Preview on 2024 Reporting Updates

Dominik Asam, Chief Financial Officer

December 18, 2023

Preview on 2024 Reporting Updates | December 18, 2023

Safe Harbor Statement

During this presentation we will make forward-looking statements which are predictions, projections, or other statements about future events. These statements are based on current expectations, forecasts, and assumptions that are subject to risks and uncertainties that could cause actual results and outcomes to materially differ. Additional information regarding these risks and uncertainties may be found in our filings with the Securities and Exchange Commission, including but not limited to the risk factors section of SAP's 2022 Annual Report on Form 20-F.

Preview on 2024 Reporting Updates | December 18, 2023

Agenda

1

Share-based compensation

2

Gains/losses from equity investments

3

Gains/losses from divestitures

4

SAP triggered financing

5

Disclosure Update - Introducing Cloud ERP Suite

Preview on 2024 Reporting Updates | December 18, 2023

Share-based Compensation

Gains/Losses from Equity Investments

Gains/Losses from Divestitures

SAP triggered Financing

Disclosure Update Cloud ERP Suite

Non-IFRS results to includeshare-based compensation (SBC) expenses

  • Update of non-IFRS definition
  • SBC treated as economic expense in steering, management incentivization and reporting
  • Partial shift to equity-settlement reduces volatility of SBC expenses
  • Inconsistent treatment across industry
  • To be reflected in future outlooks and ambition updates

Old definition

New definition

Share-based compensation expense

8.287

8.230

8.032

29.6%

26.0%

7.203

5.436 5.418

19.5% 17.6%

2.794 2.614

1.084

2017

2018

2019

2020

2021

2022

Update to be applied starting January 01, 2024.

Non-IFRS operating profit in €m and Non-IFRS operating margin. Continuing and discontinued operations.

Preview on 2024 Reporting Updates | December 18, 2023

Share-based Compensation

Gains/Losses from Equity Investments

Gains/Losses from Divestitures

SAP triggered Financing

Disclosure Update Cloud ERP Suite

Non-IFRS results to excludegains/losses from equity investments

  • Update of non-IFRS definition
  • Significant equity investments, primarily via SAPPHIRE Ventures
  • Mostly unrealized gains/losses
  • Impacted by valuation fluctuations of broader equity market
  • Recognized in finance income
  • Material impacts on profit before tax, effective tax rate and EPS
  • Update allows to see 'underlying' bottom-line trends

Update to be applied starting January 01, 2024.

Old definition

New definition

Gain/Loss from equity investments

6.847

4.509 4.284

2.338

3.090

-1.194

2017

2018

2019

2020

2021

2022

Non-IFRS profit before tax in €m. Continuing and discontinued operations.

Preview on 2024 Reporting Updates | December 18, 2023

Share-based Compensation

Gains/Losses from Equity Investments

Gains/Losses from Divestitures

SAP triggered Financing

Disclosure Update Cloud ERP Suite

Moving gains/losses from smaller divestitures 'below the line'

  • Currently: Gains/losses from less material divestitures1
  • Going forward: Recognized as non- operating income/expense, net
  • Smaller divestitures no longer distort 'underlying' operating profit growth rates
  • Major divestitures continue to be reported as discontinued operations

Impact of gain/losses from divestitures on operating

profit in respective quarter of divestiture

Operating Profit

Gain | Loss

2.768

2.581

2.102

SAP Digital Interconnect

SAP Fioneer

SAP Litmos

Q4 2020

Q3 2021

Q4 2022

1 Divestitures not qualifying as a 'discontinued operation' under IFRS 5 Update to be applied starting January 01, 2024.

Based on non-IFRS operating profit in €m. Continuing and discontinued operations.

Preview on 2024 Reporting Updates | December 18, 2023

Share-based Compensation

Gains/Losses from Equity Investments

Gains/Losses from Divestitures

SAP triggered Financing

Disclosure Update Cloud ERP Suite

SAP triggered financing to be discontinued in 2024

  • Introduced in 2022
  • Sale of accounts receivable at year- end
  • Affects annual cash flow by pulling Q1 cash flow into Q4
  • Continuing in 2023 but to be finally discontinued in 2024
  • 2025+ cash flow unaffected
  • Long established customer triggered financing to continue

SAP Financing

Programs

Customer triggered

SAP triggered

financing

financing

Preview on 2024 Reporting Updates | December 18, 2023

Share-based Compensation

Gains/Losses from Equity Investments

Gains/Losses from Divestitures

SAP triggered Financing

Disclosure Update Cloud ERP Suite

Resounding Success of "RISE with SAP" and SAP BTP Drives S/4HANA Cloud and PaaS revenue growth

SAP S/4HANA Cloud

4.000

+77%

3.000

growth

2.000

1.000 >10,000

0

customers

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

2020

2021

2022

2023

PaaS

2.500

2.000

1.500

1.000

500

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

2020

2021

2022

2023

Annualized cloud revenue run rate in €m, defined as quarterly cloud revenue multiplied by 4. PaaS is Platform-as-a-Service and includes SAP Business Technology Platform and Signavio. Growth rates are for Q3, year-over-year, at constant currency.

+46%

growth

>80%

attach rate to RISE with SAP

Preview on 2024 Reporting Updates | December 18, 2023

Share-based Compensation

Gains/Losses from Equity Investments

Gains/Losses from Divestitures

SAP triggered Financing

Disclosure Update Cloud ERP Suite

Building on our 'RISE with SAP' success, we move towards expansion

with Cloud ERP Suite (incl. BTP)

Cloud ERP

Business Technology Platform

Business Technology Platform

the full LoB portfolio

Spend

Supply chain

management and

management

business network

Human

Customer

capital

Cloud ERP

relationship

management

management

Cloud ERP

BusinessTechnologyPlatform

BTP has become a key element of every solution - one suite on one platform

Expansion of commercial models increases focus on packaged suite sales and flexible consumption (e.g., RISE Premium Plus)

'RISE with SAP' drives multi-cloud adoption across the entire suite (HCM to SFSF, BW to Datasphere,…)

Preview on 2024 Reporting Updates | December 18, 2023

Share-based Compensation

Gains/Losses from Equity Investments

Gains/Losses from Divestitures

SAP triggered Financing

Disclosure Update Cloud ERP Suite

Cloud ERP Suite disclosure reflects evolution of strategy

  • Switch from SAP S/4HANA Cloud to Cloud ERP Suite starting Q1 2024
  • Cloud ERP Suite includes solutions closely integrated with Core ERP and included in key commercial packages
  • SaaS and PaaS merge, as boundaries between applications and platform continue to blur
  • IaaS continues to be reported separately
  • Current cloud backlog and cloud gross margin become group-level KPIs

Until Q4 2023

SAP S/4HANA Cloud

SaaS SAP

S/4HANA

Cloud

PaaS

IaaS

Starting Q1 2024

Cloud ERP Suite

SaaS & Cloud ERP PaaS Suite

IaaS

Illustrative

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Disclaimer

SAP SE published this content on 18 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 December 2023 17:40:03 UTC.