued become as sustainable reflected importantly, our you execution I for intelligent to your of am extremely This been discipline of progress happy XXth customers take healthy And Renewal very a focus confidence we our much. success rates were our dedication, would strategy confident will our questions. keep year making Thank most towards

Alright. line. please Operator, open the

Thank take go Briest at from will the you. first UBS. Instructions] Please [Operator We question ahead. now Michael

and Two in confidence I around the I afternoon your hear voice thank and me Luka, can you. there Yes, from progression margin your may. EBIT if progression. Good congratulations.

Is XX% appreciate will Can you year, Is really out and the in buybacks that charge spent the investments to And those stock migrate then that this and understanding made the to it it I disappear margin cash terms stock-based in running costs? you double likely is consulting infrastructure? billion specifically, cash just Thank what around they some being would to XXXX Why of the as will are XXXX? what And the last year? investors what get us think confusion of think margin? to I are option of stock morning transitory on cash XXXX programs. cloud the relative presumably some in €X.X just in over programs there say was you this flow, settlement settled?

very are Michael, a Thanks questions those lot, really good Yes. and one. for your important and

So, let with start me first. margins the cloud

we had infrastructure. major already are going in through overhaul our XXXX, late cloud stated of delivery we As a

We are harmonizing it.

first and mid-triple-digit all across a customers legacy still XXXX outset We cloud harmonized year, spend At the our related on the in was that it cloud XXXX infrastructure. the the of remaining results migrating prepare in across a and portion infrastructures the for of this that essentially hitting in who margins. And second our was solutions half to figure. various migration on of the XXXX solutions program to aspects the spend are of since are year, million euro half cost of R&D more the some

you percentage bubble to decrease double this restructuring know, And the took program. as operating while XXXX legacy also have by the seen of where are impacted idea, depletion, still also give landscapes that we was the the full Just a you we new point charge to an moderate accelerated mainly old. project-related delivery cost of points is infrastructures. existing basis of cloud for we build the but this to cost close we X by up And say actually in so XX cost,

remain expecting underlying efficiency suggest that stable at also regular will quite noticeable see continue which a margin. XXXX, a XXXX. we I in So, as gains, we this gross operational have scale-related cloud seen XXXX will minimum that actually will at would in also in we am

that we in think the in is that against more increase than have well, certainly, When also it’s to not effects. running program I it. two the will expense it but the scope to we have significant XXXX, slightly dissipates due XXXX,

the million. greater that elasticity of up range cloud and relief second, of have due expenses immediate gone, of the and the than should course, Cloud greater a as all project-related XXXX those €XXX incremental this together. all, infrastructure more we hundred Converged be certainly that And will a then our efficiency to be million, step to we efficiency see of said, will of operations of of the just First couple put in an I in

of step-up the further So this there will be margin in than will XXXX from XXXX point which result the in cloud a big towards target. on, progression obviously

reason be As The this cloud now move solutions, an little are of slight assumed that’s back in certainly Concur in see a was arriving had Concur. as to double-digit seen been the additional and pointed as further to its form we started slight we margins during only were of XXXX Concur recovering and an has hit our the recover, more not of additional going that that our cloud assumptions. obviously of what element, we we hard has we us margin. But a actually planning on will in a recently returned growth time predicted one the why normal, have in that expecting the That and continue a I progression to new pandemic our our are, highest into support cloud we’ve to portfolio. increase therefore, point and had will recovery. originally they than where point decline later will one

So the then to major program to depends on actually It’s kind on. of this that have there. timely I later we outlines effects straightforward not rocket relatively And the consider the the all completion that are and basically see of is points science. hope

to cash that program settlement purchase SAP a at effect settled. one and make so-called continue important is are the cash we share-based have of I compensation point. unit program, flow to our is equity who move in program. equity We programs, for most stock schemes place compensation Now sure assessed not stock for I also in because the which we side, settled on SAP an employees of are program notably so-called want share-based this it’s a the program, which be that participating subsidize to own is still compensation our discounted restricted SAP moving programs think share-based move over will additional the to the

in in share-based €X.X cash billion as compensation-related XXXX, you rightfully have out outflows. we had roughly pointed So

SAP impact see XXXX the year go will see this we Then because that to slightly of be related outflows the €XXX impact XXXX, which will other sum, in where MOVE in reductions compensation the settlement we from expect from to cash settlement but programs program of are million We share-based to on still that still the all cash to cash course than is do we those and move from anymore have first are in to still of we settlement. in equity transform, expect going regulatory more worldwide. the still in the In jurisdictions constraints there to move no also legally will first fact not be able SAP MOVE equity see up we will have going XXXX. for amount to

that I So hope perspective. into it puts

are we course, billion in target XXXX. for cash flow confident our €X free Of extremely

We a are in thought we would from starting seen as you where XXXX be. actually have as ahead, point we

time that and next start well. as that that So potentially will influencing we difficult other review year, it out, such and but as will are years and in are appreciate currency before. accordingly on you to free certainly, a increase cash taxes our X from But on prerelease our also this long factors scope definitely is there it very see we so to very, to closer, move also trajectory. like that continuous up also this go as cash And very we take confident significantly of a flow predict basis are and update movements,

the for you detail, Luka. Thank

you. Thank

please. question, Next

from Please will BNP Thank We Instructions] Paribas. you. at ahead. go the Slowinski now next take Stefan question [Operator

Luka, you and thanks taking question. Thank Christian, for my Yes.

the back of the around obviously will working years course, is just think stock on stock? then or that Just a XX% hear looking other underwater, of was maybe we question around your it couple year, that a holistic companies or environment, be Do cash stock lot hand, normal a so the favor. that significantly it expect be down companies tightness it And which, to increasing up the option have of to at previous sales with this where of the compensation, associated follow-up new about On ago. a the market, compensation, from guided time? I plans broader comp you basis, hiring the be that’s a question is in whether trend XX% on are over that, in of kind

like you what be environment can us the you. Thank anything about is how appreciated? and executing So hiring tell would you’re

of in whole Perhaps Yes. then take because can hiring to finance, the my kind I on not question. relate lot And we a are colleagues hiring. I will of operational environment, doing the first

So Scott talk the suited there. I to think is probably better environment about

But this, look, obviously significant front we it’s gradual share-based compensation think for on percentage on again, decline whereas seen you’re we because are we of with of terms increases. front, in from likely front, right, revenue Now that the see step-up of the on, planning we from upward perfectly line sizable will see quite course, the share, our of an movement compensation now And that you have a are and will see this don’t movements revenues. from what absolute significant share-based expense with we we actually peers. perspective, in

price expense in was that at overall the being with still awarded plan. all, So plan of until because measurement tied plans constantly this unlike you years the seeing the us actually compensation valuation compensation X – the point the in this why period of is that? share-based the Qualtrics, on adjust particular, management at the First we of share-based stay significant our from movements, compensation will share that’s to IPO. a moment, it exercise at cash-based share executive’s measure you where the of compensation equity-based the for the in plans grant the period value. at based – And the actually plans, IPO And are

price IPO at $XX that the basically fixed had. it’s So we

more was it year, it will one-third compensation goes time related This So expense share-based one-third. XXXX Qualtrics. from down year, This and XX%, down. actually than go right? total Last dissipate planned that of to perspective, to over for actually, is SAP’s

moving gradually on our it SAP organic but plans annual of equity decline, So our And then the to pace in of are will to not side, further one-time other a part would that will MOVE would the and to settlement say, you which in in and baseline, the at that step we in the of million assume. that the own expense vesting terms plans from be program roughly results not and incremental quarterly XXXX will so €XXX addition up. you also

revenues perspective, years. that So will of come our over therefore, the we expense ratio the coming stable course next the increase, why will next the will years, X from that’s down and be over believe that actually relatively whereas gently the obviously

perhaps So or on hiring want to Scott the environment, does Christian? comment, anyone

and three can Christian, I hiring comments sure. on please guess top. add the I Yes, comment, on side.

the our over able is with best rolled and where employee that suited of allowed that together all, is talent. in able work that are continued attract a the is those we Flex competitive Having lot to a leverage movement. have launched we last us no particular, to market said success market technology with seen you, strong. engagement pandemic the that will other to – that Businesses we’ve to the SAP, got programs be and be be environment that, the ability our there of sector is means and – skills to year doubt it that’s has with best out programs First with able in to retain

we’ve even I say industry. pool. been And a and it’s but market, the talent talent is within actually volatile successful a to not retain would aggressive our an that So then third great expand only very

be talent that early early we but able continues achieve. America diversity mix and world the allows into expand. just to that young what talent, to sector we organization Christian? That’s in to to then bring see North into coming is this the talent around to so aspire not And bring the us

just per the hire to able SAP. we course, academies close we of are large people And Scott. of I the it actually course, scientists, cost were the go have I there areas lot, These offset of cyber like demand high are out hiring data side. up. a Thanks market. maybe mean, really mean well all, on in that. first inside where, But Yes. in of to and

have a academy. sales We

a of is to – which On university are need course, of of our strong that from and academy where engineering an talent company, make the investing success. supplemented training we the we the engagements we this especially also from future have, big inside have we caliber are skills, people. young for now in We the of talents, sure market, our are but high expanding that we these also we top, reskilling educating outside with and also

you. Thank

Great. for you information. Thank Alright. all the

We will take next the question.

will take Stanley. Morgan at Wood Please question next ahead. Adam from We go the

you you makes were as for quarter. backlog profitability the feeling bit that out but on guess a that these It’s then are a on metrics that about really scale could enterprises, wonder becoming us large Hi. current We’ve The up have strong around better very large way doing obviously, is frames, are you in comp example longer this and detail the ever questions cloud these seeing seen term X, following on I plan. beyond plans talked any we’ve XX-month you’re us stock it. that hyperscalers a a is there Luka, cloud specific very IPOs. guess would I And year I large on and adding. competitive. in order Chris this business the thank maybe bigger looking got give and project. at previous little Congratulations numbers give you strong software if business. that a these sense not that cloud on more products of years. could the the as helpful of two picture please. time go you projects are about all, fourth all be into there over intake in maybe talent, much that well, If talking of question. for visibility as first beyond to wonder, very Luka, I’ve more taking and how that, the what I is companies X a X, about

to actual customers? be to expenses share you maintain Thank In continue won’t with you. stock-based or to a with level whether for in that you a at feel coming I’d compensation to of you just P&L, about that’s you on terms the through engagement of when interested be voice see And that? in higher that what customers, confidence gives spending your out need the XXXX look how

Yes.

total which horizon to companies at of landscapes on larger X transformed. dozens really of that are have between ones, entry our about QX. the we shorter all, then favor And year. have annualized of entry to transformation you or because low about needs to years was very the complexity some of have, that and entry differential we what in full we free Scott the depends a discrepancy on the feel order kind It teens Look, versus to even that start talking this in in of in then we talking Let that cases, give visibility, backlog contracts, up But we’re me idea digits the of build first Nimble total when an magnitude on seen to transformed. least terms perhaps to that. about percentage large growth double much the be in talking had to be are very also Christian generalize obviously difficult rise order systems order in landscape and for we for have it’s and general,

So on increased that duration in this cloud contracts of fact the to can QX X.X also has sizable. quite the of And point average to years. our is this, now top in the you

more which, with So time, have of at a share multiyear we way have stronger same contracts, contracts the ramps.

a that they be in growth diminishes Scott and visibility impact and then of but that’s also are new for You And and and can outer why contracts backlog kind have full volume to now net we not relax. Cloud time, the years potential the backlog, don’t we giving business see, with that back team therefore, over that’s his us. obviously full – said carrying and same Current us share the revenue the backlog need continue that lay of those growth increased but is of to massive

we course, high have ambitions. Of

we new absolutely have still confident I of course, XXXX. to require continues even the that And we additional growth cloud revenue As our can said, can beyond that, accelerate absolutely drive. are confidence business, we which we

expenses other innovation in ratio house. And percentage as when trend think down years, first, the the on again, R&D Now have into will on compensation now we our made and the side over significant step-up capacity ratio compensation expenses, in XXXX, we particular, we especially step And I in share-based last in with in the the have and sales on which time, where you already a investments or to that remain that with marketing get other stable. – seen of past is XX%. X revenues to of a to relatively also XXXX, obviously up start going XXXX the had gently should the

this. for to order massive have We strong we pipeline are we this expecting, and entry are a that in growth into drive extremely generating we that are order investing

QX solutions of We even have across seen reason sales that And we but those our as have double-digit generation. step ahead new sales but for the of also a renewal rates. year orders, of in the of order and have in why then actually a for to also up healthy the pipeline in That’s sales quickly drive and planning invest adoption we deployment resources to are marketing invested sales, this significant make terms we full only also in required as have in for very into outcome capacity, another drive, an sure portfolio course, we not properly course, in to ratio. of growth Scott’s team QX post

on any need competitive up come don’t drive unplanned fully year strength growth of based based made portfolio, this start next determined investment feedback our return obviously rates of with to that are on investment will for level, increase now on as to been the confident forward. have the we investments expenses. see now, expect, And we on based customer the the positive double-digit we accelerating at those in customer a and to incremental So satisfaction very

the rates, as are so lot well. to this extremely to years. X means without up that high. proceeded extremely capacity that integration been Christian do. tidying has the can for a win still within said, to that drive hard having also of innovation we say, of And work past shift And The has Our existing has of homework, work the new

the That’s very helpful. detail. appreciate I

you one had Maybe Adam on let’s depends questions I the especially maybe – from see also portfolio. cross-sell And of the this and customer, to our build in RISE mean opportunities around then on now. really customer we just also in

omni-channel the to reskilling high gas, in What we the In You the workforce? combination it’s manage oftentimes we oil have a – the about a a with move to conversation sales. workforce energy? can retail, how to manage change changing always needs for transformation example, clean of in how around it’s discussion quote total the about management. is can and What around forward cash a in tech, oftentimes

also shocks. then, all also demand management, loyalty with some industry-specific CX see regard of we the supply retail high of have co-innovate customers. retail also where We with cloud hundreds the in strong chain we industries, in capabilities in and And management, returns of to course, develop and other

there search so away go was that. we in are in chain evident is are XXXX. will soon. as And also So building not expecting on the network also shocks Also, the actually we that – business the supply

what a actually this S/XHANA not see depends. it’s I are we Cloud. you only then with to doing, shift RISE really So And mean

CX Factors, field is is see involved, is And these second of all modular there It’s cloud involved. so a then step, more also is our is we to in you journey scenarios, because move want involved, important very even platform important cloud there is RISE in Success customers. there with a to our And ERP. the

want with So can of can And side also are build customers the we how what they the our those? to us of platform, the modification? why do the to the adoption standardize our How partners all ecosystem marketplace. and is we So modifications penetration our which increase had joining in side meantime. on-prem We meet the why by that’s the on and in the platform.

is a cloud because also stand-alone a had BTP tightly integrated forget of it’s – RISE but it’s not This let’s not this anymore. because So And shift very strong this ERP. it’s is platform. modular very, the a our to exactly platform into part quarter, is

you Thank next question. we will and the take

Goodman go will take Please question We the next of James ahead. Barclays. from

Thank much. good Hi, very afternoon. you

was was me the significantly so this which anticipated business, versus to I the where core your for I switching the X% area decline. you support year, the think clearly expectations on line, over up outperformed think So particularly which most maybe

But there to So less to despite substitution cloud really, impact license I a have maintenance seems strength. was perhaps the anticipated. you less appreciate that of there been than from cloud

and of as around you here of on in wondered comments from then just on seem whether will outlook briefly accelerating overall saying I go the year. backlog. growth ‘XX, effects as And the levels, if cannibalization maybe to pace stay still expect comment could bit current these really a that you you despite back to cloud in ‘XX perhaps well of and And actually transition effect can the this sort around as little seasonality of growth double-digit cloud Luka comment resilient required we we maintain any higher from that the the trajectory larger ‘XX. around you really support is some reconcile the be to these through the support. So But resilience at go through backlog come the out the

this wondered given continue backlog that a why we up very much. bit particularly non-current to you Thank still higher current the tick strength. year, little and just through backlog wouldn’t So see

Yes. are No, important questions. those

me a step take them. at first try to Let

to no all, remain close real is first when SAP. So extremely it to support absolutely from comes churn revenues, of There you’re correct. away They resilient.

previous clearly. triple-digit very had case. extension remains But and So as extension we cloud as part up euro multipliers our the of driving one support now. program. The that of cloud calls revenues for It’s cloud part a that are on healthy extensions migrations the we going the already, figure XXXX million healthy been as discussed by a has is impact we seeing churn of on are

this that that covering remain we will extremely flagged not healthy. level, factor the trend, had but So Xx are very, it very believe it remain we significantly at above certainly same while and will this we high

about to going of we we impact this, give still RISE expectation because as that the XX% RISE support and support think €XX left then contracts revenues that of an than about you through remain billion. €X.X then. those contracted have healthy. only cloud billion that revenues around the more idea, over That Currently, midterm the going cloud our billion large with decline XXXX, to in and time as other extremely when might are expect want To there ambition forward, highly when revenues big, I have ramp have well we their the concomitantly XXXX, change by around support would of as take in €XX.X tell you Now to have marginal I in said more will you then revenues be would migrations predictable transformations have of think are we we will for declining. want about are we revenues, a

will be increasing of support would a sliding contracted that say, new software say, be the because there there so so the migration So less up, revenues fill path, also frankly will impact. to clients and revenues to quite

XXXX, let expectations in talk of in In seasonality any different me about terms ways. three this

about QX situation And then trajectory with that different compare. mean, order performance for right. our the QX a First backlog. in XXXX, you and entry was we creates quarter. but and have like strongest obviously expect cloud current a QX I asked similar for full the XXXX in you’re the probably tougher in Undoubtedly, year, of each all, a

should than actually lower QX whereas you’ve in CCB slightly the rate So I would QX, QX. in what might rates in see that you assume in growth QX, higher and QX seen and growth in be

half QX the way a entry takes would we software first cloud as QX then bit, revenues. that’s compare and pandemic be travel hope support revenue well we stronger that’s a highest how seasonality in helpful. performance, was and because had second think the surge in quarters terms seen conditions in finds a And half in into also software I revenue ease then create like we On areas have of profit but But spending support makes will year, expect half QX, leaving the in the of will, in growth to take you That so environment the second and then in kind and we significant when that a would a in the the recall, also in the while spend have – lot way as revenues definitely cloud we easier the about coming revenues. the at course, the year, because search of now a growth. certainly, the are you as territory. similar then will in very quite the level. of I to assume until marketing strong in increasing tough look behind at the in we cloud development, seen that it rates positive The its for the in order were actually QX up compare what that that a growth in front,

much. very Thank you

that, mean, just we and on consider launched that did Luka, I build job tremendous have XX team RISE months ago. on Scott to to also Just And we CLO.

which growth our that We are see time, large by these now some order biggest now is course, the the now large took you and driver majority throughout year you to is driven XXXX. shortage. no the such entry And have there that of but cooking seen deals deals of

customers, important installed an as of maybe factors We the XX,XXX one base renewals. well, plus have

plans. XXXX a the growth we on. also, bonus It’s our had mean drivers So, will reorganization, and internal key why of customer. then they we also in our are And now getting the RISE, to bigger. renewal back the closer is to in I one profit with turn base there, change much bigger double-digit

data the heavily RISE. We are using telemetry with now

much, having have we we then so will or saw this closer, positive modifications – and on well come. have them as this the We adoption. we the in with in the to a now current price We get year renewals. work also very the them much architects at and has And with continue We years customer. and already are impact

And the please. Thank that Alright. take will with we you. next question

We at question will go from Evercore. Please ahead. Materne Kirk next the take

geographies cloud has that sort catch about was next reaccelerating? or of an talk adoption this there commentary again, all Americas opportunity I down U.S. by up not the around was very if if case, this or that’s bit if includes I bit just Christian, the spend Thanks Americas, the assume fairly little if the been little of is wondering your the balanced up I across weighed assume much. to of sort say, a a it across bit year the And you RISE Luka, adoption geographies. be. kind little I a might just year. make could for, the to curious and success of sort intelligence of for then was

So, much. just Thanks one a for quick you well. as very

to their Siemens on and Yes, on have logos, seen say, frankly build technical equally I not now can Scott, the now all the in digital feel stand of few of it. other at the large U.S. business say to XXXX, I start mean does all transformation is the when and Germany, the and making the move question, are look many the ones you first, in we transformation yes, order the And QX. course, question in U.S., RISE others. I entry also in where and of with please the answer a but mean cloud especially the from or the there throughout CVS also They to we would as – I Germany model. are have first I free customers okay, are only move, the there

this see and for the current also the pipeline we year. growth we So, in saw equal

was from and however we So side? region, anything see spanning strong an actually, Scott, the add really actually, RISE pipeline world, across your and to equally

I Christian, regions. thing clearly, is mix The customers you think only that the and that, of across our would to I add said well, it differ

being that to a a cross-sell, important having the small the in is one obviously, large think Germany to catalyst organizations to bookings the and intelligent midsized Asia entry give order you of Christian enterprise some there. then story, in of North outside Whereas, year up is our So, of just half customers areas. to ability progressed, process transformation I acceleration context XX% significant other in than the one and RISE did S/X, RISE had America America the the like had initial with end-to-end Over of markets other we in and to and able those the core was do then more saw Latin to together being But the the the uptick so, through outside add customers the comment we want of significant impact markets regions. that major solutions that be has. and as core QX. we saw referred on I which solution of

to RISE expand the as So, get roll they that it the they of the look get as customers SAP. use, and opportunity with benefits they out, expanded then

And that to that of our provide so we to customers. going when forward only that that in suite customers mission-critical going opportunity transformational our proposition be gives across And transformation. that confidence RISE provide But its see the we workloads look in not base forward. then does use solutions then pipeline for the SAP expand able end-to-end on

all, larger entirety had in in year the general, in backlog quarters yes, that a the we the the the of of coming uptick, in and of cloud course, on of one the you the of reacceleration Concur U.S., back to should – three because seen absolutely Just of healthy the a particular, very will, first the reacceleration help have Americas, growth. Americas. the in quickly continued And that we actually, search current in particular, see ones, first and

Thank you.

question take next We you. the can Kirk thank please.

you. Thank

from We will Mohammed question Sachs. go Goldman at take Please Moawalla next the ahead.

afternoon more have two Great. very you Good much. questions. gentlemen. Thank I

kind savings some the base remind operating into the more just in acquired some in start of of that around there as hybrid installed kind of And will and sales further cloud Obviously, around of the to into of of kind on you remaining of and sort kind to we of of kind from a growth? the of the And marketing drive base able as acceleration, confidence support on were we of we your opportunity the coming structural is be of kind pandemic, you. how kind the to move potentially Thank could and sort the reopen and profit secondly, kind are things to where then cross-sell as look sort products. Luka, as of of growth just terms your multiple make particularly back you spend you acceleration. think of up-sell? much S/XHANA, migration world. efficiencies move on Firstly, I a of cross-sell you us Will more there products go-to-market runway, to

Yes.

fleet base the take in Scott the benefiting demand. and mean, other I in the mean to part that move can on on you So second half in But particular not from much this. pandemic comment and this invite so and in second the the SX, behind I travel, right. perhaps I I part us will to installed is But were we are Christian first savings quite facilities, already of year. in obvious frankly, car areas were clearly,

actually We to normalized spending much already have returned behavior. more

basis right one are on that get this, additional working and baseline that course, know a we then that So, we confident have on for are And us I leverage continuous the now where is, to the lot efficiencies. of in say, one to first would the us have Again, we come significant which profit from cloud improvement we be. the gross search are most the levers all, profits. of significant will where of is a to to

also effect and the any weight of then further should have step-up together the the will X we time, fact sales us expenses decline more of investment business R&D anticipation incremental had. targets existing against. base, first it significant expect carry you, the the need that we on-premise fact have – the further. the in momentum have seen over And to shift we will not definitely the with that installed a next such of then years Secondly, top as as to marketing work that of Perhaps smaller that weight we in and cloud line because increases mix part. and in to the the And also last Christian, that the over for for the

existing and for cloud, what Mohammed, XX,XXX the into course, now look conversion situation ERP is differentiating CRP when running the I our looks of one this up that the then and much the customers. win, customer we space of office countries. to still It’s after obviously, on-premise about converting we better, is, many, first mean, you all, are of starting the And with CFO. another a are ERP many in the

We have localized versions everywhere.

new finance technology, infusing are certain processes. We AI to automate

We are doing real-time treasury management and much more.

So, this is really great.

the now customers obviously, that there the equation the we there, HR users heavily heard have also now BTP. most the are which and also also they we offering we Employee and And can of cloud, customers in is Aldi Central side, the on also still are about Now are XXX,XXX localized. over won with easily also just XX,XXX with

seamless have modules the connection of also but the ERP. to finance, other the We to

much are are weights, higher made actually seeing, of decisions now cross-sell we seeing years only may win few also X We of different be customers backs course, years a but also ago. who not or X

healthy catch-up on side, a are we business, but seeing and now a procurement on the SuccessFactors we took it extremely then the And So, conversion there. while, rates. huge are

can we team QX, So, in many customers proud now announced direct on about of and also we want as these procurement. that. offer procurement And indirect just plan, engineering the ERP very

And direct the you our will one if on in future So, you or there, platform. which with ERP the with one on-premise then one also and indirect impact tough because base we XXXX, further we of installed procurement more the no of Concur. with that, have procurement, matter expand are have now easily. convert was much the pandemic, in also in localization can Travel a investing but

are We in innovations. more putting also

doing the UX side. We on a are lot

Scott, see there, rates recoveries forward. to also conversion So, we stronger and the will once back, there, even also is add? travel anything going see we

and described it bit of Yes, a maybe just context. give everything that to quantify you

incredibly RISE, loyal the and no you to as customer if throughout invest continued in was an SAP. long-term Christian, We you base, year and But described have have different. say, as and they look we at QX

we entry XX% was there joining. organizations customers, existing and number large was order also While some had customers net of the new of a the bookings nearly new, of

adding expand as SAP, accelerate journeys customers the customer not dependent forward in invest continue are So, to although and SAP, transform but to their the good well. going existing to and we gives and that is they are pipeline on in new them we our and also with news the confidence helping cloud base,

Alright. Thank you.

please. question Next

you. Thank

question go next We Please at ahead. will Johannes take the from Deutsche Bank. Schaller

question are And acceleration you outlook that cloud of QX. think, thinking conversion on your multiply, already taking that share downside for XXXX, And I SaaS we and seeing. brought you Thanks average about you the If cloud just us quite volumes above for of Luka, you XXXX just Yes. I again the be And stand quick Concur. without where actually for boilers that help would moment. components up-selling another at around are grow and terms some question, If develop? And factor out strong my here Christian, mean the I on congratulations in we should Could Luka, travel at take good to as SuccessFactors licensing on travel where SuccessFactors understand of for understand you to obviously mean, point up-selling, be volumes on then maybe the how wins. just better a could we for you the look made us assumptions ERP made little you XXXX? then you. cloud think about Could cloud bit a actually competitive the on that the of business from on upward in think maybe now? in depending a up. would the there. better extension that right we kind how there it Thank to component second the were is

not separated. all, on we seeing because I cloud the it you So, first this tell are as cannot extensions, really of to

also do also we do we not And an it holistic we case when segregating it would one. these have opportunities it to portfolio, more of to actually and do a see Scott extension spans the separating are that accordingly. not As respect, make across and and in we transformations that so. lots Christian, explained And then sense

due mean actually opportunity a us and every said, So, we conversion that the have we I for this to that’s fact up-sell will those Xx – like-for-like definitely good. great as and factor, also expect has the above that to I that’s of remain and far are one conversions case

business the it still In pre-pandemic to where are to terms expecting back was fully volume not assumptions we of Concur’s Concur, XXXX. be for in

might expect and also hopeful are XXXX. there will a continued that We cautiously in recovery. We be optimistic be the that obviously this case

level. So, the now, seeing right that dramatic digits Concur at sense a that group low-double moderately the expecting growth be not are expecting that they will the we there are continue climb would above the rates the where from but that up we in to from for increase are were we rates growth far

competitive The greatly many experience resulted of in is for comparable to such still dilutive used not nothing in forward-looking momentum. slightly we anymore because terms below, of strengthened in order it innovations SuccessFactors to has might be I wins example, XXXX. the clear our think as, actually category, the growth be solution have and are our growth differentiator can that certainly look planning but are management for We which – is competitive entry, believe benefits a invention offer. the on there that we we us human as as from our for And that competition

that what that of seen. – For translates be growth then remains rates to ultimately kind

in But largest forget high clearly, a our need categories, something diminishing into not base of see that law is remains some will SuccessFactors cloud numbers very Let’s that on bake to it. we you has SuccessFactors. order in to something been up. is up. XXXX. and The certainly that continue Revenues is sequentially sequentially – Cloud momentum expect sequentially we entry that are accelerating up backlog

clear. Thank you, Luka. very That’s

Okay.

We have please. one time Thank for final you. question, quick

Thank you.

America. ahead. question from We Please Bank of go Frederic will Boulan now take the at last

that. S/XHANA update Hi. And afternoon. migration. the Thank the to can we first the of Christian customers question core the where a migration share number on if Good of so, momentum, on Thanks cloud. we cloud an on where you. Maybe around expect you ERP are your for

the then businesses been now can and pipeline can that you for free second years? flow if of in are coming have cash expect what the share we discussion. migrated numbers around question, the on percentage couple of And So, any or back in

as that If €XXX million I long-term million to we gave see than where more €XXX you more free that a way, than are XXXX. in help we increased lower similar you number, guidance number? I compare or assuming you. to in you October the were expect we free cash else flow prevent Everything XXXX from be outlook, items that’s how a mean Thank some moved your your other slightly – flow should being moving can which that us there you by guidance gave when equal, other mean cash cash have understand, still number that does today?

Yes.

moving of What in I an the X,XXX space with wide that because of the mean majority the meantime And to matter afford still you are increase remaining was me have innovation behind start cloud. further cloud first, which of customer actually, a falling XX,XXX XXXX we the is curve. can first, movement you let mean customers, will actually are accelerate potential, of have your customers the on-premise question. customers. industry no factors. S/XHANA the obviously the cloud So, over I two first No way the in we of S/XHANA

models. in you the all run business So, these to capabilities find S/X, new

the go. really forget so if do not you on all pay IT that Now the is evolution, with we have with is we this go lot the happening a billing. We you – local want cyber second, want – of switch around as team models, can then we want to commerce, license the let’s happening and real-time And the site is everything that customers data what protected. cannot sure also making

scale economies actually of meantime, in of the with, accelerates are course, that we And then growth. So, our really the getting. also,

can on we in are also offer RISE. we also very meantime can We competitive obviously, the still rates. conversion how recent But

soon this that further all into agility. also move They that of why need really sources XX,XXX the lot the now that coming cloud. the they accelerate on in plus, they to get S/XHANA I-based this customers these And is even of – So, then cloud year flow mean on-prem, the to remaining are modifications. come. will need to is are to because doesn’t someone delivering, not we our now this years there on also want and later of calls a in They for we rid this and are innovation what this if

our looking favorite billion. it in free of me in with obviously, the topic impact XXXX. €X.X with higher than October share-based of XXXX, cash XXXX, the we were Then day the which Look, cash plans Okay. it close Actually, out compensation in at flow the above let was was flow.

go reason their cash is knew million XXXX. would already compensation is in Qualtrics that settlement, basically impact therefore, XXXX switch plans €XXX and the IPO would less why However, its we our which also then share-based than back to through that equity of

– So, that for, you if out. we easiest its from many X account million is billion still €XXX metric you there expect than XXXX. plan to so anyway would to in more would are a But two, on we then follow had into your logic, to impact that additional not the again, and have have €X.X bridge the for factors years of in that expected an essentially XXXX, take

the as U.S. is, outside such unpredictability of this the the period just that to the that a we or out. the impact at very – $X.XX simply is against cash difficult is back time which significant had important dollar factor or a If on euro long tax actual example, payouts, increase forecast currency course, lead of taxes of least such will cash when, to completely deferred very for again, this of also is Just have flow has significant a a decrease movements. of

of free elements this can as at move to same year into as of our cash successful reiterated beginning I guidance. deliver well. XXXX. mid-term That’s of our that And well. of forward all hard Indeed, planned why look a we cell, year. take believe, only ambition, course, SAP then that’s our our another revisit at closer, also, is next already as for then as as said But will trajectory work our increasing through including flow equity when move us as with true it further of course, And again, if So, into we the The ambition. we we are confidence we have move increases, we pre-release. the additional actually XXXX we on why we with bear confidently it’s the mid-term profit move we confident absolutely very

seen at was in we that free flow, up You guided what more cash reason. for have and in No, €X or restructuring in taxes were better slightly above or such as the Not employee-based beginning extraordinary impacts, than on far we €X.X terms the billion off at ended of compensation. cash coming fact expected were outflows XXXX billion of we profits. we the was that it than income that the

in flat And profits again, the a case have, flow XXXX. a that come range in ambition. high slightly bit you result have from therefore, a what to If be have let’s also at generation XXXX. our declining increasing to as evidently And we it’s see also cash similar will to definitely see for be of above. seen will in that significantly cash we end, flow We will little year, up the free you perhaps will next free mid-term

again for Luka, today. joining. our Alright. and call this you, Thanks Thank concludes for

everyone. Thanks, Bye-bye.

Thank you. Bye-bye.