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.