SAP,SAPGF - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to the SAP Q2 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I will turn the conference over to Mr. Stefan Gruber, Head of Investor Relations. Please go ahead, sir.

Stefan Gruber

you. Thank good or afternoon. morning Good is Head Investor Gruber, This of Relations. Stefan our for to joining you earnings us results. Thank quarter for call second discuss our Luka who today; also our and us for make by Christian Australia, joining Customer remarks Mucic, Scott Success from CFO, Russell, opening call joined both our who the I'm on Q&A will leads CEO, our Klein; Organization.

for this not find Investor intended call affect with SAP's our risks of XX-F the place future discussed slide cautioned Securities you could dates. XXXX as will and of uncertainties Any about as which reliance of March get could like call call not supplement expect, results undertakes they website, to believe, results for Form the annual U.S. today's can few actual defined are Act measures. estimate, words that Reform would or are differ non-IFRS this subject as anticipate, forward-looking financial their intended use Participants plan, on say relate All of in forecast, and from to such Litigation forward-looking filings SAP filed our SEC, project, Relations I to statements forward-looking on made statements usual, in started, identify obligation only with the Commission, expectations. the and available could, revise to that deck speak factors SAP more Before similar historical outlook we download. on statements. and forward-looking statements any Exchange such that cause during forward-looking facts SEC fully materially statements. are XXXX. expressions are the The SAP's may, Words X, undue update and to statements report the financial to statements to publicly XXXX. that SAP's Securities to a these are Private U.S. On are no intend, predict, should, forward-looking as including

as non-IFS Christian conference the And provide performance should those all not at and like superior with currencies call to to of I'd measures following changes this substitute things as For point non-IFRS prepared the constant measures you financial percentage in shown financial Unless noted, financial to Klein. for The that, a year-over-year. webcast, slides accordance over considered remarks. and Christian? we numbers on the are IFRS. referred with be to our of are prepared non-IFRS CEO, to will we turn rates or growth proceed be the otherwise

Christian Klein

I despite of of Thanks for well positive all joining affected endowing to to extend a be the all seems the and new today. parts floods catastrophic Western the by you as in sympathies I vaccinations. phase Europe also those want in hope pandemic our China. deepest progress you're to doing to

We closely relief rescue our to are working with and support efforts. the communities affected

Let's update. now turn to earnings our

transforming last playing has For executing digitally quarter. is the SAP, and industry of backdrop against are another QX before. been This the It more we strategy ever against shows introduced strategy we out that than every with urgency fantastic year. well

in partnering are cloud. Our the transform today. IT we a move with the announced their with customers us is time, to same while businesses modernizing they This at landscape reflected results strong as the quarterly the

customers. we value all-time most teams high in an revenue The Intelligent cloud to satisfaction XX%, incredible excluding XX%, by are cloud executing key revenue points Our X further backlog to accelerated SaaS/PaaS our cloud XX% Most and €X.X importantly, percentage recent growth by improve accelerated current takeaway: our survey. are net to sequentially our strategy to and our Our billion, our Spend. is hit continues customer working; excellently; delivering grew

of the some this quarter. now a at Let's look behind quote take drivers our

leading our companies SAP, industries with strong single RISE clearly all geographies from of is customers, to from and and transformation sizes our end-to-end offering. chose especially example, RISE AMD, business platform. new onto base enterprise demand consolidate and from installed see We our customers. them larger for across both, of One from

platform, business leads RISE S/XHANA integrated our of to adopt our Another as chose and industry example with RISE cloud the this platform. our quarter. That's our adoption business is offering cloud play retail. momentum we who Strong to which secondly, the to exactly technology Coop who move on. of dynamic, applications. I line and cloud S/XHANA out important business technology an first through is for would There to of customers part co-innovate SAP like strategic And dynamic saw touch strong then

for Our growth up therefore, revenue This revenue XX%. significant S/XHANA backlog acceleration half XX% cloud the cloud sets was to was, run S/XHANA rate up us S/XHANA of in impressive quarter, revenue year accelerated cloud and €X more two. a billion. an than reached in of

customers, net of XX% being with up customers We XX% more have, S/XHANA XX,XXX new. meantime, year-over-year these the in than

now to and SAP next-generation business and customers for platform business industry-specific integration platform. partners the Over process live Let's X,XXX developing shift discuss technology for and line new applications. the adopted business our X,XXX of

had quarter, powered by including a strong RISE wins, customer business with Lenovo Renault. Hilti, growth and and BXB strong Our double-digit

business RISE of on Let applications. SAP cover with our industry of me and now the impact line

LoB entire to next-generation of end-to-end business our processes enable them to technology move business across This customers cross-sell applications. run cloud amend RISE our on portfolio. based our opens opportunities the platform, industry our With to we up

share analyst cloud result, market research competition. a that our the its confirms over As SAP increased latest the in

of saw across wins against deals, This quarter again unique fantastic majority competitive a whole our Net-net, over SAP's we position, competitive we alone, performance have were proven record. all and winning in portfolio. which XXX the

more experience normal Many Clarins their support transform their management X,XXX few and and suite, are than looking to HXM Oracle they a Let solutions workplace. human full Essential. examples. employees. our me companies we our share selected function including won the a And Workday new Employee as navigate against HR better in to

Great current cloud revenues CX by double DeLonghi. Our Dyson wins quarter this include digits. and strong cloud and grew customer backlog

call procurement source our is for Alcon able solutions We and in materials, double current pay indirect Ariba their platform also revenue cloud by digits no offer. to competitor cloud Vision direct which and other as business chose our backlog Fieldglass and year-over-year. to

digital my cloud with and growth. quarter into this an Our Lomaz. is Decker, revenue and strong been chain It performance key our a customers chains business that has outstanding also double-digit Signavio Stanley results. solutions CCB & world. always run Black choosing supply full This supply clear. Intelligence first one customers, consolidated the helping also in has are quarter These current and Cooper to them had to resilient our first us add included with unique is They our in as of in value to which growth. transform Process digits cloud comments thing for like triple segment, are this grew quarter continued I'd SAP's part some In Business business about all ever-changing backlog. in their conversations

and we optimistic are future, today market. reflect the about guidance wasted have to we in momentum We the our seeing are the

to addition, by business, progress our into by investing will our billion in are total This to of expand new core we $XXX total In TAM a XXXX. markets. the market $XXX billion addressable

two more highlight growth detail. Let in me areas future

respond It created With business and disruptions business provides to in in world's comprehensive supply the for real-time have the members network, largest a to their network. chain. SAP powerful way we most

across This sustainability from support can our impact only full journey the alone, portfolio, partner companies SAP have who their is XXX,XXX progress. spectrum neutrality and to quarter over With entire of new on social economic carbon partners the joined. trading sustainability,

been excellent solutions and consider right and We network In transparency solutions their has are real-time partnering with performance across leading sustainability that in largest customers solutions that allow the this emissions core carbon metrics. them line more offer we from into are measure quarter. world's to ESG of of product, insights design building to XXX than a enterprises. end-to-end allow best Together, summary, that the another

distinct strategy Our the just results working in creating but demonstrate that not our momentum market. is

goal more again today. our results with hand reaching by Thanks annum, €XX TAM. joining of of let growing for us cloud weight about the Luka And optimistic revenue in me organic of are to to XXXX cloud our our detail. talk per through over billion in XX% growth twice now We

Luka Mucic

completely Thank is adoption portfolio. is saw their customer encouraging, as their cloud quarter transformation. quarter, first and more you excellent business gained also an in Christian, After growth in numbers. to momentum from see that well. cloud continue momentum much, with to the which very our customers have Yes. second side with strong that say hello partner trusted even very SAP agree across our my quarter as The I clearly we our and the I Christian reflected transition in in accelerating

Let's behind in key the of a quarter. now look some the performance take this at drivers

Platform, This a Business growth, was as growth cloud Our at strong customer trend in its Intelligence, Business performance Technology backlog €X total as accelerated approaching Qualtrics current by experience. backed billion. well sequentially to Process XX% continued

XX% in business. by billion, S/XHANA cloud accelerate more As particular grew current strong revenue half expect we With this to of second S/XHANA backlog, in than backlog the significantly €X.X growth by to year. the U.S. cloud our propelled

uptick after cloud For strong important the percentage driver RISE with an revenue X five resulting launch XX% Cloud months was was, sequential points, the XX%. up S/XHANA it Only a S/XHANA again, by the of quarter, cloud SAP, showed revenue performance. growth. in of Total

began. showed restrictions the which time the Our travel for sequential recovery signs stabilization to Travel Expense first of pandemic global business led and first a as eased, since

was growth. than Spend solutions. it We percentage though X more impacted category cloud SaaS/PaaS are other points even be continues The up to growth also pleased to Spend see revenue rate our Intelligent returning Intelligent quarter-over-quarter, to

predictable share percentage of revenue to XX%. more X Our points expanded by

licenses quarter the as strongly first well customers cloud and the software revenue offering. for half anticipated, as with X%. decreased grew to revenue transition software more our SAP year, by As In as RISE the

Digital services for lower November of as by well first in for Interconnect increased months. revenue, Despite the the was our the services total was our SAP down quarter as caused which X%, revenue Our divestiture business mainly by last year. six X% the revenue

stronger regions. had and United cloud strong results let growth. APJ robust moving X%. increased to acceleration the Brazil XX%, were in software some And before cloud our Korea briefly EMEA by being cloud software being revenue we with region, region, current cloud in backlog a on line, Americas bottom and revenue a regional and South and market, sequential by the color Australia you where Cloud In see equally all was by Japan, performance revenue give largest me by was in had up double revenue that our the and growth, increased cloud States, proud with the we Mexico. with increased across X%. revenue a strong key In Cloud In we to revenue the strong. by up cloud increased Saudi revenue performance software region, and an digits with highlights. Cloud combined X%. XX%, Germany even also Arabia, Now particularly

gross margins and profitability at in the look second now Let's quarter.

margin gross on driven grew strong and outside business basis cloud Our This a while performance gross by executing Spend XX%. points basis our margin points of SaaS/PaaS to XX The Intelligent reached was by XX initiative. delivery grew cloud next-generation XX%. by

a in overcompensated expanded first Intelligent of XX In basis margin our our margin margin margin to and X% cloud Our to The points drop at XX% second by points software XX% to increased backed of operating remains our our basis on-premise months. and by increased were support by XX%. cloud business, Spend and the expected better while an margin. and was for slightly margin gross XX%. grew XX%. by improvements Overall, six up margin was services XX up profit our gross gross to business in and quarter, the our margin which by software Infrastructure-as-a-Service The XX%, software support declined

in slight Our basis operating showed due by R&D. to to primarily XX.X%, margin decline planned XX the investments additional points a

was six points by operating was by down strong it down XX% IFRS over percentage first €XXX IFRS and operating XX.X%. to compensation expenses, was Qualtrics. decrease million percentage driven basis, higher On was This very XX.X%. by and to points the to share-based For our months, X related X.X profit to our an margin grew primarily

substantial a down performance tax EPS, In in taxes brilliant points. to likewise The effective effective the to rate by saw second XX.X%, IFRS to and QX. quarter, turn now had reduction non-IFRS which another reduction me tax points. the XX a down XX percentage significant rate XX.X%, saw Let percentage

are of respectively. fund to results as IFRS Sapphire changes outlook tax capital the again that we committed in rate tax XX% for income. our the $X.XX Ventures result, with build quarter, outstanding exempt effective mainly billion. contribution aspire lower a increased with to was businesses. continued year. combination In tax Sapphire industry-leading next our effective of income. The non-IFRS to decrease EPS driven the rate another we This As significantly as comparison a from launched guidance venture full XX%, our in total by and from Ventures well volume previous our in by a second support lowering entrepreneurs finance This underscores

Let me continue with our cash flow.

months, six CapEx. and operating up Positive income lower paid. taxes was restructuring by €X.X first compensated cash were the effects payments to a flow billion. Free from supported X% share-based For in €X.X higher billion, was reduction flow cash by by compensation

year, Continuing year remains flow we outlook, unchanged. six full operating free in our business performance cash guidance the our first For the full flow cash which raising. months, with reflecting strong the are again and

customers the to act detailed transition circular our well. want statement I our to line to already us in always how before closing, a quarterly our sustainably published about that as sustainability through Christian the please are innovations earlier to outlook, economy and today. green refer more For mentioned portfolio. the enabling talk we we And

We public stakeholder part joining integrated act support sustainability and business, have commitments our coalition, Forum of World on to Economic including several an as we our capitalism made the promises.

Our will best among others. reporting software support metrics,

we neutral year, the by our Looking progress end lower own carbon of towards half at year. continue internal our last make of the In XX becoming emissions our to first significantly were of to the goal compared kilotons, carbon XXXX. metrics,

Given now remote our to our we anticipate previously initiative, and higher decreasing the pledge be emissions flex regions some ongoing to the the kilotons actually we of Therefore, carbon topic end QX. are even nearly we with expected. work level pandemic guidance than diversity, to women And conclude XX% of to to a the continue the management increase of year. number range to of kilotons XX on the for of in at XXX in

So let me up. sum it

encouraged portfolio. strength solution highly by SAP the our clearly with We customers. RISE across resonating is are with

once and half us in raise we cloud year are our the to cloud the again current will gives The be first now much, revenue and to accelerating. questions. outlook. Thank your take the strong Our year backlog of very full happy momentum confidence you

Stefan Gruber

we Operator, you. Thank can start session. Q&A the now

Operator

from go Our first Stefan Slowinski Instructions] ahead. BNP [Operator Paribas. question from comes Please

Stefan Slowinski

down. sequentially, Yes. your remarks, on to SAP mentioned in of multiple upgrade projects topic as I maybe increasing cloud backlog it seems current up like slightly flat that and number just Yet wanted follow S/X. even prepared cross-selling an growth the ex-Qualtrics ex-S/XHANA probably have you to apps the customers was

seeing S/XHANA despite seeing become business acceleration do just of So growth, And into that other wondering to backlog in feed the yet current we're when areas? growth? lines why you the in that the we're not expect more visible backlog

Luka Mucic

more Perhaps technical are we the Yes. around some around the add views a of their then seeing cloud -- start kind This the current perhaps Christian market. can and Scott is me question let in backlog. and of that momentum the off

internal as to current important in First our of of ahead that very actually, was both all, it's our as cloud QX well note backlog, planning. QX in

is and cloud, much adding, bookings distribution can current that overall number impact from new impact cloud more an quarter-over-quarter terms such that's that absolute have the have the look obviously, any a number significant. is that And from it seeing. a So seeing the note you other fast bookings that increase we funnel. you also momentum versus perspective, a the add renewals, actually It's to as conditions, to cloud backlog growth we because bigger at itself of year are already more, in composed you It's under in highest case of in are actually the where of increase a of, normal scaling would And usually how a a new without kind today, you during big of take of make is expectations. seeing when an established business you're that our increase the year the you S/XHANA quarters. the then in highest have even actually can excellent important the QX that ahead therefore, is, fast cloud you outside very the in significant in

when we -- percentage by double revenue year, from Last growth to points. this QX our at on versus compare it's X.X rate can sequentially to QX year. increased also basis. QX quarter-over-quarter see percentage sequential year, points This last X.X you in a this actually You year QX that

is that in steady to into future, acceleration this expect growth there we here. absolutely you continue are So actually assets particular, the And the happening. given highlighting

on So, with of we pleased Scott. this the Christian to and ahead what in be are extremely our And and opportunities, momentum perhaps we are time. expected at point cross-selling

Christian Klein

Stefan. Thanks,

Luka as sequential year saw And high when I on the year of your then since guess the seen growth it's years. CloudCo expected. cloud to in top cloud growth, of have this revenue high put it's of salvation also what in say consider existing But further increase renewals, of not you further two. highest then it's cloud all, very of And number, we first have half again, this maybe acceleration many we has lead So revenue upcoming and important order outlined, in seen XXXX. you have which to one, large a yet in now course, to entry obviously, that safe this a half of a will in order entry already revenue we

an says, I then backlog also now I end-to-end, all now it's go to that on cross-sell already a platform. is, to BTP. and rational data There big is to solutions. then, the with But XX% -- new want our okay, Fieldglass, of is the see opportunities, for pay security logic mean next-generation I now But actually go for to backlog for S/XHANA okay, forget is today retire behind to move see regard same it's And I guess customer, And that's SuccessFactors. year-over-year. buying up about. do I this one model the model. move you RISE to hire platform, customer, go very is our is we still I to and a who course, current the to of do cloud to also cloud. its the I the wants also HR on for very I decision ECC this cloud a impact there not And RISE I So Ariba, and move then -- procurement mention S/XHANA want procure the important still next prem the want what end-to-end. how strong. I with should with And

Stefan Gruber

thank Okay, you.

Let's please. next question, take the

Operator

Our Wood next Stanley. question Please comes from Morgan go Adam ahead. from

Adam Wood

Thanks afternoon. for good Hi, question, taking and Luka. the Christian

this it's you're plays orders a cloud How as about maybe us spending the ability a question, metrics at related I just differences, terms of these bigger revenue? for with of in and Spend, as along. around those markets of the kind big the kind more pickup more of when guess, on Could what's investors one that of And out with a where you bookings in a market's the mix to as by you quickly the customers number any And probably maybe momentum? to Stefan's implied come not get but as the be guess, furthest but Other seeing the bookings growth? particularly business are us smaller to subscription obviously there around new travel you are recognize cloud -- and should feel in is Any give disappointed see just delays that than and much that to long can actual hoping of on for. better we I'm happy maybe U.S. in terms from So, the reassure little growth. we are renewal should Concur, what's bit signing is be around how how the I We then to mean, of maybe thinking little open, Intelligent back then give of you new that the expense? talk happening that new I maybe improved, that that, you deals markets I and thinking looking were secondly, that rates it's dynamics in? give see detail metrics obviously, on side, acceleration on what is example, and us? can order in mean,

Christian Klein

Yes.

then and start, me in please, chime here. colleagues Let

renewals the statement bookings together all, of CAGR in significant bookings QX we there, various the terms you the the as again, significantly in our have we as So clearly, of renewal want both that have we movement's new I that the where across quarter QX saw as up color cloud well given new performance base first ahead to first every significantly year-over-year. only objectives. are course, additional make. commentary saw in can what I well portfolio. the CCP. the already that mean coming higher midterm alone due of of in pickup, not of order all built to we improvement it's Ultimately, And need both That's as for around actually parts are I And hit the as as cloud new is the we what assure to

why I that's revenue we our ahead -- on are internal also So of side, plan. the

perhaps like only that growth is that so the growth, We bookings in new S/XHANA, transactional think BTP have the some terms growth Ariba have we an bookings I also double-digit bookings, returned but actually was very not which double-digit of new the cloud and seen line, in Fieldglass in that terms revenue we to growth ongoing the strong to those of it's in that And rate, a on showing. revenue Intelligent in but and cloud of top. note on piece aspect can run concur important the to not back additional Spend, -- fact seen cited come have fast did triple-digit we areas mention

to business gearing So is we that see start this up.

importantly, for in will significantly to through we X% support the particular, the QX, have transactional from we it revenues contribute As further to XXXX. half growth accelerate But set this and start I for will in year growth and to it negative in business, the next expect went targets the year. of that more that second also said, kind

pickup say, So contracted. a a business, that's It's that they I America strong for though, certainly very its Spend. based really Intelligent I of terms not North even broad-based. said business as in had the And size the new region, performance would is specific there, on to cloud before, of confined

Luka Mucic

look, my you for have when you business Adam, CCP mean side, new closing. take the a I the And Yes. and net just are at we look

as, the new upcoming years as many successfully well So growth renewals. the order course, the had highest entry We of since closing in half year one.

are which is clearly lagging the already ahead us we about confident to revenue, So of cloud very plan, XXXX. two now also indicator year be allows half the a and which for

example, So then, of this have course, we high the And all-time customer metrics for now survey. that's on in other an recent is very satisfaction, our like, important.

the showing a signals building lot are the of Scott? indicators important and that which also years So healthy quarters a to we is only but closing for business, also strong new that all business equally of not lot come. we are

Scott Russell

but and be I guess Yes. guess covered it, I Christian share. most two you've I would of Luka, there'll that comments additional

platform, before, customer but significantly major growing talked the with we our technology categories, categories Business QX? all all when first the really QX Process amazing momentum it RISE, what by order question Intelligence, our entry. is, about in the look experience, earlier half in entry across Qualtrics in about Yes, in bookings and that is an underpinned the back order the The cross-sell, pleasing was first to the you in

market growth did being cloud we're strength of underpinned and than the implication our amongst mentioned, business dimension. is going forward in above and entry, us as what terms order portfolio other what want a business, also across at but with on it's dynamic which proving that come COVID when only particularly the America only our I that things. confidence, second half it just Christian with of So And strength not rather look in very outlook sequential North in showed terms in group to that that the was our doing pipeline that confidence secondly reiterate mentioned, gives one Luka that a what gives will notwithstanding is us situation well the revenue I

Stefan Gruber

you. please. next We the question, take Okay. Thank

Operator

ahead. Our next Evercore. question go comes Please from from Materne Kirk

Kirk Materne

obviously, Just year. S/XHANA software much doing seeing there? the well, two you might or some a I'm get And of believe all would last more really who little but of software. just on cycle broader granularity just are, all just you how are of on trying questions after there on really investment in more or the sense wondering acceleration you and to Cloud perhaps acceleration if I -- some a back-office be around cloud. you the all why S/XHANA retrenchment momentum is the be dynamics, Just legacy some that replatforming Thanks. competitive in the rethinking on back-office back-office, maybe then are winning? And a bit great. was

Christian Klein

first, one move reason. I customer RISE and the me add for perspective. customer. your S/XHANA cloud. -- SAP momentum pick actually the this retailer, first And with now mentioned And I please corp, then let they example. large with go Scott, a me some I large mean, a Yes, Luka, it's let did

They to want move is get because their them, with this to workloads. We're do back industry-specific this need move move manual They want to capabilities. chain to in commerce First, offering offering we're consumers. new new business We're upgrades receive now a cybersecurity new the also to platform. a standard, platform deliver ways also ways them license better also capabilities cloud. for now them why to regular a supply of experience innovations, fly. require also They regular the doing really to traditional the they then, certain of see they to to of significant to And personalized want to they on connecting the want the technology which process, today lot a offering models. replenishment, automation for

shift to reasons business new is to redesign an and coming the sure benefit but XX not way you also to hand expertise the cloud faster landscape the this the the customers the going now take industries requirements have of S/XHANA where Cloud, will from this have to selling course, product, of RISE, resonating business with is also -- we processes And is And offering platform way new and And line agile actually more the really business. with lot an from IT a doing is a And because our be and core reinvent as this hundreds you And is what making of move our and benefit then, there So, well, are that are cloud any this what in business it's actually these how well. age. you a the is to the alone, really of a of business run customer. to we also, customers. by course, one can transformation, the to And act applications. much there, very across to up. digital of not

Scott Russell

and Yes. just that can I offer. on flexibility of it's able a They a to means that if the enough. why the customer is the on market the platform and last take cost really our speed office. point and other there, which workloads with growth it's is to to brings, so S/X, out which It's businesses which about and need They different moving in that you be capitalize in the to capability, the the your speak need all much Maybe think momentum but pick back transform. in not need portfolio innovate Christian, that see agility RISE an feedback gives we that in that we're from to the cloud uncertain with and the making digitize. in also I'll opportunities add agility, not transformation SAP cloud we to comes is up They one, I because that important customers what

it So us, existing do second Company's driving companies speed digital that that we've the want SAP highlight well. to the customers be -- net and that new first. but to transformation, of customers RISE growth in that then And new our that order would would net with want as that's and clients, shows not a entry got only coming facilitating with the new I is addition significant

in second promising the the half. that, pipeline with look So to continues

Stefan Gruber

next Thank The please. you. question,

Operator

will ahead. Please Serafini take next We from our Jefferies. go from now question Julian

Julian Serafini

or license much away this decline my able at some question versus opting the quarter, XX% due that the it's year-over-year, XX% for to cloud you and XXXX. is revenue of I'm how customers specifically. so solutions? And give down or see how look quantify still environment today. right, much ask revenue Are one on to So is market If just we going color over license you to the may

color you So some on please? give help that, could us

Christian Klein

Yes.

are just and shifts portfolio happening a strong growth declining in the correlated portfolio, the can give So an for entire well, for cloud. I license is seen the decline you as is fact offering it's portfolio the -- It's and consequence that see in really well. as exactly that actually have the perhaps for the clearly, we to you S/X total cloud, you the as of To time anyway that there move cloud seeing massive this. longest it's true rest the as quite the moved the very S/X supply see which and being, mean, is example, the seeing The there that strong happening And those already trends. it's of chain. what with the we I now know, to you XX% frankly, as time take we broadly quite digital a for as in across are well. the cloud with direct pickup some a continuation growing on-prem software IBP, as have of

biotech in recent they SAP have now in number both in across the very own there, both their cloud note. business, quarter we as that, positive the across chosen in hopefully, the significant into have something uptick cloud one them with massive have of as some perhaps We companies share And will like mid-market. of news well our quite also us to transactions many lot large future, the well. clearly had still as this A seen strong you why in in particular. been also we have as That's right. seen on-premise as translate have We're companies And very growing we SME nimbler enterprises companies is of from actually also have it a quarters, become smaller the on-prem in into That's who well reasons of coming on-premise. have expanding for is posted. that and our

Luka Mucic

which you healthier let's the But support had is are buying revenue move we also much And a we top, the of to quarter. initially Yes. of ourselves I to our planned. I on net base based customer the are as more our of a second, performance also, on see massive. that share mean the not support from cloud. cloud, XX% then mean, installed it's this also not decent revenues forget, way to new And conversion cloud our rates

installed it's of a also winning So, market we the share. are not move base, only

can actually cloud new customers attract We with industry new the coming entering our We innovations road also new on and maps with are territories. platform.

Stefan Gruber

question, Okay. please. Take Thank the you. next

Operator

ahead. Our from Please comes Schaller question Johannes next Bank. Deutsche from go

Johannes Schaller

making. good the if on Congratulations I I have two, you're progress could.

we seeing. see we $X we comment second already, the one, you quarter? conversion X of have And the where come a Could that us factor you're you every is a subscription in about a revenues, a bit trend lot factor. think then trending give said times First maybe that from ERP maybe actually $X stand little you times to I sense target we If revenue or in you're cross-selling the better positive to upsell look from you Luka. at continued? about wanted cloud for given of for I now has Scott, QX, And potential cloud X basically said to talked revenues Sapphire, more. support than of we in Look, back

maybe to could everyone, now that kind see when more by the and us get launched evidence little you Christian that on you break should of potential you application, have us a sense number? unsold, that the $X $X. down little a for we of kind timing theoretic maybe also bit give can of And bit since RISE. color should seen only you So And you some how

Luka Mucic

the take me to a QX. for and Let as improved first further closer increased two factor one We're have even factors, Christian now. very indicated, to quickly. and QX three of conversion conversion Actually, actually already over in much the

goes one of we result revenues. churn to healthy in QX, resilient that higher QX. but is of that a show were it the Obviously, our also and So in we very license shows that factor because is number we up strong the support translates have extremely revenue mean much also the are into by that churn posting. healthy. in this cloud And I is little a X% extremely it limited extremely was

On I over. cross-selling, can the perhaps hand

Scott Russell

then can I cover question the first add on can and please you top.

SAP So and in underpinned we've at I a we S/XHANA today. look transform, transform as it obviously to already guess able required to capabilities be you capability, are are and covered RISE this also cloud. for but there discussion and broader When by say, the with in to the the its business truly capabilities is that

both with significant be innovate hybrid orchestrate to platform, technology a growth and built scenarios gives as on entry to customers our So that about the order extend of able applications partner we business able that which vertically top. across RISE, and to capability and to talked has the that seen in non-SAP part her be innovation SAP uplift

opening our comes bringing on growth the his company business Secondly, and driving on facilitating network, growth. partners capability the network added by on that of activity our network again, network trading significant RISE Christian through XXX,XXX the -- mentioned SAP, network, board, in with about every then that trading that and so

I my And during we to answer seeing so that that would every talked Christian, Sapphire about you already of impact if dollar one for to uplift that, arise continue. expect we're we the that to the and the short extended is, add? three, to want guess

Christian Klein

want with finance mean now this highly last only mean, these customers integrated. lot, they They move, cross-sell, procurement. oftentimes, And customer. also regard And when cloud to don't in there's Yes. also this or And logistics, but not not then Thanks imagine the ECC it. I HR. I now is And want they want Scott. an think a mean, least, make about I

wanting system. used to for that There applications, It's for data to much that for this when you change then, much is whole same anymore. of important. accruals we many now sense a is why you the SAP the very HR are in you And everything finally one are modernize procurement had same in end, have when Now also compliant also now because integration our HR, the at procurement with finance also consider security model, your landscape all their wanting P&L direct your that, their or in the and one compensation to example, sure certainly, you're also agile, finance platform. that now so not customers on move make so and vacation to this doesn't expand Again, example sense different. production way P&L We your modernize model the footprint a And very why or system, finance as from did were our of you or your make the It's much your it booked looks compliant do offer not changing and decoupled models. or, your because customer at core again only completely and customers but homework for to And time, do same cloud. procurement one so indirect platform to same in is you HXM but suite more our book business model. you system, sheet. capabilities integration on is of a your balance monolithic it's are our to this example, new makes ton in the a the large better kind we moving

Stefan Gruber

please. question, Thank you. next The Okay.

Operator

from Bank next The from Please America. Boulan comes go of ahead. question Frederic

Frederic Boulan

get metric And the comment just articulate the XXXX on should actually we your further acceleration you read from comments the CAGR, considering can we acceleration current can obviously, the I expect you made in QX, back RISE you're cetera. come that should incremental in seeing on cloud enough that your earlier to that the bit backlog earlier higher. which revenue is, cloud If industry CCP et is to comments growth after a cloud, small

captured structurally higher Or it by CCP? part in a stabilize transactional to at the by, level? outperformance you et which is do CCP is cetera, contrary driven of that that expect not So

Christian Klein

Yes.

Let me dissect try this. to

a But a absolutely of the the of and growth fact said believe you that further in should to growth just so well, in CCP very CCP that There that you That's up volume, absolute due not is new you on more previous are needle. the in is much see only quarters we the to but expect steady accelerate and step-up. obviously first it will during then gentle accelerate a nature the our the should high But year. that as two source the up. a very low revenues, growth amount as obviously we of not the transactional all, cloud currently built way come important. the demands will assume needle further sitting significant at So, in and of again, absolute bookings is the CCP that we and how at. And QX, more QX which are move One absolutely, looking that typically are level. moving are

then this are expect step If and will add the course, great, year based We And we that's we certainly, from are and coming the year significant on are up. the there that don't confident happens, then pure seeing we see to of started that a we the again, see enter as which for but momentum it will prudently have years increases remainder to the we we new and growth upside, that that CCP. the very absolutely glad stabilize. of they that

years solutions think solutions around are launched a starting to around opportunity massive now that in The different cloud those. on existing is just potential purely the what are We CCP. just portfolio, revenue already have see of industry as we today come areas, in The SAP for from on network, growth other total market for that the the seeing all having market. growth this the topic sustainability, we to that great in is focusing new organic bring new see to is solutions which business you we innovation about of are in net opportunities, the which a new a come top organic great current will we accelerating and the addressable

that lot giving So is of a us confidence.

of our at we of be wanted ahead this in time actually are point we expectations said, I As in where XXXX. to

Frederic Boulan

can And on point quick made a on ask if cloud. the you just industry follow-up I

industry fresh, I to can with talk about cloud should If share us you those your pipeline data kind reception can seen pricing the discuss if what offers. but very you that? of we've we for it's -- bit you offers. Talk expect know extent points of cloud industry any can on a about And

Christian Klein

Yes. Good our question. cloud. also we And S/XHANA look, industry with sell solutions oftentimes, conjunction in also cloud

on side transformation oftentimes, then I the I As the the works, and went into digitize verticals. customer my core processes

also the as bundle running that retail, for utilities, natural we selling have are also processes then, we again, course, new we And think again, back you with which we doing demand sell optimizing our claims in example, solutions solution actually example, or of replenishment, are Scott, in a for platform it core a also with cloud the and For industry released sitting that cloud but then, And ways of stand-alone, have industry another core. also at for S/XHANA those intelligent management, the packages already. new save into the lot for of hundreds to for naturally we that great just automotive. loyalty, integrate management can claims also just RISE. we retail, solution, millions money are you of sometimes of and our now moving of which oftentimes millions, Sapphire, And our about capabilities, customer When a are expansion ways it's as of logic. is it's on doing and partner there core are supply you

Luka Mucic

offering. cross-sell through the reinforces the with industry value of It our the the Yes. the customers opportunity and gain cloud orchestration RISE broader

Stefan Gruber

the take next we Now question.

Operator

The next ahead. from UBS. question Please Briest comes Michael from go

Michael Briest

Two from as me well.

XXX HX, a Christian, we customers, about could in S/X about of new. or little take sort to the First as XXX customers, I half one, whom were talk Scott a comparison of probably I net sales to the while. X,XXX cycles RISE talk XXX you bit guess, appreciate

And How before came discussions customers? S/X of lot of new would net RISE within a came you started then And migrations? expect of RISE. back them these when exceed S/X? the S/X was old would How S/X maybe So very going again. support, have net many customers profiles? it Luka, from customers add performance just on to a the wins of what strong sort many But secondly, was those RISE

a HX. percent that math you support you. stabilize couple year continuing implies even see minus of outcome get in year? be and that is don't just -- that's today grow your for see think XX% to recurring, What gives it for the you to to X% support the doing so I Thank on the guidance, the we or confidence that to the the going do down

Christian Klein

go first on RISE to question? would Scott, like the you

Scott Russell

Christian, on I'm add any please happy to, comments. so

let look, break it down. to me So try

XXX First of over mentioned, net new. had that the in in at of all, in over growth RISE as we've QX customers we seen of and QX over XXX, which half

we're So -- in it see two significant seeing I a parts.

first we've net that that bid momentum a in Luka The earlier seen all, market. significant of new mentioned in the this and

looking RISE a others, that transform by that for obviously, are Airways, have markets globally, brings organizations in their they work quickly also large that, that's are they to Christian SAP, looking seeing underpinned are work but and also we're that the got complex S/X. so that portion, bigger is but mentioned simplicity Coop, amongst companies large Etihad cloud providing customers. with in AMD, So the

that expect to We continue.

to installed the reflect market conditions market notwithstanding So towards organizations. cross-sell that to the with we growth RISE, say, larger both I continued and and COVID. the both that the base with volume, value conditions being share brings S/X drive have we not Notwithstanding, second And the net outlook large well. the only that also will opportunity see and with and the But existing that, and underpin RISE a as small the as outlook a that gives with but customers pipeline through new confidence well for that medium and as half our larger ever-changing continues that, resonance that. as

Christian Klein

that I But the as probably that the seen, essentially expect all, don't is two kind digits, had of you remainder year things support And the on in well for of and we in nevertheless, best support growth performance there Yes. QX to QX, turned last positive the openly our flat. fact mean, first that things. will That the year implied down. by already we revenue the We outlook that of I as side have keep concede has profile you year QX. bring support obviously are the one, the prudent need license inevitably mind and of was revenue, in had the for software on this of the growth will was while quickly supported, as in also in that actually negative revenue double half

this extent also therefore, to the reached. will little the particular, And cloud a them distributed very what see conversion can be decrease base QX opportunities agreements, it revenues the XXXX. impact then the a support a also certain that versus more but now The full versus the will depends ramp is starting to on corresponding year of therefore, and also until we the It of out a complex up. customers, to which, to support And move take while crystal second therefore, That's will with spread extent. larger will to RISE ball again, of in this looking software very impact installed reason bit. revenues QX, conversion are starting be across support already the like larger cloud, factors, into healthy is and a ones, bit ramp in

transformation, to certainly I we bit guidance substantial little model and that bit. we that it caution of given through into So going here the extremely of is business think upside the sense rather I of implied the a makes risks But side all are probably that kind say, one a taking downside. would on filter the comfortable err with a to feel consideration,

Stefan Gruber

Okay. Thank you.

the Let's question, move to please. next

Operator

from go question Research. next comes ahead. The Bernstein from Please Moerdler Mark

Mark Moerdler

the this saw related especially questions, on current you in We strong nice acceleration if cloud that -- don't Q-over-Q quarter, mind. the Two bookings. bookings. cloud S/XHANA S/XHANA booking cloud Congratulations

year backlog over coming but you first happened at transitions is many basically number smaller RISE with would nice, second made one cent of point be other number the a any in excluding that deals current it get that be have S/XHANA you then the and cloud from next dollar cloud The is that it SAP zero or bookings? generates is up increase, year of and are even which seeing ends that impacting up get appreciated. additional -- time backlog In that an you into this backlog the number these SAP? the potentially signed Obviously, comes deals And much you would another RISE how in then are this words, do this after year a upsell so the after? comes

Christian Klein

business there's for me come the back RISE our let do strong redesign to to to mean standard. their with on S/XHANA transformation many choose of the a Mark. Obviously, the business customers take I first do offering and their regard question, also the also choose technology to correlation look, as They correlation between platform. And BPI cloud. model a to

deals QX, cloud upcoming RISE also I consider, mean, have the the for correlated since to share But were also we will this So increase that I XX% well. resonates was say roughly to In can actually RISE. around January. you S/XHANA say, definitely of -- is also it quarters, because really would

side, deals side. actually we early the very And on IT the to remarkable quite in still customer, on me larger only So days. for also it's on lot with work actually have business but case closed already that are transformation the the business we you a the first because the not for the

transaction that year in actually more pipeline. are we very confident even Luka? half also we much at by also two see the So looking larger

Luka Mucic

you agree. RISE an it's mean, CCP, exact number the I contribution give of I but insignificant. now, can't Yes, I And to not for really

is percent now a are RISE. hope through of for helps. talking we CCP the coming I S/XHANA, total already So share double-digit which about that

Stefan Gruber

you. Thank Okay.

we time I think for... have

Mark Moerdler

in go of -- I'm question sorry, -- terms second In the on. of terms

Stefan Gruber

No, ahead. Mark, please go

Mark Moerdler

moving In of second the other increase all big current over? in the creating this the on Does made are as smaller to some Or year up cloud year these up deals are creating up end saying the just SAP. and it these of was end an potentially, some bookings? question. words, RISE to I projects year it with lots deals that and cloud increase does start next after, that -- convert

Scott Russell

Maybe that Yes. I pick Luka. up, Christian and can one

the is both. answer So Mark,

over say I makes really organization. when -- of an at choose RISE, launch end and the that we've or time as at since leverage will transformation said, a look with do are parts so they the the it customers number to a the seen get or a What small, organizations, seen And that on a able got offering it and so look phased Christian customers they Verizon. opportunity large overall with we've at offering So beginning different as to amazing journeys. quite but compelling you number different the of indicate, January, of medium are transformation There this the -- far their response, to embed organizations business into are to a it what at of multi-geo, the of rise differ RISE with use when to between the bring holistic in it business do. and larger whether that have that quickly as multi-industry that out period if they be landscapes particularly is from is simplicity way. and have the do their the they as would But being singular transformation you different transformation expect roll There continue platform. we look even then RISE and the then would they that's brings. that And journey you're

Christian Klein

very said I look, to the Mark, or they the they move customers and who And to have adhere new with to project the phasing, right. regard Absolutely, it's done sometimes with what within mean, actually live also to regard we months, one two standard. one small is Scott so platform,

customers, And in a in also do lot these overall So a they, projects. step-by-step also with then of to volume of large organization. course, the course, way, as this that's actually mentioned, the second, not of even we see a remote Scott

see they case, But actually start assumed I start business also our with internal So to process. a there, they to a have that certain division, duration. we Luka, with I business also compared say, a longer

phasing year planned initially Now, the and as we more see deals towards one also two the closing. much we for are actually that large goes year

Stefan Gruber

Okay. Thank you.

brief We please. have time for two questions, final

Operator

Our next question comes from ahead. Mohammed Moawalla from Goldman Sachs. Please go

Mohammed Moawalla

of of clarification, sequential the you the bookings cloud is to we of forward a progression better-than-expected cloud you get very a on Just a the should of you much. comment see backlog. you some Luka, significant around sort reacceleration that as we in Thank that Or of there saying growth pull element in an QX? made Are sort the a saw?

Christian Klein

the just and QX growth a for in underpinned to the QX. significant, is that strong current have clarify and what would actually we Otherwise, seen would less QX. To backlog bookings moderate. then growth acceleration rate QX and have we And this in be should be normal that and new saying by us, of I That's sequentially you also that. was to see expected conditions, unexpected cloud that under in QX very than step-up the remarkable had. growth cloud pronounced briefly, been quite across It's significant relatively expansion steady Yes. very more a

significant what steady expect I in progress would QX one. and QX is then for a so, more also And therefore, further a

Stefan Gruber

Okay.

one, last assume. the Now brief question also I

Operator

ahead. Knut The go Please Bank. Woller from Baader last question from comes

Knut Woller

Yes.

the in a briefly the Asia-Pacific with of bit pandemic there than color you. you on sequentially. slowed revenue? the growth saw coming on out Europe in and for didn't APAC North back on that the faster And year development simply the lockdown to Just cloud Is in America? development? within the Or highlights which The your China, other Thank the the any quarter due regions. behind dynamics some we also last mention drivers of are

Luka Mucic

Yes.

in pretty wider going Actually is in substantial across to hard it's perspective, as in won't amazing what the Asia, cloud look have QX. from to performance actually, China It able me been So great the the well. are mentioned do, they first including at the the very had really significant year Scott, we growth. mature that revenue to kind you when were and testament bookings. I performance darkest think of they MEE, to and America, returned how very markets with very the pandemic And had a days But a conditions, stellar would to very you of terms for team market region in a will, that think entry they a half performances growth first the a have relevant would we that nevertheless, justice that similar done basically market revenue for What the differentiate has in as take of just XXXX, be from of a mean, an look new all, in output really that I Japan, Asia, that's have SAP. it's new some a I significant was Again, performance China stellar expect lot when would take to like pretty into and the a to doing out that today at When Germany, do the particular, number of I present, the order that look and pandemic really and the teams a a they strong pick quite say, largest add? have of absolutely little camp. have that past. order us. a that we therefore And solid, translate stunning Siamese of the rates a bit markets, perspective, superior. those of me very into where India there have we and mentioned, Korea you at in all comes twin markets in outset to I market regions obviously, because see South solutions like are anything that difficult large, outcome and had in there Australia higher growth, of because appropriate of at of for future, North predominantly are all before, customer in to just also in mind. the different seeing strong But in take would others intimacy momentum growth difficulties terms general, then post the a wouldn't in I I entry being some steady you you we overall for trust cloud I in in a are very story think driving the but the the specific the

Scott Russell

any some But is you particular very well. amazing the customer summarized performances I also others, relying like India, heartening markets we're the also really performance, really we the large mentioned. obviously, us underpin huge in some it their It's great on and reinforces region think across business move cloud, markets States consistent the our which to I it is, growth you as but as think into not because and the Luka, have which it bookings in world, strength performance. of Germany like a bigger driving and for of momentum the forward. base obviously United are in including

Stefan Gruber

our Thank very joining. goodbye. replay much, for The very much will and Investor much. available in the earnings This QX very you soon Thank be Relations Thank call. you concludes so website. you

Christian Klein

Thanks, joining. for everyone, Yes.

Luka Mucic

Thank everybody. you

Christian Klein

Take care. Bye-bye.

SAP SE (SAP) 21 Jul 212021 Q2 Earnings call transcript