WALLDORF, Germany, June 5, 2024 /PRNewswire/ -- SAP SE (NYSE: SAP) and WalkMe Ltd. (NASDAQ: WKME) announced today that the companies have entered into a definitive agreement under which SAP will acquire WalkMe, a leader in digital adoption platforms (DAPs). WalkMe's solutions help organizations navigate constant technology change by providing users with advanced guidance and automation features that enable them to execute workflows seamlessly across any number of applications. This results in higher adoptio ...

SAN FRANCISCO, June 4, 2024 /PRNewswire/ -- Docusign (NASDAQ: DOCU), a global leader in Intelligent Agreement Management, today announced the upcoming launch of its new Docusign Connector for SAP Ariba solutions – a new offering that automates workflows between Docusign CLM and SAP Ariba solutions to help businesses accelerate time to value and eliminate friction in source-to-pay agreement processes. Available globally starting in September, this new connector will be unveiled at SAP Sapphire events in Orla ...

AI-powered solutions help enterprises add intelligence to information throughout their SAP business processes WATERLOO, ON, June 3, 2024 /PRNewswire/ -- OpenText™ (NASDAQ: OTEX), (TSX: OTEX), the information company, today showcased a powerful suite of SAP custom solutions with generative AI to revolutionize information management within SAP processes. These new enhanced capabilities enable future knowledge workers using SAP to integrate, search, and apply archived information – while controlling long- term ...

LOS ANGELES, June 03, 2024 (GLOBE NEWSWIRE) -- FloQast, a Finance and Accounting Operations Platform provider created by accountants for accountants, announced today that it is certified by SAP as built on SAP Business Technology Platform (SAP BTP), SAP's platform for the Intelligent Enterprise. "FloQast's expanded integration with SAP S/4HANA now includes private cloud integration with SAP's Business Technology Platform – a game-changer for companies navigating ERP transitions," said Mike Whitmire, CPA, CE ...

Amazon Web Services expanded its partnership with enterprise application programming software firm SAP. The collaboration is designed to make it easier for customers to adopt the RISE with SAP solution on AWS, according to a Wednesday (May 29) press release. The tie-up is also expected to enhance the performance and efficiency of SAP workloads running in the cloud and integrate generative artificial intelligence into an enterprise's business-critical applications. "AWS was the first cloud provider certified ...

SAP SE (SAP) announced that NEC Corporation has chosen SAP S/4HANA Cloud via the RISE with SAP solution on Amazon Web Services (AWS). NEC will utilize generative AI technology and SAP's Joule copilot to facilitate the migration. NEC is a leading Japanese multinational in IT and network integration, which aims to cut costs and enhance data integration across its business units. To support its digital transformation, NEC will transition from on- premise SAP S/4HANA to SAP S/4HANA Cloud. NEC will use generativ ...

WALLDORF, Germany and TOKYO, May 16, 2024 /PRNewswire/ -- SAP SE (NYSE: SAP) today announced NEC Corporation (TSE: 6701 "NEC") has selected SAP S/4HANA Cloud through the RISE with SAP solution, running on Amazon Web Services (AWS). Together with implementation partner ABeam Consulting, the migration will leverage NEC's generative AI technology and SAP's natural language, generative AI Joule copilot. NEC, a Japan-based multinational leader in the integration of IT and network technologies, was seeking to opt ...

Mohammed Moawalla working capital, particularly in Q1. Are there any kind of plans or initiatives, whether it's around sort of shifting the kind of the invoicing to annual or other kind of collections levers that you compress on? And would you inclined to perhaps pass on some of those savings elsewhere in investments in the business? Or could that be as seen as a potential upside risk? Thank you. And -- but we also said that let's see what's coming beyond that, if anything, of course, we will only go for mo ...

Part I [Letter from the CEO](index=5&type=section&id=Letter%20from%20the%20CEO) SAP's CEO reviews 2023's strong performance, highlighting cloud growth and strategic investments in AI to lead enterprise applications - In 2023, SAP met or exceeded expectations across all key metrics, achieving significant growth in **cloud backlog** and **cloud revenue**, with **non-IFRS operating profit** exceeding guidance[16](index=16&type=chunk)[17](index=17&type=chunk) - 2023 Key Financial Performance (Non-IFRS) | Metric | 2023 Performance | | :--- | :--- | | **Current Cloud Backlog** | Over €13.7 billion, 27% growth | | **Cloud Revenue** | €13.7 billion, 23% growth | | **Non-IFRS Operating Profit** | 13% growth | | **Total Cloud Backlog** | 39% growth to €44 billion | - SAP announced an investment of nearly **€1 billion** for AI use case development and initiated a transformation program to reallocate resources towards business AI, aiming to become the 'number one business AI company'[26](index=26&type=chunk) - SAP's share price rose by **43.2%** in 2023, reaching a record high of **€148.18**, with plans to increase dividends by approximately **7%** to **€2.20 per share** and a **€5 billion** share repurchase program announced[20](index=20&type=chunk)[21](index=21&type=chunk) [SAP Executive Board](index=8&type=section&id=SAP%20Executive%20Board) This section details the composition of SAP's Executive Board, listing members' roles, tenure, and other relevant information - SAP's Executive Board members include Christian Klein (CEO), Dominik Asam (CFO), Dr.-Ing. Juergen Mueller (CTO), Scott Russell (Customer Success), Thomas Saueressig (SAP Product Engineering), Gina Vargiu-Breuer (Chief People Officer, joined 2024), and Julia White (Chief Marketing and Solutions Officer)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Investor Relations](index=10&type=section&id=Investor%20Relations) This section reviews SAP's strong stock performance in 2023, its position as a top DAX company, and plans for shareholder returns - Global economic growth slowed in 2023, yet stock markets showed strong performance, with the **DAX index rising over 19%** and the **Nasdaq-100 index increasing by 53.8%**[32](index=32&type=chunk)[34](index=34&type=chunk) - SAP Stock Performance vs. Key Indices (January 2 – December 29, 2023) | Metric | Increase | | :--- | :--- | | SAP Share Price | 43.1% | | DAX 40 | 19.1% | | Nasdaq-100 index | 53.8% | | S&P 500 Composite | 22.8% | - SAP's market capitalization reached **€171.3 billion** at the end of 2023, making it the most valuable company in the German stock index again and ranking **61st globally** among the most valuable companies[36](index=36&type=chunk) - SAP plans to propose a dividend of **€2.20 per share** at the 2024 Annual General Meeting (a **7.3% increase** from 2022) and announced a **€5 billion** share repurchase program extending until the end of 2025[48](index=48&type=chunk)[21](index=21&type=chunk) - SAP Common Stock Return (As of December 31, 2023) | Investment Horizon | 10 Years | 5 Years | 1 Year | | :--- | :--- | :--- | :--- | | Investment Value (Initial €10,000) | €22,385 | €16,045 | €14,470 | | Average Annual Return | 8.4% | 9.9% | 44.7% | | DAX 40 Performance | 5.8% | 9.7% | 20.3% | | Nasdaq-100 index | 16.7% | 21.6% | 53.8% | [Report by the Supervisory Board](index=15&type=section&id=Report%20by%20the%20Supervisory%20Board) The Supervisory Board reports on its 2023 activities, including collaboration with the Executive Board, strategic oversight of AI, cloud transformation, and sustainability - The Supervisory Board maintained continuous cooperation with the Executive Board, regularly reviewing company strategy, business performance, risk management, and compliance, and approving significant transactions requiring its consent[54](index=54&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk) - In 2023, the Supervisory Board focused on the **Artificial Intelligence (AI) strategy**, **cloud transformation**, the establishment of a new **Government Security Committee**, and **sustainability** topics, overseeing the implementation of related measures[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - The Supervisory Board approved the **Qualtrics divestiture**, the establishment of a **€5 billion** share repurchase program, and agreed to a settlement with the U.S. Department of Justice and SEC regarding compliance violations[69](index=69&type=chunk)[72](index=72&type=chunk)[76](index=76&type=chunk) - SAP Supervisory Board Member Meeting Attendance in Fiscal Year 2023 | Supervisory Board Member | Total Meetings | Attendance Rate (%) | | :--- | :--- | :--- | | Prof. Dr. h. c. Hasso Plattner | 28 | 89% | | Manuela Asche-Holstein | 26 | 92% | | Aicha Evans | 27 | 89% | | Margret Klein-Magar | 38 | 97% | | Monika Kovachka-Dimitrova | 23 | 100% | | Peter Lengler | 30 | 100% | | Jennifer Xin-Zhe Li | 31 | 94% | | Dr. Qi Lu | 21 | 90% | | Gerhard Oswald | 33 | 100% | | Dr. h. c. Punit Renjen (since May 11, 2023) | 11 | 100% | | Christine Regitz | 28 | 100% | | Dr. Friederike Rotsch | 30 | 93% | | Heike Steck | 29 | 97% | | Dr. Rouven Westphal | 32 | 100% | | James Wright | 35 | 100% | [Responsibility Statement](index=28&type=section&id=Responsibility%20Statement) The Executive Board confirms that the consolidated financial statements and management report fairly represent SAP Group's financial position and performance - The SAP Executive Board confirms that the consolidated financial statements fairly represent the Group's assets, financial position, and operating results, and the management report provides a fair review of business development, performance, position, and future opportunities and risks[98](index=98&type=chunk) [Independent Auditor's Report](index=29&type=section&id=Independent%20Auditor's%20Report) BDO AG Wirtschaftsprüfungsgesellschaft issued an unqualified audit opinion on SAP SE's consolidated financial statements and management report, highlighting key audit matters - BDO AG Wirtschaftsprüfungsgesellschaft issued an **unqualified audit opinion** on SAP SE's consolidated financial statements and management report, confirming compliance with IFRS and German commercial law, and fair representation of the Group's financial position and performance[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - Key audit matters include **cloud revenue recognition** (due to contract complexity and high judgment requirements), **uncertain tax treatment assessment** (due to complex interpretation of tax laws across jurisdictions), and **valuation of unlisted equity securities** (due to valuation complexity and reliance on management estimates)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[112](index=112&type=chunk)[116](index=116&type=chunk) - The auditors confirmed SAP SE maintained **effective internal controls** over financial reporting as of December 31, 2023, and provided reasonable assurance on the electronic presentation of financial statements and management report in ESEF format[134](index=134&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [Independent Auditor's Report on a Limited Assurance Engagement of the Combined Non-Financial Statement](index=40&type=section&id=Independent%20Auditor's%20Report%20on%20a%20Limited%20Assurance%20Engagement%20of%20the%20Combined%20Non-Financial%20Statement) BDO provided limited assurance on SAP SE's combined non-financial statement, finding no material non-compliance with applicable regulations - BDO conducted a **limited assurance engagement** on SAP SE's combined non-financial statement, prepared according to German commercial law and EU Taxonomy, covering non-financial matters such as environment, employees, human rights, and anti-corruption[153](index=153&type=chunk)[154](index=154&type=chunk) - The assurance conclusion found no matters leading the auditors to believe the statement was not prepared in all material respects in accordance with applicable regulations and management's interpretations[164](index=164&type=chunk) - Assurance procedures included understanding the sustainability organizational structure, evaluating information system design, analyzing quantitative data, and assessing data collection and reporting processes[162](index=162&type=chunk) [Independent Auditor's Report on a Limited Assurance Engagement on Sustainability Information](index=43&type=section&id=Independent%20Auditor's%20Report%20on%20a%20Limited%20Assurance%20Engagement%20on%20Sustainability%20Information) BDO provided independent assurance on selected qualitative and quantitative sustainability disclosures in SAP SE's 2023 integrated report - BDO conducted an independent assurance engagement on selected qualitative and quantitative sustainability disclosures in SAP SE's integrated report, including the **Business Health Culture Index**, **Employee Engagement Index**, and **total greenhouse gas emissions** (reasonable assurance for quantitative, limited for qualitative)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) - The assurance concluded that quantitative sustainability indicators were prepared in all material respects according to reporting standards, and no material non-compliance was found for qualitative and quantitative disclosures[180](index=180&type=chunk)[181](index=181&type=chunk) - Reporting standards adhere to Global Reporting Initiative (GRI) Standards and the Greenhouse Gas Protocol, with the Executive Board responsible for report preparation and internal controls[170](index=170&type=chunk)[171](index=171&type=chunk) Combined Management Report [General Information About This Combined Management Report](index=47&type=section&id=General%20Information%20About%20This%20Combined%20Management%20Report) This section outlines the basis for preparing SAP Group's combined management report, including accounting standards, audit scope, and forward-looking statements - The combined management report is prepared according to German commercial law and German accounting standards, with all financial and non-financial data based on **going concern**[185](index=185&type=chunk)[189](index=189&type=chunk) - Forward-looking statements in the report are based on current management expectations but are subject to uncertainties and risks, meaning actual results may differ materially[191](index=191&type=chunk)[194](index=194&type=chunk) - Portions of the non-financial statement included in the report have undergone **limited assurance** but not a statutory audit[187](index=187&type=chunk)[188](index=188&type=chunk) [Strategy and Business Model](index=49&type=section&id=Strategy%20and%20Business%20Model) SAP's strategy focuses on delivering AI-driven cloud solutions for business agility, value chain optimization, and sustainability, supported by R&D and diverse revenue streams - SAP's purpose is 'to help the world run better and improve people's lives,' providing integrated, relevant, reliable, and responsible AI solutions by combining generative AI with business data[198](index=198&type=chunk) - SAP's vision is to achieve business agility, value chain optimization, and core sustainability through **cloud ERP solutions**, **SAP Business AI**, and the **Green Ledger initiative**[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) - SAP's revenue primarily stems from **cloud solution subscription fees**, with significant contributions from software licenses, on-premise support, consulting, development, and training services[207](index=207&type=chunk) - 2023 Research and Development Investment (IFRS) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | R&D Expenses (Million Euros) | 6,324 | 6,080 | 5,270 | | R&D Expenses as % of Total Revenue | 20.3% | 20.6% | 19.6% | | R&D Full-Time Equivalents (FTE) | 36,444 | 35,280 | 33,377 | | R&D FTE as % of Total Employees | 34% | 33% | - | - In 2023, SAP acquired **LeanIX** to enhance enterprise architecture management capabilities and divested **Qualtrics** to focus on core business[19](index=19&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) [Performance Management System](index=59&type=section&id=Performance%20Management%20System) SAP's performance management system uses both financial and non-financial metrics, including cloud revenue, operating profit, customer NPS, employee engagement, and net carbon emissions, with non-IFRS metrics for internal management - SAP uses cloud revenue, cloud and software revenue, predictable revenue share, current cloud backlog, and non-IFRS operating profit as key metrics for measuring operational financial performance[266](index=266&type=chunk) - Non-financial performance indicators include **Customer Net Promoter Score (NPS)**, **Employee Engagement Index**, and **net carbon emissions**, which are considered indicators of the company's future performance[265](index=265&type=chunk)[282](index=282&type=chunk) - SAP's **non-IFRS financial metrics** are used for internal planning, forecasting, reporting, and compensation management to provide a more transparent understanding of performance[293](index=293&type=chunk)[294](index=294&type=chunk) - 2023 IFRS to Non-IFRS Revenue Reconciliation (Million Euros) | Metric (Million Euros) | IFRS | Currency Impact | Non-IFRS at Constant Currency | | :--- | :--- | :--- | :--- | | Cloud Revenue | 13,664 | 394 | 14,058 | | Software Licenses | 1,764 | 37 | 1,801 | | Software Support | 11,496 | 286 | 11,782 | | Total Cloud and Software Revenue | 26,924 | 717 | 27,641 | | Services Revenue | 4,283 | 109 | 4,392 | | **Total Revenue** | **31,207** | **826** | **32,033** | - 2023 IFRS to Non-IFRS Operating Profit Reconciliation (Million Euros) | Metric (Million Euros) | IFRS | Adjustments | Non-IFRS | Currency Impact | Non-IFRS at Constant Currency | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Profit | 5,787 | 2,935 | 8,722 | 322 | 9,044 | | Operating Profit Margin (%) | 18.5 | - | 28.0 | - | 28.2 | [Financial Performance: Review and Analysis](index=68&type=section&id=Financial%20Performance%3A%20Review%20and%20Analysis) This section provides a detailed review of SAP's 2023 financial performance, highlighting strong cloud growth, exceeding non-IFRS operating profit expectations, and robust free cash flow - In 2023, global economic growth was moderate, with strong IT market demand for digitalization and AI technologies, leading to robust demand for SAP's cloud solutions and services[313](index=313&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) - 2023 SAP Key Financial Performance (Non-IFRS, Constant Currency) | Metric | 2023 Performance | 2023 Outlook (Revised) | | :--- | :--- | :--- | | Cloud Revenue | €14.06 billion | €14.0 billion to €14.2 billion | | Cloud and Software Revenue | €27.64 billion | €27.0 billion to €27.4 billion | | Operating Profit | €9.04 billion | €8.65 billion to €8.95 billion | | Predictable Revenue Share | 81% | 82% | | Free Cash Flow | €5.08 billion | Approximately €4.9 billion | - In 2023, **cloud revenue grew by 20% to €13.664 billion**, **current cloud backlog increased by 25% to €13.745 billion**, and **total cloud backlog grew by 37% to €44.25 billion**[356](index=356&type=chunk)[357](index=357&type=chunk)[336](index=336&type=chunk) - Non-IFRS operating profit increased by **13% to €9.04 billion**, exceeding the outlook range, primarily due to accelerated cloud revenue growth, completion of cloud delivery programs, and stringent cost management[340](index=340&type=chunk) - 2023 SAP Group Consolidated Revenue (IFRS) | Revenue Type (Million Euros) | 2023 | 2022 | Year-over-Year Change (%) | | :--- | :--- | :--- | :--- | | Cloud Revenue | 13,664 | 11,426 | 20% | | Software Licenses | 1,764 | 2,056 | -14% | | Software Support | 11,496 | 11,909 | -3% | | **Total Cloud and Software Revenue** | **26,924** | **25,391** | **6%** | | Services Revenue | 4,283 | 4,128 | 4% | | **Total Revenue** | **31,207** | **29,520** | **6%** | | Predictable Revenue Share (%) | 81% | 79% | +2pp | - 2023 SAP Group Consolidated Operating Profit (IFRS) | Metric (Million Euros) | 2023 | 2022 | Year-over-Year Change (%) | | :--- | :--- | :--- | :--- | | Operating Profit | 5,787 | 6,090 | -5% | | Operating Profit Margin (%) | 18.5% | 20.6% | -2.1pp | - SAP SE's 2023 operating profit significantly increased to **€4.396 billion** (from **€739 million** in 2022), primarily due to a **€3.749 billion gain** from intra-group share repurchases[464](index=464&type=chunk)[468](index=468&type=chunk) [Non-Financial Statement Including Information on Sustainable Activities](index=92&type=section&id=Non-Financial%20Statement%20Including%20Information%20on%20Sustainable%20Activities) This section presents SAP SE's non-financial statement, covering environmental, social, and governance matters, and details the alignment of economic activities with EU Taxonomy standards - SAP's non-financial statement, prepared according to German commercial law and EU Taxonomy, covers material non-financial matters including environment, employees, human rights, anti-corruption, customer loyalty, and data privacy and security[485](index=485&type=chunk)[486](index=486&type=chunk)[491](index=491&type=chunk) - SAP identified 'data processing, hosting, and related activities' and 'manufacture of low-carbon transport technologies' as EU Taxonomy-relevant economic activities, though 'data processing, hosting, and related activities' did not fully align with Taxonomy criteria in 2023[493](index=493&type=chunk)[494](index=494&type=chunk)[495](index=495&type=chunk) - 2023 EU Taxonomy-Related Revenue Disclosure | Economic Activity | Revenue (Million Euros) | Revenue Share (%) | Taxonomy Eligibility | | :--- | :--- | :--- | :--- | | Data Processing, Hosting, and Related Activities (8.1) | 13,361 | 43% | Eligible but not aligned | | **Total Taxonomy Eligible Activities** | **13,361** | **43%** | - | | Taxonomy Ineligible Activities | 17,846 | 57% | - | | **Total** | **31,207** | **100%** | - | - 2023 EU Taxonomy-Related Operating Expenditure Disclosure | Economic Activity | Operating Expenditure (Million Euros) | Operating Expenditure Share (%) | Taxonomy Eligibility | | :--- | :--- | :--- | :--- | | Data Processing, Hosting, and Related Activities (8.1) | 1,545 | 19% | Eligible but not aligned | | **Total Taxonomy Eligible Activities** | **1,545** | **19%** | - | | Taxonomy Ineligible Activities | 6,660 | 81% | - | | **Total** | **8,205** | **100%** | - | - 2023 EU Taxonomy-Related Capital Expenditure Disclosure | Economic Activity | Capital Expenditure (Million Euros) | Capital Expenditure Share (%) | Taxonomy Eligibility | | :--- | :--- | :--- | :--- | | Manufacture of Low-Carbon Transport Technologies (3.3) | 51 | 4% | Aligned | | Data Processing, Hosting, and Related Activities (8.1) | 160 | 12% | Eligible but not aligned | | Low-Carbon Transport Technologies (3.3) | 159 | 11% | Eligible but not aligned | | **Total Taxonomy Eligible Activities** | **370** | **27%** | - | | Taxonomy Ineligible Activities | 1,008 | 73% | - | | **Total** | **1,378** | **100%** | - | [Security, Cloud Compliance, Data Protection and Privacy](index=101&type=section&id=Security%2C%20Cloud%20Compliance%2C%20Data%20Protection%20and%20Privacy) This section details SAP's vision and management measures for security, cloud compliance, data protection, and privacy, emphasizing adherence to frameworks like NIST and continuous improvement - SAP prioritizes security, cloud compliance, data protection, and privacy, managing cybersecurity risks by adhering to the **SAP Global Security Policy** and the **NIST Cybersecurity Framework**[513](index=513&type=chunk) - The **SAP Global Security and Cloud Compliance (SGSC)** organization mitigates risks, promotes regulatory compliance, and supports customer digital transformation by coordinating people, processes, and technology[515](index=515&type=chunk) - SAP's global data protection and privacy strategy is built on four pillars: global policies, mandatory training, a global network, and management systems, ensuring compliance with applicable data protection laws and regulations[518](index=518&type=chunk)[519](index=519&type=chunk) - SAP measures and manages performance through **SOC reports**, **ISO certifications**, and regular security compliance audits, disclosing vulnerabilities and providing patches to customers[530](index=530&type=chunk)[531](index=531&type=chunk)[532](index=532&type=chunk)[533](index=533&type=chunk) - In 2023, SAP experienced **two data protection incidents** requiring reporting to regulatory authorities under GDPR[538](index=538&type=chunk) [Employees](index=105&type=section&id=Employees) SAP's people-centric employee strategy focuses on attracting and retaining talent, fostering engagement and diversity, and developing future-ready skills to support long-term growth - SAP's employee strategy revolves around three pillars: 'Building SAP's Skills for the Future,' 'Driving SAP's Successful and Inclusive Culture,' and 'Changing How We Lead – Doing the Right Thing,' aiming to attract, develop, and retain top talent[541](index=541&type=chunk)[542](index=542&type=chunk)[547](index=547&type=chunk) - 2023 SAP Key Employee-Related KPIs | KPI | 2023 Result | 2022 Result | Target Range/Ambition | | :--- | :--- | :--- | :--- | | Employee Engagement Index (%) | 80% | 80% | 76% to 80% | | Leadership Trust Net Promoter Score (NPS) | 71 | 72 | - | | Business Health Culture Index (%) | 81% | 81% | 78% to 80% | | Innovation Index (%) | 75% | 75% | - | | Process Simplification Index (%) | 67% | 67% | - | | Employee Retention Rate (%) | 96.4% | 92.8% | Maintain high level | | Women in Management (%) | 29.7% | 29.3% | 30% | | Women in Executive Leadership (%) | 22.2% | - | 25% (by end of 2027) | - In 2023, SAP's IFRS R&D full-time equivalents (FTE) increased by **3% to 36,444**, representing **34% of total employees**[253](index=253&type=chunk)[388](index=388&type=chunk) - SAP is committed to promoting gender equality and inclusion in the workplace, with the proportion of **women in management increasing to 29.7%** in 2023 and **35.2% of total employees** being women[23](index=23&type=chunk)[571](index=571&type=chunk) - 2023 Employee Headcount (by Function and Region) | Function/Region | EMEA | Americas | APJ | Total | | :--- | :--- | :--- | :--- | :--- | | Cloud and Software | 4,389 | 4,266 | 4,426 | 13,080 | | Services | 8,178 | 5,013 | 5,481 | 18,672 | | R&D | 18,086 | 5,884 | 12,474 | 36,444 | | Sales and Marketing | 12,086 | 10,300 | 5,342 | 27,728 | | Administration | 3,619 | 1,777 | 1,307 | 6,704 | | Infrastructure | 2,834 | 1,274 | 867 | 4,975 | | **SAP Group Total (12/31)** | **49,191** | **28,515** | **29,897** | **107,602** | [Energy and Emissions](index=112&type=section&id=Energy%20and%20Emissions) This section details SAP's climate action strategy, aiming for carbon neutrality in its own operations by 2023 and net-zero across the value chain by 2030, through renewable energy and emission reduction initiatives - SAP achieved its **carbon neutrality goal for its own operations in 2023**, reducing net carbon emissions to **0 kilotons**, and committed to achieving **net-zero across the entire value chain by 2030**[22](index=22&type=chunk)[594](index=594&type=chunk) - SAP Carbon Reduction Targets | Target | Baseline Year | Target Year | Status | | :--- | :--- | :--- | :--- | | Carbon Neutrality in Own Operations by 2023 | 2017: 327 kilotons net carbon emissions | 2023: 0 kilotons net carbon emissions | Achieved | | 1.5°C Science-Based Target (SBT) | 2023: 6.9 million tons total carbon emissions | 2030: 90% reduction | Submitted to SBTi | | Net Zero Emissions | - | 2030 | Committed | | Plant 21 Million Trees by 2025 | - | 2025 | Ongoing (16.3 million planted) | - SAP reduces emissions by operating all data centers and offices with **100% renewable electricity**, implementing energy efficiency measures, optimizing supply chain procurement, and investing in natural carbon sink projects[601](index=601&type=chunk)[605](index=605&type=chunk) - SAP Total Net Carbon Emissions (kilotons CO2e) | Year | Net Carbon Emissions | | :--- | :--- | | 2023 | 0 | | 2022 | 85 | | 2021 | 110 | | 2020 | 135 | | 2019 | 300 | - SAP Total Energy Consumption (GWh) | Year | Total Energy Consumption (Scope 1 and 2) | | :--- | :--- | | 2023 | 805 | | 2022 | 906 | | 2021 | 845 | | 2020 | 871 | | 2019 | 1,110 | [Corporate Governance Fundamentals](index=118&type=section&id=Corporate%20Governance%20Fundamentals) This section outlines SAP's corporate governance principles, including its capital structure, voting rights, executive board appointments, and significant agreements triggered by changes in control - SAP SE publishes its corporate governance statement in accordance with German commercial law and the German Corporate Governance Code, making it publicly available on its website[613](index=613&type=chunk) - SAP SE's share capital consists of no-par value shares, with each share entitling one vote, though treasury shares do not carry voting or dividend rights[615](index=615&type=chunk)[616](index=616&type=chunk) - Executive Board members are appointed and dismissed by the Supervisory Board for terms not exceeding five years, with reappointments possible[620](index=620&type=chunk)[621](index=621&type=chunk) - SAP is authorized to issue and repurchase shares for employee stock ownership plans, equity investments, or financing in financial markets[622](index=622&type=chunk)[623](index=623&type=chunk) - SAP's syndicated revolving credit facility, bonds, and U.S. private placement agreements contain **change-of-control clauses** that may trigger debt repayment requirements upon a change of control and credit rating downgrade[624](index=624&type=chunk)[625](index=625&type=chunk)[626](index=626&type=chunk) [Business Conduct](index=121&type=section&id=Business%20Conduct) This section highlights SAP's commitment to ethical conduct and integrity through its compliance program, including a global code of conduct, training, and a whistleblower tool, and notes a recent anti-bribery settlement - SAP is committed to upholding ethical choices and integrity in complex business environments to maintain its reputation and stakeholder trust[629](index=629&type=chunk)[630](index=630&type=chunk) - The **Office of Ethics & Compliance (OEC)** is responsible for fostering a strong culture of integrity, providing compliance guidance, and continuously improving policies, guidelines, and systems[631](index=631&type=chunk)[632](index=632&type=chunk) - SAP's **Global Code of Ethics and Business Conduct (CoEBC)** serves as the primary ethical and legal framework, requiring adherence from all employees, partners, and suppliers[637](index=637&type=chunk)[638](index=638&type=chunk)[639](index=639&type=chunk) - SAP provides the **'Speak Out at SAP' whistleblower tool**, encouraging employees and external parties to anonymously report misconduct, with a commitment to non-retaliation[649](index=649&type=chunk)[650](index=650&type=chunk) - SAP reached a settlement agreement with the U.S. Department of Justice and SEC regarding anti-bribery matters, paying **€207 million** and strengthening its compliance program and internal controls[740](index=740&type=chunk)[1296](index=1296&type=chunk) [Human Rights](index=125&type=section&id=Human%20Rights) This section details SAP's commitment to respecting human rights across its operations, supply chain, and products, guided by UN principles and managed through dedicated committees and policies - SAP is committed to respecting and promoting human rights across its own operations, supply chain, and product lifecycle, guided by the **UN Guiding Principles on Business and Human Rights**[657](index=657&type=chunk) - SAP's **Human Rights Office** drives the cross-company human rights agenda, the **AI Ethics Steering Committee** guides AI ethics implementation, and a **Global AI Ethics Policy** has been established[658](index=658&type=chunk)[659](index=659&type=chunk)[661](index=661&type=chunk) - Prominent human rights issues identified by SAP include **occupational health and safety** and **non-discrimination** in its own operations, as well as **non-discrimination** and **privacy** related to products, services, and customers[664](index=664&type=chunk) - SAP ensures adherence to human rights standards and remediation of negative impacts through mandatory training, a supplier code of conduct, and the **'Speak Out at SAP' whistleblower tool**[666](index=666&type=chunk)[668](index=668&type=chunk)[674](index=674&type=chunk) [Risk Management and Risks](index=128&type=section&id=Risk%20Management%20and%20Risks) This section details SAP's risk management framework, adhering to the COSO framework, and identifies key risk factors across strategic, operational, financial, and compliance categories, assessing their likelihood and impact - SAP has established a comprehensive internal control and risk management system, adhering to the **COSO framework**, designed to identify and analyze risks and provide reasonable assurance over internal controls for financial reporting[677](index=677&type=chunk)[678](index=678&type=chunk)[685](index=685&type=chunk) - Risk management spans strategic, operational, financial, and compliance areas, implemented by a global risk management organization, with the Chief Risk Officer reporting to the Group CFO[686](index=686&type=chunk)[690](index=690&type=chunk)[695](index=695&type=chunk) - Overview of Risk Factors (2023 Summary) | Risk Category | Likelihood | Impact | Risk Level | | :--- | :--- | :--- | :--- | | **Economic, Political, Social, and Regulatory Risks** | | | | | Global Economic and Political Environment | Possible | Significant | Medium | | International Laws and Regulations | Very Low | Business Critical | Medium | | Legal and Intellectual Property | Possible | Significant | Medium | | Data Protection and Privacy | Possible | Significant | Medium | | **Corporate Governance and Compliance Risks** | | | | | Ethical Conduct | Possible | Significant | Medium | | **Operational Business Risks** | | | | | Sales and Services | Very Low | Significant | Medium | | Partner Ecosystem | Very Low | Significant | Medium | | Cloud Operations | Very Low | Significant | Medium | | Cybersecurity and Security | Possible | Business Critical | High | | Technology and Products | Very Low | Business Critical | Medium | | **Strategic Risks** | | | | | Market Share and Profit | Very Low | Business Critical | Medium | | Mergers and Acquisitions | Very Low | Medium | Low | | Innovation | Very Low | Significant | Low | - **Cybersecurity and security risks** are categorized as **high risk** due to their potential business-critical impact on operations, product, and service delivery[712](index=712&type=chunk)[761](index=761&type=chunk)[766](index=766&type=chunk) - Innovation risks include **AI algorithm flaws**, **data bias**, and **harmful AI-generated content**, potentially leading to competitive harm, regulatory actions, and reputational damage[785](index=785&type=chunk)[786](index=786&type=chunk)[787](index=787&type=chunk) [Expected Developments and Opportunities](index=145&type=section&id=Expected%20Developments%20and%20Opportunities) This section outlines SAP's outlook for 2024 and beyond, including global economic and IT market trends, financial and non-financial targets, and strategic growth opportunities in cloud and AI - The ECB forecasts a slight decrease in global economic growth for 2024, but IT market demand for digitalization, cloud, and AI is expected to remain strong, with IDC predicting digital technology spending to be **seven times higher than economic growth**[791](index=791&type=chunk)[796](index=796&type=chunk) - 2024 SAP Financial Outlook (Non-IFRS, Constant Currency) | Metric | 2023 Performance | 2024 Outlook | | :--- | :--- | :--- | | Cloud Revenue | €13.66 billion | €17.0 billion to €17.3 billion (24% to 27% growth) | | Cloud and Software Revenue | €26.92 billion | €29.0 billion to €29.5 billion (8% to 10% growth) | | Operating Profit | €6.51 billion (2024 methodology) | €7.6 billion to €7.9 billion (17% to 22% growth) | | Free Cash Flow | €5.09 billion | Approximately €3.5 billion | | Effective Tax Rate (Non-IFRS) | 30.3% | Approximately 32.0% | - SAP's 2025 targets include **cloud revenue exceeding €21.5 billion**, **total revenue exceeding €37.5 billion**, **non-IFRS cloud gross profit of approximately €16.2 billion**, **non-IFRS operating profit of approximately €10 billion**, and **free cash flow of approximately €8 billion**[807](index=807&type=chunk) - SAP will continue investing in **AI use case development** and implement a transformation program to optimize operational setup, capturing organizational synergies and AI-driven efficiencies for future scalable revenue growth[840](index=840&type=chunk) - Non-financial targets include steady improvements in **Customer Net Promoter Score** and **Employee Engagement Index**, achieving **net-zero across the entire value chain by 2030**, and increasing the proportion of **women in executive leadership to 25% by the end of 2027**[813](index=813&type=chunk)[814](index=814&type=chunk)[815](index=815&type=chunk) [Responsibility Statement](index=153&type=section&id=Responsibility%20Statement) The Executive Board confirms that the consolidated financial statements and management report fairly represent SAP Group's financial position and performance - The SAP Executive Board confirms that the consolidated financial statements fairly represent the Group's assets, financial position, and operating results, and the management report provides a fair review of business development, performance, position, and future opportunities and risks[850](index=850&type=chunk) Consolidated Financial Statements (IFRS) [Consolidated Income Statements of SAP Group for the Years Ended December 31](index=156&type=section&id=Consolidated%20Income%20Statements%20of%20SAP%20Group%20for%20the%20Years%20Ended%20December%2031) This section presents SAP Group's consolidated income statements for the year ended December 31, 2023, detailing revenues, costs, and earnings per share - SAP Group Consolidated Income Statement Summary (Million Euros) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Cloud Revenue | 13,664 | 11,426 | 8,701 | | Software Licenses | 1,764 | 2,056 | 3,248 | | Software Support | 11,496 | 11,909 | 11,412 | | **Total Revenue** | **31,207** | **29,520** | **26,953** | | Operating Profit | 5,787 | 6,090 | 6,308 | | Profit Before Tax | 5,341 | 4,513 | 8,505 | | Income Tax Expense | -1,741 | -1,446 | -1,682 | | Profit After Tax | 5,964 | 1,708 | 5,376 | | Basic Earnings Per Share (Euros) | 5.26 | 1.95 | 4.46 | - In 2023, **cloud revenue grew by 20% year-over-year**, and **total revenue increased by 6%**. **Profit after tax significantly rose from €1.708 billion in 2022 to €5.964 billion in 2023**, primarily due to profit from discontinued operations[854](index=854&type=chunk) [Consolidated Statements of Comprehensive Income of SAP Group for the Years Ended December 31](index=157&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20of%20SAP%20Group%20for%20the%20Years%20Ended%20December%2031) This section presents SAP Group's consolidated statements of comprehensive income for the year ended December 31, 2023, including profit after tax and other comprehensive income items - SAP Group Consolidated Statements of Comprehensive Income Summary (Million Euros) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Profit After Tax | 5,964 | 1,708 | 5,376 | | **Other Comprehensive Income (Net of Tax)** | **-1,641** | **2,280** | **2,853** | | Of which: Remeasurements of Pension Plans | -36 | 56 | 34 | | Of which: Exchange Differences | -1,597 | 2,186 | 2,846 | | Of which: Cash Flow Hedges | -8 | 39 | -26 | | **Total Comprehensive Income** | **4,323** | **3,988** | **8,230** | - Total comprehensive income in 2023 was **€4.323 billion**, an increase from **€3.988 billion in 2022**, but significantly lower than **€8.230 billion in 2021**, primarily due to exchange differences shifting from positive to negative[855](index=855&type=chunk) [Consolidated Statements of Financial Position of SAP Group as at December 31](index=158&type=section&id=Consolidated%20Statements%20of%20Financial%20Position%20of%20SAP%20Group%20as%20at%20December%2031) This section presents SAP Group's consolidated statements of financial position as of December 31, 2023, detailing assets, liabilities, and equity, reflecting a robust capital structure despite a slight asset decrease - SAP Group Consolidated Statements of Financial Position Summary (Million Euros) | Metric | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and Cash Equivalents | 8,124 | 9,008 | | Other Financial Assets | 3,344 | 853 | | Trade and Other Receivables | 6,322 | 6,236 | | **Total Current Assets** | **20,571** | **18,522** | | Goodwill | 29,088 | 33,077 | | Intangible Assets | 2,505 | 3,835 | | Property, Plant, and Equipment | 4,276 | 4,934 | | **Total Non-Current Assets** | **47,764** | **53,638** | | **Total Assets** | **68,335** | **72,159** | | **Total Liabilities** | **24,928** | **29,311** | | **Total Equity** | **43,406** | **42,848** | | Equity Attributable to Owners of the Parent | 43,157 | 40,186 | | Non-Controlling Interests | 249 | 2,662 | - Total assets decreased by **5% to €68.335 billion** in 2023, primarily due to reduced goodwill and intangible assets from the Qualtrics divestiture; total equity increased by **1% to €43.406 billion**, with the equity ratio rising from **59% to 64%**[449](index=449&type=chunk)[451](index=451&type=chunk)[455](index=455&type=chunk)[857](index=857&type=chunk) [Consolidated Statements of Changes in Equity of SAP Group for the Years Ended December 31](index=159&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20of%20SAP%20Group%20for%20the%20Years%20Ended%20December%2031) This section presents SAP Group's consolidated statements of changes in equity for the year ended December 31, 2023, detailing movements in capital, retained earnings, and other equity components - SAP Group Consolidated Statements of Changes in Equity Summary (Million Euros) | Metric | December 31, 2023 | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | :--- | | **Equity at Beginning of Period** | **42,848** | **41,523** | **29,927** | | Profit After Tax | 5,964 | 1,708 | 5,376 | | Other Comprehensive Income | -1,641 | 2,280 | 2,853 | | **Total Comprehensive Income** | **4,323** | **3,988** | **8,230** | | Share-Based Payments | 1,153 | 1,488 | 1,684 | | Dividend Payments | -2,417 | -2,895 | -2,271 | | Purchase of Treasury Shares | -968 | -1,500 | 0 | | Reissuance of Treasury Shares | 568 | 230 | 0 | | Changes in Non-Controlling Interests | -2,235 | -3 | 3,983 | | **Equity at End of Period** | **43,406** | **42,848** | **41,523** | - Total equity increased by **€558 million** in 2023, primarily driven by positive impacts from profit after tax and share-based payments, partially offset by dividend payments and changes in non-controlling interests[859](index=859&type=chunk) [Consolidated Statements of Cash Flows of SAP Group for the Years Ended December 31](index=160&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20of%20SAP%20Group%20for%20the%20Years%20Ended%20December%2031) This section presents SAP Group's consolidated cash flow statements for the year ended December 31, 2023, detailing cash flows from operating, investing, and financing activities, resulting in a net decrease in cash and cash equivalents - SAP Group Consolidated Cash Flow Statement Summary (Million Euros) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Net Cash from Operating Activities** | **6,332** | **5,647** | **6,223** | | Net Cash from Investing Activities | 906 | 667 | -3,063 | | Net Cash from Financing Activities | -7,734 | -6,337 | -56 | | Effect of Exchange Rate Changes | -388 | 134 | 484 | | **Net Increase/Decrease in Cash and Cash Equivalents** | **-883** | **109** | **3,587** | | Cash and Cash Equivalents at End of Period | 8,124 | 9,008 | 8,898 | - In 2023, **net cash from operating activities increased by €535 million to €6.210 billion**, primarily due to improved profitability and working capital; net cash from investing activities shifted from a **€699 million inflow in 2022 to a €4.603 billion outflow**, mainly impacted by the Qualtrics divestiture and LeanIX acquisition[444](index=444&type=chunk)[445](index=445&type=chunk) - Free cash flow increased to **€5.093 billion in 2023**, representing a **16% year-over-year growth**[446](index=446&type=chunk) [Notes](index=161&type=section&id=Notes) This section provides detailed notes to SAP's consolidated financial statements, covering preparation basis, accounting policies, management judgments, and disclosures across various financial areas - The notes detail the basis for preparing the consolidated financial statements, including adherence to IFRS and German commercial law, emphasizing management's role in applying accounting policies, judgments, and estimates[863](index=863&type=chunk)[864](index=864&type=chunk)[868](index=868&type=chunk)[882](index=882&type=chunk) - The notes cover key financial areas such as customer contract revenue recognition, employee benefits, share-based payments, pension plans, business combinations and divestitures, goodwill, intangible assets, and financial risk management[886](index=886&type=chunk)[951](index=951&type=chunk)[1012](index=1012&type=chunk)[1047](index=1047&type=chunk)[1152](index=1152&type=chunk)[1193](index=1193&type=chunk)[1282](index=1282&type=chunk) - In 2023, SAP updated its cost allocation policy, classifying code change-related activities as R&D to enhance alignment with market standards and comparability[874](index=874&type=chunk)[875](index=875&type=chunk] [(IN.1) Basis for Preparation](index=161&type=section&id=(IN.1)%20Basis%20for%20Preparation) This section outlines the basis for preparing SAP's consolidated financial statements, adhering to IFRS and German commercial law, and details accounting policies, management judgments, and the 2023 cost allocation policy update - SAP's consolidated financial statements adhere to **IFRS** and **German commercial law**, with all amounts presented in **million Euros** and based on a **going concern**[863](index=863&type=chunk)[866](index=866&type=chunk)[867](index=867&type=chunk) - In 2023, SAP updated its cost allocation policy, classifying code change-related activities as R&D, resulting in an approximate **€95 million increase in cloud gross profit**, **€275 million increase in software license and support gross profit**, and **€370 million increase in R&D expenses**[874](index=874&type=chunk)[875](index=875&type=chunk) - Key Currency Exchange Rates | Currency | December 31, 2023 Mid-Rate | 2023 Annual Average Rate | | :--- | :--- | :--- | | Australian Dollar (AUD) | 1.6263 | 1.6285 | | Canadian Dollar (CAD) | 1.4642 | 1.4596 | | Swiss Franc (CHF) | 0.9260 | 0.9717 | | British Pound (GBP) | 0.8691 | 0.8699 | | Japanese Yen (JPY) | 156.33 | 151.94 | | US Dollar (USD) | 1.1050 | 1.0816 | [Section A – Customers](index=165&type=section&id=Section%20A%20%E2%80%93%20Customers) This section details SAP's accounting treatment for customer contracts, including revenue recognition for cloud services, software licenses, and support, as well as receivables and customer-related liabilities - SAP's revenue is derived from **cloud services**, **software licenses**, standard and premium support services, consulting, customer-specific software development, and training[887](index=887&type=chunk) - **Cloud revenue is recognized over time**, software license revenue is recognized at a point in time when control is transferred, and software support revenue is recognized over time[906](index=906&type=chunk)[907](index=907&type=chunk)[909](index=909&type=chunk) - 2023 Total Revenue by Region (Million Euros) | Region | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Germany | 4,921 | 4,469 | 4,324 | | EMEA (excluding Germany) | 9,083 | 8,440 | 8,135 | | Americas (total) | 12,762 | 12,227 | 10,292 | | Asia Pacific Japan (total) | 4,441 | 4,384 | 4,204 | | **SAP Group Total** | **31,207** | **29,520** | **26,953** | - As of December 31, 2023, the transaction price allocated to unsatisfied or partially satisfied performance obligations was **€58 billion**, with **€44.3 billion** attributed to cloud performance obligations[922](index=922&type=chunk) - 2023 Capitalized Costs of Customer Contracts (Million Euros) | Category | Current | Non-Current | Total | | :--- | :--- | :--- | :--- | | Capitalized Costs to Obtain Customer Contracts | 1,046 | 2,918 | 3,964 | | Capitalized Costs to Fulfill Customer Contracts | 199 | 236 | 436 | | **Total Capitalized Contract Costs** | **1,246** | **3,154** | **4,400** | [Section B – Employees](index=174&type=section&id=Section%20B%20%E2%80%93%20Employees) This section provides financial information on SAP's employee benefit arrangements, including headcount, employee benefit expenses, share-based payment plans, and pension plans - 2023 Employee Headcount (by Function and Region) | Function/Region | EMEA | Americas | APJ | Total | | :--- | :--- | :--- | :--- | :--- | | Cloud and Software | 4,389 | 4,266 | 4,426 | 13,080 | | Services | 8,178 | 5,013 | 5,481 | 18,672 | | R&D | 18,086 | 5,884 | 12,474 | 36,444 | | Sales and Marketing | 12,086 | 10,300 | 5,342 | 27,728 | | Administration | 3,619 | 1,777 | 1,307 | 6,704 | | Infrastructure | 2,834 | 1,274 | 867 | 4,975 | | **SAP Group Total (12/31)** | **49,191** | **28,515** | **29,897** | **107,602** | - 2023 Employee Benefit Expenses (Million Euros) | Expense Type | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Salaries | 12,128 | 11,369 | 10,120 | | Social Security Expenses | 1,919 | 1,779 | 1,516 | | Share-Based Payment Expenses | 2,220 | 1,431 | 1,334 | | Pension Expenses | 438 | 447 | 390 | | Employee-Related Restructuring Expenses | 222 | 85 | 25 | | **Total Employee Benefit Expenses** | **16,992** | **15,157** | **13,487** | - Share-based payment expenses increased to **€2.220 billion in 2023**, comprising **€806 million for cash-settled** and **€1.414 billion for equity-settled share-based payments**[960](index=960&type=chunk) - SAP's restructuring provisions are recognized once a detailed plan is approved and announced to affected parties, with 2023 restructuring expenses primarily related to the targeted restructuring program announced in Q1 2023[1009](index=1009&type=chunk)[1010](index=1010&type=chunk) [Section C – Financial Results](index=186&type=section&id=Section%20C%20%E2%80%93%20Financial%20Results) This section provides insights into SAP's segment and overall financial performance, including segment results for "Applications, Technology & Services," consolidated income statement reconciliation, and earnings per share - SAP's sole reportable segment is **'Applications, Technology & Services' (ATS)**, which saw strong **cloud revenue growth of 20%** in 2023 (**24% at constant currency**)[1013](index=1013&type=chunk)[1021](index=1021&type=chunk) - 2023 Applications, Technology & Services Segment Performance (Million Euros, Non-IFRS) | Metric | 2023 Actual Currency | 2023 Constant Currency | 2022 Actual Currency | | :--- | :--- | :--- | :--- | | Cloud Revenue | 12,538 | 12,903 | 10,428 | | Software License and Support Revenue | 13,259 | 13,582 | 13,964 | | **Total Segment Revenue** | **30,057** | **30,853** | **28,496** | | Segment Gross Profit | 22,105 | 22,731 | 20,954 | | **Segment Profit** | **9,811** | **10,129** | **8,824** | - Net financial income in 2023 was **-€456 million**, an improvement from **-€1.389 billion in 2022**, primarily due to reduced net losses from fair value changes in equity investments and increased interest income[1028](index=1028&type=chunk) - The effective tax rate in 2023 was **32.6%**, higher than **32.0% in 2022**, mainly influenced by changes in valuation allowances for deferred tax assets[407](index=407&type=chunk) - 2023 Earnings Per Share (Euros) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (Continuing Operations) | 3.11 | 2.80 | 5.45 | | Basic Earnings Per Share (Continuing and Discontinued Operations) | 5.26 | 1.95 | 4.46 | | Diluted Earnings Per Share (Continuing Operations) | 3.08 | 2.79 | 5.45 | | Diluted Earnings Per Share (Continuing and Discontinued Operations) | 5.20 | 1.94 | 4.46 | [Section D – Invested Capital](index=194&type=section&id=Section%20D%20%E2%80%93%20Invested%20Capital) This section focuses on SAP's non-current assets, including investments, business combinations, and divestitures, detailing the accounting and valuation of goodwill, intangible assets, and property, plant, and equipment - In November 2023, SAP completed the acquisition of **LeanIX** to enhance enterprise architecture management capabilities, with a cash consideration of **€1.231 billion**[211](index=211&type=chunk)[1050](index=1050&type=chunk)[1052](index=1052&type=chunk) - In June 2023, SAP completed the divestiture of **Qualtrics**, receiving approximately **$7.7 billion in cash** and reporting it as a discontinued operation, generating a **pre-tax gain on disposal of €3.562 billion**[212](index=212&type=chunk)[1056](index=1056&type=chunk)[1057](index=1057&type=chunk)[1059](index=1059&type=chunk) - 2023 Goodwill by Operating Segment (Million Euros) | Operating Segment | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Applications, Technology & Services | 27,392 | 27,221 | | Qualtrics | 0 | 4,083 | | Emarsys | 395 | 395 | | Taulia | 296 | 294 | | Business Network | 976 | 1,052 | | Sustainability | 29 | 32 | | **Total** | **29,088** | **33,077** | - 2023 Intangible Assets (Million Euros) | Category | Carrying Amount December 31, 2023 | Carrying Amount December 31, 2022 | | :--- | :--- | :--- | | Software and Database Licenses | 479 | 513 | | Acquired Technologies | 235 | 486 | | Customer Relationships and Other | 1,791 | 2,836 | | **Total** | **2,505** | **3,835** | - As of December 31, 2023, total non-current assets decreased by **11% to €47.764 billion**, primarily due to reduced goodwill and intangible assets from the Qualtrics divestiture[451](index=451&type=chunk) [Section E – Capital Structure, Financing, and Liquidity](index=212&type=section&id=Section%20E%20%E2%80%93%20Capital%20Structure%2C%20Financing%2C%20and%20Liquidity) This section describes SAP's management of its capital structure, financing, and liquidity, aiming for a robust financial position through high equity ratios, moderate leverage, and balanced maturities - SAP's capital structure management aims to maintain a strong financial position to support business growth and ensure high independence and financial flexibility[1153](index=1153&type=chunk) - 2023 Group Liquidity, Financial Debt, and Net Debt (Million Euros) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 8,124 | 9,008 | -883 | | Current Time Deposits and Debt Securities | 3,151 | 686 | 2,464 | | **Group Liquidity** | **11,275** | **9,694** | **1,581** | | Current Financial Debt | -1,143 | -3,986 | 2,843 | | Non-Current Financial Debt | -6,612 | -7,778 | 1,166 | | **Financial Debt** | **-7,755** | **-11,764** | **4,009** | | **Net Debt** | **3,521** | **-2,070** | **5,590** | - Group liquidity increased by **€1.581 billion** in 2023, primarily due to proceeds from the Qualtrics divestiture, partially offset by the LeanIX acquisition, share repurchase programs, and Eurobond repayments[441](index=441&type=chunk) - SAP repurchased **7.56 million shares** in 2023, spending approximately **€949 million**, primarily for employee share-based payment plans[423](index=423&type=chunk)[1159](index=1159&type=chunk) - 2023 Financial Debt (Million Euros) | Category | Nominal Amount (Current) | Nominal Amount (Non-Current) | Carrying Amount (Current) | Carrying Amount (Non-Current) | Carrying Amount (Total) | | :--- | :--- | :--- | :--- | :--- | :--- | | Bonds | 850 | 6,521 | 849 | 5,932 | 6,780 | | Private Placements | 292 | 90 | 294 | 95 | 388 | | Commercial Paper | 0 | 0 | 0 | 0 | 0 | | Bank Loans | 0 | 0 | 0 | 0 | 0 | | **Total Financial Debt** | **1,143** | **6,612** | **1,143** | **6,026** | **7,169** | [Section F – Management of Financial Risk Factors](index=220&type=section&id=Section%20F%20%E2%80%93%20Management%20of%20Financial%20Risk%20Factors) This section discusses SAP's management of financial risk factors, including foreign exchange, interest rate, equity price, credit, and liquidity risks, using derivative financial instruments for hedging - SAP centrally manages market, credit, and liquidity risks through its global finance department, utilizing **derivative financial instruments** for hedging to reduce profit and loss volatility[1203](index=1203&type=chunk)[1204](index=1204&type=chunk) - SAP faces **foreign exchange rate risk**, primarily from intercompany royalty payments in major currencies such as the US dollar, British pound, Japanese yen, Swiss franc, and Australian dollar[1207](index=1207&type=chunk)[1208](index=1208&type=chunk) - 2023 Foreign Exchange Exposure (Billion Euros) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Year-End Exposure | 4.2 | 1.7 | | Average Exposure | 3.3 | 1.6 | | Highest Exposure | 4.2 | 1.7 | | Lowest Exposure | 2.5 | 1.3 | - SAP manages credit risk by collaborating with highly-rated financial institutions, requiring collateral, and diversifying its investment portfolio[1241](index=1241&type=chunk)[1242](index=1242&type=chunk) - 2023 Fair Value and Classification of Financial Instruments (Million Euros) | Category | Carrying Amount | Fair Value (Total) | | :--- | :--- | :--- | | **Assets** | | | | Cash and Cash Equivalents | 8,124 | 2,478 | | Trade and Other Receivables | 6,525 | 122 | | Other Financial Assets | 8,887 | 8,415 | | Derivative Assets | 85 | 85 | | **Liabilities** | | | | Trade and Other Payables | -1,822 | 0 | | Financial Liabilities | -9,676 | -8,005 | | Derivative Liabilities | -623 | -623 | | **Net Financial Instruments** | **12,038** | **2,720** | [Section G – Other Disclosures](index=240&type=section&id=Section%20G%20%E2%80%93%20Other%20Disclosures) This section provides various other disclosures for SAP's consolidated financial statements, including prepaid expenses, tax assets and liabilities, legal contingencies, board compensation, related party transactions, and post-reporting period events - 2023 prepaid expenses primarily include prepayments for hyperscaler cloud services, support services, and software royalties[1283](index=1283&type=chunk) - SAP faces legal contingencies including intellectual property-related litigation, non-income tax-related litigation, and anti-bribery matters, with the anti-bribery matter settled in early 2024 involving a payment of **€207 million**[1285](index=1285&type=chunk)[1291](index=1291&type=chunk)[1294](index=1294&type=chunk)[1296](index=1296&type=chunk) - 2023 Executive Board Compensation (Thousand Euros) | Compensation Type | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Short-Term Employee Benefits | 19,632 | 12,556 | 25,015 | | Share-Based Payments | 24,469 | 20,726 | 25,095 | | Post-Employment Benefits | 1,033 | -1,429 | 464 | | Termination Benefits | NA | 9,600 | NA | | **Total** | **45,134** | **41,453** | **50,574** | - In 2024, SAP will implement a company-wide restructuring program, expected to impact approximately **8,000 employees**, with preliminary restructuring expenses estimated at approximately **€2 billion**[1326](index=1326&type=chunk)[1327](index=1327&type=chunk)[1328](index=1328&type=chunk) - 2023 Number of Consolidated Entities | Year | Number of Entities | | :--- | :--- | | December 31, 2021 | 290 | | Additions | 26 | | Disposals | -28 | | December 31, 2022 | 288 | | Additions | 12 | | Disposals | -65 | | **December 31, 2023** | **235** | Further Information about Sustainability [About This Further Information on Economic, Environmental, and Social Performance](index=263&type=section&id=About%20This%20Further%20Information%20on%20Economic%2C%20Environmental%2C%20and%20Social%20Performance) This section outlines the basis for SAP's supplementary economic, environmental, and social performance information, prepared according to GRI standards and aligned with SDGs, TCFD, SASB, and WEF metrics - SAP's economic, environmental, and social performance information is prepared according to **GRI Standards** and has undergone independent assurance by external auditors[1356](index=1356&type=chunk) - The report content aligns with the **UN Sustainable Development Goals (SDGs)**, **Task Force on Climate-Related Financial Disclosures (TCFD)** recommendations, **SASB Standards**, and the **World Economic Forum (WEF) Stakeholder Capitalism Metrics**[1358](index=1358&type=chunk)[1359](index=1359&type=chunk) [Sustainability Management](index=264&type=section&id=Sustainability%20Management) This section details SAP's commitment to integrating sustainability into its strategy, governance, and executive compensation, aiming for positive economic, environmental, and social impact through its "enabler" and "exemplar" roles - Sustainability is central to SAP's strategy, aiming for a global vision of **zero emissions, zero waste, and zero inequality** through its dual role as an 'enabler' (providing sustainable solutions) and an 'exemplar' (sustainable own operations)[1360](index=1360&type=chunk)[1361](index=1361&type=chunk) - SAP has established an **ESG Steering Committee** and an **external Sustainability Advisory Panel** to guide and oversee the company's sustainability performance[1364](index=1364&type=chunk)[1365](index=1365&type=chunk) - Employee engagement is crucial for driving SAP's sustainability initiatives, with **81% of employees** in 2023 indicating active contributions to SAP's sustainability goals[1367](index=1367&type=chunk)[1368](index=1368&type=chunk)[1369](index=1369&type=chunk) [Stakeholder Engagement](index=266&type=section&id=Stakeholder%20Engagement) This section emphasizes SAP's continuous engagement with diverse stakeholders, including customers, employees, investors, and partners, to gather feedback, share strategies, and foster innovation - SAP engages deeply with stakeholders including customers, employees, financial analysts, investors, governments, industry analysts, partners, non-profits, and academia to drive innovation and product/service development[1372](index=1372&type=chunk) - SAP ensures employee voices are heard and concerns addressed through mechanisms such as regular employee surveys, quarterly employee meetings, and a global grievance office[1374](index=1374&type=chunk)[1375](index=1375&type=chunk)[1376](index=1376&type=chunk) - SAP collaborates with **over 2,800 educational institutions globally** through the **SAP University Alliances program** to integrate cutting-edge technologies into curricula and develop future talent[1382](index=1382&type=chunk) [Materiality](index=268&type=section&id=Materiality) This section describes SAP's comprehensive materiality assessment, conducted in 2022 and reviewed in 2023, to identify key non-financial reporting priorities based on German commercial law and GRI standards - SAP conducted a comprehensive materiality assessment in accordance with **German commercial law** and **GRI Universal Standards** to identify key non-financial reporting priorities, with results re-evaluated in 2023[1387](index=1387&type=chunk) - The assessment was conducted from two dimensions: 'outside-in' (impact on SAP's business success and resilience) and 'inside-out' (SAP's impact on the economy, environment, and people)[1390](index=1390&type=chunk)[1391](index=1391&type=chunk)[1394](index=1394&type=chunk) - SAP's Material Non-Financial Topics | Topic | Material According to HGB | Material According to GRI | | :--- | :--- | :--- | | Cybersecurity, Privacy, and Data Protection | ✔ | ✔ | | Ethics and Compliance | ✔ | ✔ | | Climate Change and Air Quality | ✔ | ✔ | | Customer Responsibility | ✔ | ✔ | | Employee Engagement | ✔ | ✔ | | Employee Rights | ✔ | ✔ | | Well-Being, Health, and Safety | ✔ | ✔ | | Human Rights | ✔ | ✔ | | Fair and Inclusive Workplace | ✔ | ✔ | | Talent and Development | ✔ | ✔ | | Energy | ✔ | ✔ | [Why Holistic Steering and Reporting Matters](index=271&type=section&id=Why%20Holistic%20Steering%20and%20Reporting%20Matters) This section emphasizes the importance of holistic steering and reporting, integrating financial and non-financial ESG metrics, and highlights SAP's role in developing standardized impact measurement methodologies - Global crises underscore the need for companies to create value beyond financial performance, with increasing stakeholder expectations for ESG performance disclosures[1403](index=1403&type=chunk)[1404](index=1404&type=chunk) - Since 2012, SAP has integrated sustainability into its annual reporting and, as a founding member of the **Value Balancing Alliance (VBA)**, is dedicated to developing standardized impact measurement and valuation methodologies[1407](index=1407&type=chunk)[1408](index=1408&type=chunk)[1410](index=1410&type=chunk) - Results from the 2023 VBA pilot analysis informed SAP's internal sustainability projects, including updating the net-zero target baseline and integrating 'living wage' concepts into compensation reviews and human rights due diligence[1415](index=1415&type=chunk)[1417](index=1417&type=chunk) - SAP's operations and supply chain generated **over $163 million in negative greenhouse gas impact**, while customers' existing on-premise software installations resulted in **over $1.9 billion in negative greenhouse gas impact**[1418](index=1418&type=chunk) [Social Investments](index=274&type=section&id=Social%20Investments) This section outlines SAP's CSR strategy, focusing on accelerating social enterprises, fostering future skills, and promoting sustainable partnerships to create long-term social and environmental impact, aligned with UN SDGs - SAP's **Corporate Social Responsibility (CSR) strategy** focuses on accelerating social enterprise development, fostering future skills, and promoting sustainable partnerships to create long-term social and environmental impact[1422](index=1422&type=chunk) - SAP's social investments primarily align with the **UN Sustainable Development Goals (SDGs)**, particularly **Quality Education (SDG 4)**, **Gender Equality (SDG 5)**, and **Decent Work and Economic Growth (SDG 8)**[1423](index=1423&type=chunk) - In 2023, SAP provided **$3.7 million in in-kind contributions** to non-profits and social en

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE AC ...