Letter from the
Dear Fellow Shareholders,
Thank you for your commitment to and belief in SAP. As the company’s new co-CEOs, we appreciate that SAP thrives when we put our customers, shareholders, and communities at the center of all that we do.
We are proud of all that SAP has accomplished in 2019 and are laser-focused on continued innovation at scale, integration across our portfolio, and strong customer success and adoption of our solutions. For nearly 50 years, SAP has grown because we have the market’s best engineering talent, a global footprint across every industry in more than 180 countries, and a deep understanding of how businesses must operate in today’s global landscape. Never has that heritage been more valuable.
The year 2019 showed once again that SAP can deliver both reliable financial returns and strong underlying growth – and we take great pride in this continued growth story:
- We delivered 12% growth in total revenue, our highest growth rate since 2015.
- Cloud revenue continued to be the major growth driver, growing 40% (non-IFRS).
- We increased our operating profit by 15% (non-IFRS), with margin improving by 0.8pp (non-IFRS).
- With increased efficiency in cloud delivery, cloud gross margin increased 5pp in 2019.
- Our flagship suite, SAP S/4HANA, had a record year, growing to approximately 13,800 customers across 25 industries.
Our stock posted an all-time high in December 2019, and again in early 2020. Our share price grew by 38.4% last year, out-performing the German DAX index, which increased by 25.5%.
We are pleased that our shareholders continue to participate in our growth, with a proposed annual dividend of €1.58 per share for 2019, representing an increase of 5.3%. Further, we intend to return an additional €1.5 billion to shareholders through a share buyback program. The share buyback program, in addition to the attractive regular dividend policy, is an important element in delivering value to our shareholders, and together, they show our disciplined approach to capital allocation.
We spent our first 100 days as co-CEOs listening to our stakeholders and understanding their perspectives, and we are now acting on what we have heard. Our first step was to align our customer-facing organization to simplify and improve the experience of our customers. We are also unifying our engineering teams across the entire portfolio into one team with one set of priorities. This will allow us to focus relentlessly on accelerating the integration of our Intelligent Enterprise and driving SAP’s next wave of organic innovations. We will continue to be the partner that enables customers to rewrite their business models, redefine their industries, and leapfrog their competition.
Our acquisition of Qualtrics this past year makes SAP the leader in the Experience Management (XM) category. The Qualtrics XM Platform is enabling our customers to listen, understand, and act on the core experiences of business: customer, employee, brand, and product. Our vision for XM is resonating with our customers – as Qualtrics has expanded our customer base to over 11,450 customers in 2019 and has only just begun to penetrate our installed base.
Leading in the experience economy also means putting an even greater focus on ensuring superior experiences for our own stakeholders, which is why we aim to increase our Customer Net Promoter Score by three to five points in 2020. We believe the changes we have already begun making will improve and harmonize how our customers experience SAP. The same holds true for our own workforce – we announced a new vision in 2019 that shifts HR from traditional, often transactional human capital management (HCM) to human experience management (HXM) – to go upstream in the employee lifecycle to transform the human experience at work. Our own Employee Engagement Index reflects our approach, remaining above industry benchmarks at 83%.
We also remain prouder than ever that our enduring vision is to help the world run better and improve people’s lives. We lead our industry on issues ranging from sustainability to diversity and inclusion – such as with our Autism at Work program. But that’s just the start of how we serve our world:
- We are launching the Climate 21 program at SAP to build analytical and transactional capabilities into our core business applications, to help our customers both understand and minimize the carbon footprint of their products and operations.
- Our solutions help eradicate modern slavery from supply chains and help customers move away from single-use plastics to sustainable, alternative materials. Our software is used to predict and prevent disasters, eliminate gender inequality, and educate people who have never had the opportunity to enter a classroom.
- We are committed to becoming carbon neutral by 2025, and we have reduced our net carbon footprint for the past five years, despite strong growth.
- We will continue to support all aspects of diversity in our business. We are proud that SAP is at the top of the Forbes America’s Best Employers for Diversity list, reflecting our industry-leading metrics, including roughly 34% women in our workforce today and nearly 27% women in leadership positions.
- We also strive to have a positive impact in the communities where we work and live: Our SAP One Billion Lives program inspires a closer collaboration between social enterprises, corporations, and consumers to accelerate wider social change. In 2019, SAP employees around the world dedicated more than 270,000 hours of service to causes important to them.
In closing, we want to thank you for your trust and confidence. Between us, we have called SAP home for nearly four decades – and we ascended to the role of co-CEOs with deep humility, a profound reverence for our past, and an unbridled optimism for our future. It is an honor to write the next chapter of SAP alongside 100,000 of the most talented colleagues in the technology industry.
In 2020 and beyond, the best for SAP is yet to come.
Jennifer Morgan and Christian Klein
Co-CEOs, SAP SE