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Why invest in SAP?

View the different aspects of our equity story and understand how we generate long-term value for our shareholders.

Reasons to invest in SAP

The digital transformation of the global economy is in full swing, and SAP is playing a role in this development in particular with its broad portfolio of solutions and innovative strategy. Although current macroeconomic uncertainties in individual countries or industries are having a dampening effect, the vast majority of companies are taking advantage of technological developments to consistently transform business models, gain market share, and leverage efficiencies.

License sales continue to decline and maintenance revenues also continue to fall in the medium term. At the same time, cloud subscription revenues are growing strongly. This changes the value creation from a highly volatile, seasonal business to a much more stable and predictable business model. By the end of 2022, the proportion of ratable revenue secured over several years was already 79%. As a result of this change in the business model, costs are also much easier to plan and the earnings situation can be sustainably improved. 

Cloud solutions are very attractive to our customers due to their faster time-to-value, easy scaling on demand (economies of scale) and the change in cost structure (OPEX instead of CAPEX). This is evident from the sustained high growth rates in order intake (current cloud backlog) and cloud revenues. The high potential for selling adjacent solutions (cross-selling) gives the cloud business model further acceleration, and the associated development of end-to-end business processes at our customers creates a high level of loyalty.  

Our transformation into a fast-growing cloud company requires significant investments. With these, we are primarily pursuing the securing of our future operating results and we are already seeing that the efficiency gains in our cloud solutions are reflected in a growing cloud gross margin.  

With the increasing demand for SAP cloud solutions, the investments required for these solutions have impacted our operating income and operating margin in 2021 and 2022. However, our accelerated move to the cloud will ensure that we continue on our path as a cloud growth company while maintaining our focus on cost savings. Through these measures and our resilient business model, we are well positioned and the inflection point in profitability has now been reached. We expect double-digit growth in operating profit in 2023. 

The high proportion of more predictable and recurring revenue protects SAP against short-term economic crises. When SAP we started the journey to the cloud in 2010, the share of recurring revenue rates was about 30% and came exclusively from license maintenance revenue. By the end of 2025, we want to have increased total revenue to more than €36 billion and about 85% of that will be recurring. At over €22 billion, cloud revenue will account for around 60% of total revenue by then. 

SAP has long closely linked sustainability with the Group’s strategy. Our integrated approach of financial and non-financial performance measures enables us to act holistically, be environmentally conscious, and operate sustainably. Since 2012, SAP has published an Integrated Report that transparently discloses these metrics and positions SAP as a sustainability leader. By the end of 2022, the proportion of investors with an ESG (environmental, social, governance) focus was already 43%, putting SAP high among the leaders in the software sector and among European companies. Independent sustainability rating agencies have been giving SAP top marks for years.

ESG-related data, in addition to revenue and earnings, will become a decisive factor for almost every company in the future. SAP sees this as a key driver for new solutions, further growth, and competitive advantage. SAP ESG solutions enable our customers to capture, analyze, and report environmental metrics along their own value chains, while becoming more sustainable themselves.

SAP has paid a dividend since its IPO in 1988 and has never reduced it since then. The current dividend policy is to distribute at least 40% of consolidated net income after taxes to shareholders. At the 2022 Annual General Meeting of Shareholders, it was resolved to pay a dividend of €2.45, which included a special dividend of €0.50 to mark SAP's 50th anniversary. The total amount distributed was €2.865 billion.

With hundreds of thousands of customers worldwide across all major industries and more than 250 million users of SAP cloud solutions, SAP holds the largest market shares in enterprise resource planning (ERP), supply chain management solutions, purchasing solutions, travel expense management, and business planning, according to IDC.

  • SAP customers generate 87% of global trading volume ($46 trillion)
  • 99 of the 100 largest companies in the world are SAP customers
  • 97 of the 100 "greenest" companies are SAP customers
  • 85 of the 100 largest companies in the world are S/4HANA customers
  • Around 80% of SAP's customers are SMEs

SAP is a global company with operations in more than 180 countries around the world. Our solutions are offered in part for 45 languages and for 25 industries. Negative developments in individual geographies or industries can usually be offset at Group level. SAP solutions are designed so that customers can operate them locally (on premise), in the cloud, or hybrid as needed. The large network of more than 23,800 partners worldwide supports SAP not only in sales, but also in the customer-specific implementation, service, and operation of our solutions.

SAP's strong financial strength and operating cash flow of approximately €8 billion in 2022 will enable us to reduce our debt quickly. Net debt in the Group at the end of 2022 was €3.6 billion and corresponds to a debt-equity ratio of 0.45. Capital from debt is generally only required in the case of major acquisitions. We use various approaches to raise capital, such as loans, bonds, or commercial paper. SAP's good rating is an important factor in the attractive interest rate on debt capital.

How We Create Value

In the digital era, businesses that are able to harness their data faster and more effectively will be the ones that succeed through disruption. SAP is at the heart of the digital transformation of corporates.

The COVID-19 crisis was an accelerator for digital transformation. Customers are looking to move to the cloud even faster for greater resiliency and agility. SAP will increase R&D investments to help its customers’ transformation accelerate and generate growth in cloud revenue to more than €22 billion in 2025 and expand the share of more predictable revenue to approximately 85%.

We expect our total adressable market to grow to €650 billion in 2025.

For details on our actual results and mid-term ambition please visit the 
Recent Results page.

Our transformation to a fast-growing cloud business demands significant investments. We see operating expenses largely as investments in the future that will help secure our operating profit in the long term. Nevertheless, we continue to see the benefits from increasing efficiency of our cloud offerings, demonstrated by the increasing cloud gross margin. 

The increasing customer demand for SAP Cloud solutions required additional investments that impacted our operating margin in 2021 and 2022. Our expedited move to the cloud will ensure we continue our path as a cloud growth company while we remain focused on cost efficiency. These actions and our resilient business model position us well to meet our new ambition targets as uncertainty recedes.

For details on our actual results and mid-term ambition, please visit the Recent Results page. 

Our primary source of cash, cash equivalents, and current investments is funds generated from our business operations. Over the past several years, our principal use of cash has been to support operations and our capital expenditure requirements resulting from our growth, to quickly repay financial debt, to acquire businesses, to pay dividends on our shares, and to buy back SAP shares on the open market. In recent years, we were able to repay additional debt within a short period of time due to our persistently strong free cash flow.

We believe that our liquid assets combined with our undrawn credit facilities are sufficient to meet our operating financing needs and, together with expected cash flows from operations, will support debt repayments, currently planned capital expenditure requirements, and capital returns to our shareholders over the near term and medium term.

The primary objective of our capital structure management is to maintain a strong financial profile for investor, creditor, and customer confidence, and to support the growth of our business. We seek to maintain a capital structure that will allow us to cover our funding requirements through the capital markets at reasonable conditions, and in so doing, ensure a high level of independence, confidence, and financial flexibility.

SAP has a long-term issuer credit rating of „A2“ by Moody’s (outlook positive) and „A“ by Standard & Poor’s (outlook stable).

Our Strategy

Today the companies that thrive are the ones that can respond digitally.
SAP is uniquely positioned to help. 

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We enable the data economy with seamless, connected business processes for every organization. We help customers transform into intelligent, networked, and sustainable enterprises. 

We bring all our partners and customers together as part of the world’s largest business network — a worldwide marketplace that connects millions of intelligent, networked, and sustainable enterprises.

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We enable the data economy with seamless, connected business processes for every organization. We help customers transform into intelligent, networked, and sustainable enterprises. 

We bring all our partners and customers together as part of the world’s largest business network — a worldwide marketplace that connects millions of intelligent, networked, and sustainable enterprises.

Our Approach to Sustainability

At SAP, our purpose is to “help the world run better and improve people’s lives” with sustainability at the core.

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SAP aspires to a world with zero emissions, zero waste, and zero inequality. Our corporate sustainability approach is to create positive economic, social, and environmental impact within planetary boundaries – with a special focus on holistic steering and ESG reporting, climate action, circular economy, and social responsibility.

Our Unmatched Portfolio

SAP software, technologies, and services serve hundred thousands of customers globally. 
Our intelligent enterprise addresses 25 industries and 12 lines of business.

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SAP has the unparalleled technologies, products, footprint and vision to weave together the four essential end to end business process — Recruit to Retire, Source to Pay, Design to Operate and Lead to Cash — to create not just one intelligent enterprise, but a worldwide ecosystem of them.

SAP is the only company whose technology can reach into all of those processes to create a clear organizational view that dials down into the millions of daily interactions that make up a company, an industry, and a global network.

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