SAP SE

January 14th, 2022 Innovative Companies

ALPORA SUSTAINABLE TECHNOLOGY

January 2022

SAP SE is a provider of enterprise application software headquartered in Germany. The multinational company develops enterprise software, including e-business and enterprise management software, advises on the organizational use of its application software, and provides training services. SAP sells its products and services worldwide.

Focus on Innovation

The company’s innovation focus is on developing new digital business solutions that target global connectivity and enable new digital services for its partners and customers. In this way, SAP is specifically following the megatrends of connectivity and digitization. With intelligent technologies, the company is providing new impetus in all business areas. These include innovative solutions and services for artificial intelligence, machine learning, robotic process automation, edge computing, and much more. For example, robotic process automation (SAP Intelligent RPA) uses intelligent bots to automate repetitive manual processes. By automating time-consuming routine tasks, freed-up resources can be made available for more complex processes. Thus, processes, as well as resources, can be redesigned and continuously improved at any time.

To improve ESG transparency and sustainable business performance, SAP offers the “SAP Sustainability Control Tower” product. This is designed to achieve sustainable business goals with holistic enterprise-wide sustainability management.

Financial Report – OUTLOOK FOR THE FISCAL YEAR 2021

The software company is optimistic about the outlook for the fiscal year 2021. Especially in the cloud revenue segment, a further acceleration of revenue growth is expected for the fourth quarter of 2021. Thus, currency-adjusted cloud revenues (non-IFRS) alone are expected to achieve a growth rate of 16% to 19%. Together, cloud and software revenues (non-IFRS) are expected to grow at a constant currency rate of 2% to 4%. Operating profit for 2021 is expected to be between €8.1 billion and €8.3 billion, in line with the previous year. In addition, the three non-financial key performance indicators in 2021 are customer loyalty, employee engagement, and CO2 emissions.

THE THIRD QUARTER OF 2021

SAP recorded year-on-year revenue growth of 5% to €6.84 billion according to IFRS. Strong growth momentum was seen primarily in the cloud business, due to increasing current cloud backlogs and cloud revenues. At €2.39 billion, cloud revenue increased by 20% year-on-year. By contrast, software license revenue fell by 8% to €0.66 billion as more customers opted for the “RISE with SAP” subscription offering to handle their business-critical core processes. Likewise, service revenue decreased by 6% to €0.93 billion compared with Q3 2020. This decrease in revenue resulted from the disposal of the SAP Digital Interconnect communications unit, which was completed in November 2020 and had contributed approximately €81 million in service revenue in the prior-year quarter. Under IFRS, operating profit decreased by 15 percent to €1.25 billion and the operating margin decreased by 4.3 percentage points to 18.2 percent. This decrease was due to higher expenses for share-based payment programs.

Chief Financial Officer Luka Mucic commented as follows: ” This has been an excellent quarter across all key financial metrics. We are seeing sustained, strong progress in SAP’s transformation. Our cloud business is growing at an accelerating pace and has led to our improved full-year outlook.”

Every month ALPORA presents an ALPORA Top Innovator for each innovation fund. For each company, a detailed innovation analysis was carried out based on the ALPORA-Methods and the resulting innovation efficiency score was determined.