Sap Se · XETR:SAP
Sap — Investor Day (June 2024)
37 slides from Sap's investor day presentation, Jun 11, 2024
Slide 1: Opening Remarks
Opening Remarks y Anthony Coletta Chief Investor Relations Officer
Slide 2: Vision & Strategy
Vision & Strategy J Christian Klein Chief Executive Officer
Slide 3: We are at a watershed moment for Enterprise Applications
8D2A00 840606 9B015D 7800A4 2C13AD 1E592F 035663 0040B0 223548 We are at a watershed moment for Enterprise Applications Public Cloud BTP AI Foundation on BTP Embedded AI Customized AI Cloud AI infused Execute transactions Run smart processes Deliver AI-driven outcomes
Slide 4: 8D2A00 840606 9B015D 7800A4 2C13AD 1E592F 035663 0040B0 223548 75% Increase in on-time planning
8D2A00 840606 9B015D 7800A4 2C13AD 1E592F 035663 0040B0 223548 75% Increase in on-time planning 34% Decrease in carbon emission per product Public ~90% Faster ERP upgrades
Slide 5: Our success formula for sustained, rapid growth at scale
Public Our success formula for sustained, rapid growth at scale Accelerating revenue growth through 2027 Land with RISE/GROW & expand to our LoB portfolio Scalability #1 Enterprise application and Business AI company Focus Accelerating the pace of innovation across our portfolio Innovation Public
Slide 6: Focus x Scalability x Innovation = Accelerating Revenue Growth
Public FOCUS x SCALABILITY x INNOVATION = ACCELERATING REVENUE GROWTH Our goal Public
Slide 7: Our goal: #1 Enterprise application company by focusing on Cloud ERP Suite
Public Our goal: #1 Enterprise application company by focusing on Cloud ERP Suite Enterprise Application company according to IDC1 Growth of Cloud ERP Suite every quarter since Q1/2022 Total Addressable Market of Cloud ERP Suite alone by 2027 1. IDC Semiannual Software Tracker 2023 H2 Final Historic
Slide 8: Our goal: #1 Business AI company
Public Our goal: #1 Business AI company Huge potential by embedding Business AI across our portfolio SAP Cloud users worldwide across the portfolio to benefit from Embedded & Customized AI partners onboarded as part of SAP’s AI ecosystem building custom AI on SAP’s Generative AI Hub ABAP developers
Slide 9: Our Business AI differentiates us
Public Customer contracts allow SAP to use data for AI training Business data & customer base Out-of-the-box scenarios High-value AI use cases by end of the year Choice of the best LLM models1 AI standards, identity, security 1. For custom-built in GenAI Hub of SAP AI guiding principles Our Business
Slide 10: Our profitable growth formula to deliver scale
Public with RISE with SAP and GROW with SAP to our LoB portfolio Our profitable growth formula to deliver scale FOCUS x SCALABILITY x INNOVATION = ACCELERATING REVENUE GROWTH
Slide 11: Land with RISE with SAP
Public extensibility potential per € of software spend remaining support revenue conversion potential at 2-3x BTP attach rate to RISE with SAP in 2023 Land with RISE with SAP Significant untapped potential to be addressed through strengthened adoption focus Run and innovate Discover and explore Move
Slide 12: Further extending Business Transformation offering
Public linking business processes, systems, data, and people through increased employee proficiency in systems directly contributing to business agility & transformation success PROCESS DATA PEOPLE APPLICATIONS Further extending Business Transformation offering Incorporating user-centric adoption, e
Slide 13: Land with GROW with SAP
Public of customers by volume opt for premium packages net-new customer share since introduction country versions available for S/4HANA Cloud, public edition Land with GROW with SAP For mid-market and net-new customers FOCUS x SCALABILITY x INNOVATION = ACCELERATING REVENUE GROWTH Cloud ERP delivere
Slide 14: We have significant cross-sell potential
Public We have significant cross-sell potential 1 2 >4 of Cloud customers with significant cross-sell potential of Cloud revenue of Cloud customers % of customers % of annual Cloud revenue Cloud customers with x number of SAP Cloud solutions in 2023 ~15% in 2022 SAP Solutions in 2023 (average) SAP S
Slide 15: We accelerate pace of innovation in the cloud
Public We accelerate pace of innovation in the cloud Innovation examples FOCUS x SCALABILITY x INNOVATION = ACCELERATING REVENUE GROWTH SAP Joule x NVIDIA AI consultant & ABAP development WalkMe User-centric adoption & enablement Supply Chain Management AI disruption management SAP Signavio Process
Slide 16: Accelerating total revenue growth through 2027
Public RISE with SAP Still ~€11B maintenance to be converted to cloud revenue at 2-3x GROW with SAP Increasing share in ~€100B Public Cloud ERP market Clean Core and extension via BTP Platform revenue potential of €1 per €2-3 spend on SaaS Cross-sell Line of Business apps Growth potential assuming ~
Slide 17: Go-To-Market Strategy
Go-To-Market Strategy Scott Russell Chief Revenue Officer Customer Success
Slide 18: Overview of demand
Public Overview of demand YoY pipeline creation growth1 (1st Half vs 2nd Half) ~3.4x ~1.6x Cloud ERP demand spiked for key industry clusters in H2’23 +96 pp +37 pp +71 pp Discrete Industries Energy & Natural Resources Consumer Industries H1 YoY Growth Jan to June H2 YoY Growth July to Dec H1 YoY Gro
Slide 19: Shift to Cloud gaining more traction
Public Shift to Cloud gaining more traction YoY increase maintenance revenue converted to Cloud Bookings 54% 13% 2021 39% 47% 14% 2022 44% 42% 32% 2023 2024 2025 2026 2027 2028 14% Expanding Cloud footprint % Cloud ERP customers with ≥4 Cloud solutions 28% 49% 2021 2023 100% 100% since 2021 (RISE La
Slide 20: Focus on User Adoption
Public Focus on User Adoption Emphasizing adoption to support revenue realization and customer retention Strong Total Cloud Backlog build paired with fast software activation • Faster activation of the full contract value – Limit ramped deals • Rapid delivery of productive environments – less than 2
Slide 21: Revenue Excellence
Public 2021 2022 2023 2024 2025 Revenue Excellence Strengthening our go-to-market engine for quality revenue growth Increasingly Profitable Cloud Growth New & Up-sell Cloud Bookings / Sales & Marketing Expenses High Revenue Quality Amid Market Shifts Net Retention from Q1 2022 to Q4 2023 Levers § Wo
Slide 22: INTERNAL Public – SAP and Partners Only
INTERNAL Public – SAP and Partners Only 49
Slide 23: Financial Update
Financial Update y Dominik Asam Chief Financial Officer
Slide 24: On track towards Ambition 2025
Public Illustrative. All figures based on non-IFRS, continuing operations and on updated non-IFRS definition in 2024. Growth rates represent CAGR 2023 -2025. Ambition 2025 is based on an exchange rate of 1.10 USD per EUR. Outlook 2024 is based on midpoint, if applicable. On track towards Ambition 20
Slide 25: Optimizing the Growth-Margin performance
Public Total revenue growth at constant currencies. FCF margin defined as FCF divided by Total Revenue. Optimizing the Growth-Margin performance Expecting accelerated revenue growth and increased free cash flow margin in 2025 0 10 20 30 40 0 10 20 30 40 Total Revenue Growth Free Cash Flow Margin 202
Slide 26: SAP financial performance 2023
Public Total Revenue On-Prem Services (4.3 | +6%)Cloud Software (1.8 | -12%) Support (11.5 | -1%) Cloud ERP Suite (10.6 | +33%) Extension Suite (2.3 | +2%) IaaS (0.7 | -16%) Cloud (71.9% | +2.2pp) Services (20.5% | -2.7pp) Software & support (89.8% | -0.4pp) Free Cash Flow S&M (27% | +1.0pp) R&D (20
Slide 27: Focus on Cloud ERP Suite
Public Focus on Cloud ERP Suite Sustained momentum drives accelerating overall cloud growth 31% 31% 33% 34% 33% 33% 34% 33% 32% Q1 2022 Q1 2023 Q1 2024 10% 11% 12% 2% 1% 1% 0% 8% 8% Q1 2022 Q1 2023 Q1 2024 1% 1% -11% -19% -14% -22% -18% -7% -15% Q1 2022 Q1 2023 Q1 2024 Cloud ERP Suite Extension Suit
Slide 28: Business AI to boost user productivity
Public APJ & Greater China EMEA Latin America North America Illustrative SAP Cloud Users Business AI to boost user productivity Joule could be a multi-billion USD opportunity for our customers just from user productivity Cloud Users
Slide 29: Customers' move to cloud accelerates
Public Oter 2023 software support revenue Other* S/4 or ECC: purely on-prem S/4 or ECC: mixed on-prem and cloud** Oter 2023 software support revenue End of mainstream maintenance by 2027 End of mainstream maintenance beyond 2027 as of May 2024 as of May 2024 Customers’ move to cloud accelerates Busi
Slide 30: SAP financial performance 2023
Public Total Revenue On-Prem Services (4.3 | +6%)Cloud Software (1.8 | -12%) Support (11.5 | -1%) Cloud ERP Suite (10.6 | +33%) Extension Suite (2.3 | +2%) IaaS (0.7 | -16%) Cloud (71.9% | +2.2pp) Services (20.5% | -2.7pp) Free Cash Flow Tax payments SBC payouts Net working capital Restructuring & c
Slide 31: Rapid gross profit growth
Public Illustrative. All figures based on non-IFRS, continuing operations and on updated non-IFRS definition in 2024. Cloud 2025e Software Services 2020 2021 2022 2023 2024e Support 68,7% 70,7% 70,3% 69,7% 70,8% 71,4% 73,0% 72,2% 72,5% Q1 2022 Q1 2023 Q1 2024 89,5% 90,3% 90,3% 91,1% 88,9% 90,2% 90,1
Slide 32: Increasing operating leverage
Public Illustrative. All figures based on non-IFRS, continuing operations and on updated non-IFRS definition in 2024. Stringent transformation program with tight governance in place >500 efficiency measures rigorously tracked & executed across all functions Triple-digit million € AI-based efficienci
Slide 33: Increasing efficiency and scalability
Public 2021 2022 2023 2024e 2025e 27.0% 25.9% 24.4% 2021 2022 2023 2024e 2025e 19.5% 20.6% 20.2% 2021 2022 2023 2024e 2025e 4.4% 4.3% 4.3% Next Level GTM role transformation incl. regional / layer consolidation AI-powered sales & marketing efficiency and productivity initiatives Growth at lower CAC*
Slide 34: SAP financial performance 2023
Public 83 Total Revenue On-Prem Services (4.3 | +6%)Cloud Software (1.8 | -12%) Support (11.5 | -1%) Cloud ERP Suite (10.6 | +33%) Extension Suite (2.3 | +2%) IaaS (0.7 | -16%) Cloud (71.9% | +2.2pp) Services (20.5% | -2.7pp) Software & support (89.8% | -0.4pp) Free Cash Flow S&M (27% | +1.0pp) R&D
Slide 35: Cash conversion on positive trajectory
Public Illustrative. All figures based on non-IFRS and continuing operations.2024e based on mid-point . non-IFRS Operating profit Free cash flow Free cash flow in % of non-IFRS operating profit 2022 2023 2025e €6.4bn €4.4bn €6.5bn €5.1bn ~€10.0bn ~€8.0bn 2024e ~€3.5bn €7.6 – 7.9bn 68% 78% ~45% ~80%
Slide 36: Capital returns reflect commitment to shareholder value
Public Capital returns reflect commitment to shareholder value Updated dividend policy based on non-IFRS results Targeting to pay dividends of at least 40% of our non-IFRS profit after tax from continuing operations €1.85 2022 2023 2024 €2.20 €2.451 €2.05 1. Includes a special dividend of €0.50 to c
Slide 37: Confidence in our future
Public Confidence in our future Aiming for accelerating revenue growth Total Revenue Growth supported by sustained cloud momentum Free Cash Flow Growth supported by profit growth and strong cash conversion Operating Profit Growth supported by increased operating leverage Total Revenue Cloud Revenue