Letter from the CEO
Dear Fellow Shareholders,
It’s hard to summarize the year 2022 in a few words – as the pandemic continued, the world also faced new and unexpected challenges, such as the terrible war in Ukraine, that hugely impacted all of our lives. We have faced conflicts and geopolitical tensions, climate change, the energy crisis, inflation, and volatile markets. Yet, once again, we have seen solidarity in times of crisis – people coming together to provide support to those in need when it mattered most. Despite the ongoing uncertainties in the world, SAP has remained in a strong position.
2022 marked the 50th anniversary of SAP, which we celebrated together with our customers, partners, and colleagues across the world. Five decades ago, our founders set out to redefine business software and in doing so, forever changed the way the world runs. Their innovative thinking, pioneering spirit, and drive laid the foundation for the rise of SAP – and they are still the basis for our success today, as we are carrying their legacy forward to drive positive change for our planet and its people – something that has never been more relevant or important than today.
Our hearts remain with the people impacted by the war in Ukraine. As announced, SAP has stopped all sales in Russia and Belarus, and we are in the process of a total withdrawal from these markets. For 2023, while business wind-down continues, our focus is on further reducing the remaining SAP footprint in Russia. We hope for the swift restoration of peace and will continue to help those affected by this war.
The last year was a stark reminder that no one business, government, or society can tackle the greatest challenges of our time alone. For that, a change is needed, and technology plays a key role in finding solutions to our global challenges.
Over two years ago, we embarked on our transformation journey to move SAP towards a cloud company. This, together with our vision to enable every organization and every industry to become a network of intelligent, sustainable enterprises, is perfectly aligned with the challenges our customers face. From increasing speed and agility, building transparent and resilient supply chains, and recording, reporting, and acting on sustainability, our solutions provide the value our customers need:
- With RISE with SAP, we enable organizations to become agile, intelligent enterprises.
- With the SAP Business Network, we connect millions of companies, allowing organizations to benefit from connected networks.
- With our SAP sustainability solutions, we enable organizations to truly operate sustainably.
Looking at our financial numbers, we met all of our outlook metrics in 2022. Our strong full-year 2022 results at a glance:
- Cloud revenue continued to be our main growth driver, increasing by 24%1.
- Current cloud backlog increased by 24%1.
- Total revenue grew 5%1.
- IFRS Operating profit was flat, while non-IFRS operating profit decreased by 7%1.
- Free cash flow was €4.35 billion.
2022 was a volatile year on the market, with technology stocks particularly hard hit. Our shares were not immune from this overall trend. Our share price decreased 22.8% in 2022, below the DAX, which lost 12.4%, but better than the NASDAQ 100, which decreased 33% over the course of the year. We want our shareholders to participate in our success. Therefore, we have proposed an annual dividend of €2.05 per share2, an increase of approximately 5% over the prior year’s regular dividend.
Customer Net Promoter Score (NPS) decreased 7 points year over year to 3 in 2022, hitting the lower end of the revised outlook range. SAP’s Employee Engagement Index decreased 3 percentage points to 80%, a continued high level of engagement at the low end of the revised outlook range. The software as a service-industry scores overall have declined over the past few years of the pandemic. SAP continues to get feedback about needed improvements around pricing increases, licensing structure, product-related topics, support, service and stability of account team relationships. This type of transparent feedback and accountability helps provide us with the information to better focus investments and further improve our customer relationships. SAP’s retention rate was 92.3% (2021: 92.8%). Further, the proportion of women in management increased to 29.4% (2021: 28.3%) and we also reached 35% of women in the workforce. Net carbon emissions continued to decrease, at 85 kilotons in 2022, down 25 kt year over year.
In addition to driving our ESG goals internally, we also take our wider social and environmental responsibility very seriously:
- In total, SAP donated more than €4.2 million to support Ukraine in cooperation with organizations such as UNICEF, UNHCR, and the German Red Cross. This includes our employee donation campaign which became SAP’s largest employee donation campaign to date.
- SAP extended its partnership with UNICEF through Generation Unlimited (GenU), focusing on employability. The partnership also supports SAP Educate to Employ, a new program educating youth in need on soft skills, foundational knowledge, and SAP skills to enable a pathway to a successful career in the SAP ecosystem.
- Together with partners, we launched the TRANSFORM Support Hub offering virtual pro bono consulting opportunities worldwide, connecting SAP employees to social enterprises.
Net-net: We believe that together with our customers, colleagues, and partners around the world, we can turn the world’s greatest challenges into opportunities for a prosperous and greener future. 2022 was one of the most important years in our history. As we head into 2023, we are committed to further optimizing and improving our business. We are deepening our focus on delivering lifetime value to current and new customers in the cloud and on high-growth opportunities where SAP can lead. Across SAP, we are laying the foundation for SAP’s ongoing success, expanding our position as the #1 Enterprise Application company on the planet, powered by our leading platform.
Finally, I want to express my deepest thanks for your continuous trust in SAP. I certainly look back on 2022 with pride and gratitude for the many ways SAP’s teams around the world are making a difference. I’m very much looking forward to 2023, and the great achievements our over 100,000 colleagues will continue to deliver as we pursue our vision to enable every organization and every industry to become a network of intelligent, sustainable enterprises.
CEO, SAP SE
1At constant currencies
2Pending approval of Annual General Meeting of Shareholders