SAP SE ADS

Hello and welcome to the SAP Third Quarter Earnings Call. At our customers' request, this conference will be recorded. May I now hand you over to Mr. Anthony Coletta, Chief Investor Relations Officer. The line is yours.

Good morning, everyone, and thanks for joining us today. With me on the call are CEO Christian Klein, CFO Luca Mucic, and Scott Russell, Head of Customer Success. On this call, we will discuss SAP's third quarter result of 2022. You can find the deck supplementing today's call as well as our quarterly statement on our investor relations website. In this call, we'll make forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risk and uncertainties that could cause actual results and outcomes to materially differ. Additional information regarding this risk and uncertainties may be found in our filings with the Securities and Exchange Commission, including but not limited to the risk factors section of SAP's annual report on Form 20F for 2021. Unless otherwise stated, all numbers on this call are non-IFRS and growth rates and percentage point changes are non-IFRS, you have a year at custom currencies. The non-IFRS financial measures we provide should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with IFRS. And with that, I'd like to turn over to Christian.

Thank you, Anthony, and thanks to all of you for spending time with us today. Businesses everywhere are dealing with a combination of profound challenges, including inflation, Labor and energy shortages and disrupted supply chains. Despite these challenges, our results demonstrate the relevance of our strategy during these volatile times and reflect how SAP is uniquely positioned to help our customers become stronger for the future. The role of technology is clear. SAP solutions are directly helping our customers address their most pressing needs. whether that means redesigning or automating their business processes, helping them with supply chain resiliency, or stepping up to meet their sustainability goals and new regulations. Analysts point to the growing IT priority for strategic ERP implementations and that SAP should benefit from our role as a mission critical partner in these challenging times. Let's take a look at our top line numbers. We've delivered another strong quarter in Q3. We are seeing accelerating momentum across all our key cloud indicators, with cloud revenue now representing our largest revenue stream for two sequential quarters. Cloud revenue is up 25%. Current cloud backlog grew by 26% and now exceeds 11 billion euros. SAP S4 HANA growth accelerates once again, with current cloud backlog growing at 90%, now at 2.7 billion euros. S4 HANA cloud revenue is growing at 81%. We are clearly expanding our leadership in ERP, with net new customers once again representing nearly 60% of our new S4 HANA deals in Q3. Together nearly 800 go-lives. The SAP Business Technology Platform has become the foundation for our customers' business transformation. The platform offers differentiating data and application services, which customers and partners use to integrate the SAP and non-SAP system landscapes. On top of this, customers are able to develop their own custom apps alongside their SAP apps and benefit from Process Automation across their integrated landscape. This leads to a powerful flywheel effect from the SAP Business Technology Platform, which now has a run weight exceeding 1.5 billion euros, contributing to overall PaaS Cloud revenue growth of 44% in Q3. Our rise with SAP offering. is the easiest and most flexible way for customers to take advantage of our portfolio. It has cemented its place as the preferred choice for customers as they move their ERP to the cloud. WISE with SAP includes the technology, support, and best practices to help customers redesign how their companies run. We are seeing strong year-over-year take-ups since we introduced our WISE offering at the beginning of 2021. Overall, there are nearly 2,500 customers running in over 100 SAP and partner data centers around the globe who have selected WISE with SAP to transform their business processes and IT landscapes. This also reflects the increasing demand for independent government cloud solutions from SAP. WISE also continues to be a great mechanism for cross-sell and up-sell with more than 80% of WISE customers deciding for our business technology platform, and 86% of WISE also including additional cloud solutions. Let me give you some examples of this strong customer momentum. In Q3, WISE with SAP wins included Prada, Ricoh, the BBC, and Schneider Electric. Prada, one of the most recognizable players in the luxury industry, have selected WISE with SAP to further accelerate their digital transformation and improve outcomes and efficiency from their global network of 635 stores. This expansion includes SAP Ariba and SAP Signavio, enabling them to analyze and transform business processes. Ricoh of Japan have selected Wise with SAP to accelerate their transformation into a digital services company. This will accelerate standardization and efficiency improvements of their production and service parts management operations and use robotics process automation to automate internal business processes. Schneider Electric, a global leader in the digital transformation of energy management and automation, selected SAP S4HANA Public Cloud to standardize the end-to-end operations across finance, Manufacturing and Logistics based on proven industry best practices. Following a comprehensive review, the BBC has selected S4HANA Cloud as the foundation for its future SAP and partner platform. Moving to BTP, in Germany, the Center for Pandemic Vaccines is using the SAP Business Technology Platform as its technical foundation, especially