Q4 2020 SAP SE Earnings Press Conference
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Good morning, and welcome to sap annual press conference. It's been quite a year. We have a lot of news for you. My name is Nicholas, chief petty officer. I am joined by our chief executive officer Christian Klein, welcome and our chief finance officer. Luca muchas. Also a very warm welcome. Both of you gentlemen. This is our first virtual one while we've had a couple of virtual events the past year. This is a new one. So we'll see how this goes for everyone participating. Please pose your questions through the answered question tool will respond in in chronological order, please also stay your media outlet and your name, we will be staying at when we asked the question all of us will be recorded and you can see the replay on our investor relations website. And with that. I think it's time to go and to hear from our CEO Christian all York's.
Thank you, Nicola and welcome to all of you to our annual press conference. First of all, let me wish everyone a happy and even more important a healthy New Year 2021 when I'm looking back on twenty-twenty. I can only say about a year personally. I experience definitely more events as in my four years before becoming a CEO and in the same night. The second time father is already a lot but we didn't West SCP is clearly on the moved. I was threatened. She was laid out in full execution and we are moving with high speed before we go into the details. Let me just share some key marks though. We did last year one of the largest sap transformations to build a more symbol and customer-focused organization. We kept our promise and made big progress on indic wage.
Of our acquired Cloud products it double down on Innovation. We are calling awaiting with our customers across twenty-five Industries to turn them into more resilient for dogs and sustainable Enterprises. Just this week launched wise with sap to drive the business transformation of our customers in a holistic manner combined with our planning session of scenario. We also expanded the partnership with Microsoft teams to Foster collaboration and Build Together the frictionless Enterprise month just yesterday. We performed the very successful IPO of Cortex.
I see Lucas smiling next to me.
We also welcomes. We new executive board members with a strong Cloud mindset and a geographical diversity now from Australia all the way to the US West Coast so we can clearly say the Executive Board of sap never sleeps. We also adjusted our financial guidance to not trade-off marching Ambitions with the success of our customers and sap and even more important. We see already strong results out of this customer satisfaction is our ten points and we close very strong Q4.
Luca will have to create pleasure to share all the great news about our financials in a minute. Here are the total year results in a nutshell. We beat all Top Line parameters and Thursday. We close new order entry of almost 10 billion-euro in 2020. This will provide us a lot of Tailwind leading into twenty. Twenty-One Cloud revenue is was up by 18% and if we back out our intelligence spend travel and expense business, which is a tough sell in the pandemic. Our Cloud revenue is up 27% We bought sending a higher growth compared to many competitors out there.
I'm also extremely grateful for the passion and commitment of our over 100,000 employees to serve our over 400,000 customers around the globe. In fact, we delivered stronger than ever. We added more than 25,000 new customers in the midst of endemic. We made 35,000 customers go life happens. We did one our mission critical support and data centers with high resiliency.
We also clean clearly winning market share with s for Hannah at the end of 2020. We counted more than 16,000 s4hana customers up 16% over last year month. We added customers like chili at Unilever shall cubic and we close more than 200 wins against our vehicle in the earpiece place in procurement. We closed took like General Motors and process almost 4 trillion of spend in our Network in Human Experience management. We added many new customers and we are the only suck out when de localized across 100 countries customer experience management. We have closed the biggest water error for order entry for, actually we doubled our Cloud Revenue as only thing I can offer a seamless consumer experience from the online shop next day delivery and flexible payment terms.
And supply-chain, we expanded further our number one market position and we are further expanding as well our industry 4.0 capabilities to offer the autonomous Factory.
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Not sure about you Luca I would be okay if the upcoming year would be a bit less eventful, but clearly we will act with the same speed and focus on our strategy game that direction is clear executing on our strategy to reinvent how businesses want. Let me take you through the most important element to outline how long he will become an even more dominant Cloud Player in the market. We are on our way to focus as a p even more on customer success. We are putting more and more Architects off the field to drive adoption of our Solutions and platform. We are investing more in customer co-innovation and we change the bonus plans of our people across sap to track a customer first mindset.
As a result as I already mentioned the customer satisfaction score increased by ten points.
Our vision is to help the world one better. So I'm very proud. How easy piano ambli support Global fight against Cooling in Germany together with dog, We developed the corner of Walnut. The app was downloaded more than 25 million times 2000 people share positive test results every day this whole tremendous Lee to Break the Chain of Infection four weeks in production Seventeen of the top twenty Global vaccine producers one sap.
We are now helping Madonna cubic the German Red Cross and many others to scale the vaccine production and make the logistics work in times of country lock Downs off. This also shows a CPS violence in the global value chain and how we help the world to one better two days ago. We launched wise with sap wage is a game-changing offering we listen with empathy to our customers to understand their needs and challenges in Depend emack and they clearly told us in order to become a more gazillion productive and sustainable Enterprise this requires more than just a technical migration to the cloud because only with a technically migration no singing business closes will become more intelligent with the new offering we are going to ensure a holistic business transformation of our customers and only as if he can do that
Let me briefly go into a bit of detail. Why is this ASAP is an offer for large and small customers? No matter of the current size and complexity of the wage scale. Our goal is to transform every customer into a leading intelligent Enterprise of that industry wise with ATP is a continuous business transformation Journey package consisting of three elements first. We are spending a business process intelligence layer across our market-leading applications to make our to make sure our customers adapt digital business models and one intelligent and highly Automated Business courses our acquisition scenario was the missing piece in the puzzle. I will come to that in a second.
Second element we embed automated Services invites with sap to reduce system modifications and move to a standard and module a solution landscape so that our customers can ensure May accelerate the time-to-value as a third element. We embedded the intelligent Enterprise including the world's leading Erp solution as far on a cloud free access to the largest business Network the business technology platform as the foundation for indication and extensibility based on one data model and many other world-class applications a.m. And we also have the choice to one the landscape in an sap or hyperscale of data sets.
I want you offering delivering our customers Superior business outcome and eternal invest in a very simple commercial offer on a single contract with one accountable party. And this is sap all without high upfront Investments and up to 20% lower TCO wage.
From a financial perspective. We made the following decision. And of course, we we put the success of our customers first. We don't wait the success of our customers for short-term optimization. We are shifting existing customers out of the app phone software and support model into available Cloud subscription model to accelerate the growth in the cloud and bought a s a p as one of the largest cloud companies in the world.
Let's come to business closes intelligence and our acquisition of scenario with the acquisition of Signal View. We are Becoming right away the leading player in the business practices intelligence Market together with the insights and best practices from our four hundred thousand customers across twenty-five Industries. We will support our customers to continue age of even went how business closes one by analyzing benchmarking and configuring business processes. And at the same time, we will Infuse intelligence by embedding official intelligence and our PA with business closes intelligence. We we will accelerate business transformation of our customers and with that they're move to s 4hana cloud.
Let's move on to the extended partnership with Microsoft part of our strategy. We are also forming a strong partner ecosystem with Microsoft teams and sap coming together. We combine the leading business applications. We'd with deleting business communication platform.
We are going to create the frictionless and applies and determine the future of work. We will deliver numerous collaborations scenarios for end users in procurement a finance sales and we will increase the productivity of millions of end users worldwide. The first use cases will be already launched in queue to start with s for Hannah and customer experience.
now
Let's come to qualtrics. This is a fantastic success story for both qualtrics and sap and it resulted in yesterday successful IPO of qualtrics. Let me be clear wine sick and myself are fully committed to XM as part of the sap solution portfolio. We will keep up the pace of innovation you join solution quarter after quarter sap, we'll of course the main important go to market and Innovation partner to drive close within sa peace customer base, but now we will also provide qualtrics with the opportunity to extend its business serve customers beyond the sap universe so far qualtrics off the future couldn't be quieter.
But let's also remember.
We acquired qualtrics just two years ago for around eight billion dollar last year. They contributed more than half a billion euros Cloud Revenue twice of what they did when we acquired them. Yes. It is IPO put them at in valuation of around $18 billion dollars more than twice than the purchase price. We paid two years ago. Congratulations wine and team on a crate crate shop as part of the sap family now before handing over to Luca
20-21 will be an exciting year full of opportunities and I'm happy to enter this important year with very strong leadership team under both going our clear focus on customer success and Cloud close first. I would like to thank at there who will depart sap. We wish you all the best for her future, but at the same time I could not be happier to announce the addition of two exceptional leaders to our executive for Scott was succeeds there in a customer success and I've got leadership as president for a PJ. The region has become one of the fastest-growing Cloud market for sap, but with God in the lead-off, they also put it always the success of our customers at the fender.
Julia white Julian from Microsoft should be allowed the product marketing for Microsoft Office during the transition to Office 365 and for a month over the past five years. Julia will take a new executive board role as sap Chief marketing and solutions officer Julia Prince a cloud-first mindset. That will may I help us to support our transformation. She knows perfectly how to put which technology the product Innovations of sap with the business value of our customers home and she will focus on demonstrating the differentiating capabilities of our solutions to our customers by strengthening our Product Industry and digital marketing capabilities.
and I would also like to extend the
Warm body come to Julia and Scott. And also, of course once again to subpoena pending subpoena joined our executive board on January 1st as our chief people officer.
Subpoena was the driving force behind Microsoft cloud transformation in Germany. And as we all know transformation are driven by winning people and challenging culture is all about the white Talent the right leadership the right attitude and also the right processes, so I couldn't be happier and more confident to hand over to pull up in a role as Chief Operating Officer later this year.
So this is our executive for available around the Sun 24/7. And with that let me wrap it up here and hand it over to you Luca. Yeah, thank you very much Club, So to say from new board members to the old board member and I'm not sure what actually drove our IR team to put on this interesting picture, but I can only reassure you I am turned it back on you now, obviously I'm this year entering my 26-year with sap and I can certainly attest that I had my mom died moment, but I must also say that twenty-twenty also for me was unprecedented in terms of the amount of challenges to be overcome and the amount of change that we had absorbed but I'm like why's there for even more proud of how we ultimately managed to overcome those challenges and deliver another successful year for sap. I don't know.
Want to go through every number that you see on the site, but I want to spend a few minutes on four key highlights that I see in our performance and twenty twenty first of all.
It was extremely positive for us to see how we relate in Q4 and to deliver a very strong results for the company and made a lot of uncertainty and certainly heightened Palm Cove. It activities that we saw unfolding as we were getting through fall and into winter and because of this I'm even more proud that we actually ultimately managed to not only affects our revised guidance for a total revenues and operating profit, but we actually came in again within the guidance range that we had set in April at the outset of the pandemic wage given all of the volatility in the market is really a very decent result.
Now we did not quite achieve the same result to get back into our April guidance range for cloud revenues, but for me Cloud growth is nevertheless a second highlight that I want to stream not only did we grow our entire Cloud business by 18% to now more than eight point two billion euros, but we actually grew our software-as-a-service portfolio took 27% And this is really spectacular growth given the circumstances cloud is now more than twice the size of our software license business and it has helped us to repeal the share of our predictable revenues to 72% of total revenues in that context. Let me also spend the word on recognizing the great success that we had with Aqueduct IPO.
yesterday was
Obviously the culmination of a lot of great work that Ryan Smith Serafin and the entire qualtrics team and together with sap across so many different functions of the company that you have achieved in the last two years. Um, um qualtrics is a fast growth company that has excellent opportunities for the future and this has been rightfully considered recognized with yesterday at the close a twenty-seven billion dollar market capitalist capitalization and let me be clear qualtrics deserves every single dime and Penny of the black market capitalization at the same time. I believe that this great success of qualtrics gives us also an opportunity to reflect on the true value of the sap brought Cloud business.
Why qualtrics is a great growth asset. It's still represents less than 10% of our entire Cloud business in our software-as-a-service business, which has grown now as I said in 2020, we have a variety of assets both acquired as well as organically developed assets that are operating at a similar scale a similar Pace as qualtrics. Just want to cite a few here like s4hana cloud from like our Commerce portfolio in customer experience or our business technology platform portfolio in the cloud. This is a combined business that is running today at round about 5.5 billion US Dollars and if you would apply yesterday's multi-purpose out of the market capitalization of qualtrics to this business portfolio, it would actually already justify the entire market cap of sap despite the fact that this as well only representing
And about 20% of our entire business. So I truly believe that qualtrics will help us to crystallize the true underlying value of our business and gives us an opportunity to justify a re-rating of the sap share third. I'm very proud about the bottom line performance of sap. I will spend a few words on this later on but forth and equally important we have been for a long time a believer in integrated steering of the company in the importance of non-financial Matrix. Christian has already cited are great success on the customer satisfaction front in 2012-13 for me. It's also very important that our employees showed us their trust and they are engagement like never before and with the records employee engagement school that we had admit the prices in 2020. We have increased our share of women in management and are well on track to reach our targets of 30% women in management by 2012.
And last but not least. We also remain very focused on our carbon performance. Obviously twenty-twenty was helped by the absence of business travel in this respect, but, we remain committed to being not only an Exemplar but also a strong in a blur of the carbon performance of our customer base with new offerings like lima 21. So let me say a few words on our regional performance, which was actually in 2020 very consistent and quite solid across all of the Regents both in America. And in fact a.m. We posted annual growth of 3% that constant currencies for our cloud and software Revenue business in a PJ. It was 2% constant currencies within that obviously are Cloud business in India and a PJ which is still scaling from a lower base had been posting stronger growth of 25% or 21% respectively dead.
while in America
We have already a large-scale. We grew by 13%. Constant currencies. It should be noted as well that our business is an intelligent spend like concur which were particularly challenged in a 20 given the call with circumstances have a higher base in North America. Whereas are organically developed Solutions, like as far on a cloud and others are more equally distributed across the regions which undoubtedly helped the stronger performance and email and a p j as well from a individual markets perspective. I only want to say here that across the country and so we had lots of positive contributors. But what I find noteworthy is that in particular our largest markets the US from Germany and in Asia particularly Japan with positive thoughts in both licenses and in Cloud had a very strong showing just a few words on the bottom line of the company, which as I said is something that I'm really proud of because despite. Yep.
Instead we were facing on the top line. We were again in 2020 continuing a trend that we had seen already in the two years before able to increase the gross margins across all of our individual business models that holds for cloud as you can see here for under slide. It holds for all of the individual areas in the cloud the Intelligence been group private club as well as public Cloud but it also holds for our combined software licenses and support business which managed to edge up another thirty basis points despite already the very high profitability that we see in this space and which was really Stellar in our services business we manage to increase gross margins by two percentage points, which given the circumstances is also very outstanding.
And this increased efficiency on the gross margin line also translated into a very strong performance from an operating margin perspective. We ultimately actually ended up with constant currencies with a margin of 30.5% for the full year, which is the highest level that we have seen since 2015 and very importantly we did not achieve this operating margin by cutting cost. Of course, we were courses and disciplined in particular with discretionary expenses such as T&E which obviously came down given the travel lockdown wage and other discretionary expense items, but we continue to invest in our people very importantly we grew by two thousand one hundred full-time equivalents in twenty-twenty and the Lion's Share of this more than 1,900. Were you engineers in research and development to continue to prepare our Innovation agenda?
No, finally, let me spend a few words on two of the very bright. But of our set of results one is the net profit and earnings per share line. Well, even faster than on an operating profit level with IFRS earnings per share up by 56% and non-ifrs earnings per share up by 6% This was off by a very strong performance in particular of our Venture Capital fund Sapphire Avengers, which in 2020 posted record results, which were very positive be reflecting on our financial income on the cash flow side. I have to say that I did not expect given how we started the year and the uncertain ground clove it that we would post a record cash flow in every single quarter as well as for the full year of 2020. We ended up substantially above the guy dead.
Some expectations that we had set.
At the beginning of the year, which were already considered ambitious by quite a few participants. We knew at the outset of the year that we would be supported by lower restructuring cash outflows as well as a lower income tax payments, but what then came on top was just simply outstanding working Capital Management and very very effective cash collections, which draw free cash flow up by 164% year-over-year. So kudos to the entire organization across all functions that made that happen finally to close us out. Just a quick look on our Outlook where you can actually take freaky points with you one is we believe that our Cloud business will not accelerate we came from a very strong Q for order entry. So we believe that we will see in q1 a trough in terms of the growth of our Cloud business and then from there are dead.
Will start to accelerate cloud with more and more becoming the dominating line item in our p&l in 2021 already to the tune of three times or software licenses revenues and this will drive are more predictable revenues up to around about 75% We obviously dead will therefore see through the business model transformation and the higher mix of recurring versus upfront revenues muted growth in 2021 from home the transformation and the acceleration that we expect to fully kick in as of the second quarter will set us up for stronger growth in the years to come and we fully expound on October from 2023 onwards. We will see sap returning to double-digit growth territory both on the top line as well as on the operating profit wage.
Finally we continue to expect a strong cash flow performance. Also in 20 21 roughly at the levels that we had originally contemplated and planned out for 2020. So sap will continue to be solid. It will be poised for growth. It will invest properly into those growth opportunities into the transformation of our customers in court to the cloud in the new industry Cloud Solutions in business process intelligence and other growth drivers of the company to set us up for sustainable growth for many years and acceleration of that growth profile from already very high base with that. Let me hand it over back to Nicola and I'm looking forward to your questions.
And I'm on mute. It's like the thing of virtual meetings. I'm on mute. Anyway, thank you. Luka and Christian. Let me say this again. Is this great overview? We're in to the question as mentioned before please post your questions in the tool. We would get to them in the order. They come in we've got just about half an hour to take your questions. So, let's Jump On In. I'm going to give this first one to you Christian. It's from home and holidat diginomica. Christian said a tries our event two days ago some hundred thirty firms trial the offering by Year's End what percentage moved to full contract and what are sap is expectations around the impact of rise in 2021. And also the Americas showed significant decline. What is s a peace plan to rejuvenate that market? Good morning, Dan first of all off. So on wise with sap, first of all before we launched this offering as you can already see, we already have 130 pilot customers. Actually we started that, you know, nine months.
and the first
Listen to our customers. What is the need and many Chief Information officers out there told me Christian. I see so much technology, but somehow I cannot connect the technology to the business processes. I'm running and just because I'm moving now my it landscape to the cloud. I'm not having more intelligent business forces am also not adapting new digital business models. And this is how we created this new offering because now we can go and tell our customers look look at just talked about the cash flow. We have 5,000 of examples on what works for order to cash and what doesn't work. So well it can use this Insight we can use this best practices Benchmark. It may configure the business courses and make sure actually that you try for higher cash flow going forward and this is about wise with sap. This is not only about moving to a cloud infrastructure.
So it's not only about you know hardware and all of the 130 customers. They are consuming this offering end-to-end. Again, they have choice on the cloud infrastructure. They have juice world's leading Erp solution with S4 on a cloud. They use the platform heavily for indication where we made great strides and they can also move to a standard landscaper because we all know in these are mission critical process is complex processes. So extensibility is key and now the ecosystem can join the party because now they find with all the business applications Services, all of our apps are using so it's so easy. So seamless now to extend also our application portfolio and that's why it's with sap. It's really about making sure our customer see the outcome the return of in west of the investment into our software, but of course also in today investments into the cloud infrastructure, and if you allow me nickname,
Then look I would like to turn over the question about North America to you. I guess what we also have seen in the past. There was a customer calling me for weeks before Christmas poem and he told me Christian somehow the performance of my system landscape landscape doesn't work and I'm not sure if it now the hyperscale our infrastructure is in my cloud over wage portnoy's it, you know sap it was not sap, but where to go to when your Christmas peak season is at risk and with wise with sap, there's one accountable party, there's one contract and we will take care of that. Let's not forget that this is also a very very competitive pillar in this new offering Luca. You're just on the question around North America, but I think you need to understand that, uh, the cloud Revenue performance in particular might be the source of your question whether there is a need to rejuvenate that market is actually a rebirth
It's of the past. And of course North America is a very large scale.
Base and as I said during my remarks was also at the beginning of the pandemic particularly hard hit by some of the US originated assets around concur with that had a particularly tough stance given the space that they are operating in. However, there is actually nothing really to be rejuvenated about this Market anymore. Because in the same year North America had actually among the best performances of our Region's uh, when the new order entry is concerned actually the US was uh able to show positive growth in software licenses and also had a very strong Cloud order entry performance. Canada was one of our strongest market performance in Cloud Revenue age. And so with that order entry that we have achieved already and now the the wave of rice with sap and the new initiatives that we're driving very confident in our business in North America, ma'am.
So and the US has actually proven to be very resilient for us all the way through the second half and thank you Luke. I'm maybe you could touch on the rest of America's too cuz I think that's part of the question too. Yeah, absolutely. But first of all, of course, the rest of America's is relatively small compared to North America and as you know, Latin America has really had a hijacking of struggles and 20/20 Brazil is among the countries that has the highest share of covered infections despite that actually we fared relatively well against our internal expectations, which were already adjusted for this difficult economic climate on the same certainly applies for Mexico and those two markets are obviously the Lion's Share of what is happening in that in America. So we are actually quite satisfied and with the performance against internal objectives, but you cannot disregard the environment and that was a very difficult job.
For well-known reasons. Thank you Luka. I'm going to give the next one to you as well Marco from DPA FX business news wire one wants to know will there be a real valuation gain book due to the qualtrics IPO? And if so to which magnitude yeah, that's that's a good question to first of all, let me be clear. We are not holding for all tricks as a financial investment. I mean, this is a fully Consolidated subsidiary of sap in which we hold the vast majority of the outstanding shares and as such wage is not showing up in our finance income like the Venture Capital Investments that we are doing but any you know valuations that step-ups are not going to show up in fact in L, but are actually going to show up in our balance sheet. So that is an important statement to make so for us the way more important aspect is off.
the one part obviously the success that we had with the IPO translating in very
Active proceeds for sap and then more how we set up with the IPO qualtrics for continued scale and for fast growth because that ultimately will then show up in Iraq and L as we fully consolidate qualtrics. All right. Thank you. Luka. Next question is for you Christian from Michael Buble DPA the sap stock price collapse wage this year where she was last year. How long will it take to reach the old highs and what are the requirements to achieve the targets? Yeah. I mean after the end, of course, we you can already see that we are on a good way to come back and I mean look, I I guess you have heard today that first of all customer satisfaction is up and I'm a big believer and what when you do what is whitewash customers also the financial success will follow
I guess he was also see now as part of our new strategy that you know that we also play now our Cloud assets together. It's about integrating but it's also about in a life on our platform and you know, of course also driving, you know new clothes opportunities for sap. We launched our industry initiative. We are Reinventing, you know, the way how we tailor ones in traditional stores omni-channel. We are going Automotive. We announced an automotive lines where a lot of you know large oems already joined including a supply us to digitize the supply chain to manage in a very volatile market demand and Supply. This is sap, it's about organic Innovation and the complete focus on the 16th of our customers and the rest will follow and in that sequence. We also want to manage sap going forward.
Wonderful. Thank you. Christian. Next one is for Luca again from Stephan bow at oil on Zantac. Why do you plan to put parts of the qualtrics IPO proceeds in debt repayment off wouldn't it be more conducive in terms of shareholder value to invest harder in your Cloud strategy? Yeah, that's also an important question. But let me be clear. I mean we are investing very hard in our life strategy and we have actually announced that over the course of the next two years in addition to all of the R&D Investments that we are putting into different parts of our Cloud solution portfolio. We are spending a mid triple-digit million-euro amount on modernizing our Cloud infrastructure and harmonizing it on one common infrastructure stick, which will allow us and later on in the years from 2023 to have a massive Step Up in efficiency. And therefore also in Cloud gross margins. So rest assured we are heavily investing into growth in the cloud.
That being said nevertheless if you have stepped and it's coming up for repayment and you need to do so, of course, you could take out more depth to to finance your oil depth, but I don't want to create a page system that sap we will have to pay back one point two five billion euros an outstanding qualtrics term loans for the acquisition that we did two years ago. We had another one point four billion of depth from bonds that we took out previously that are scheduled for repayment and we will do so obviously it's not about the qualtrics IPO proceeds as I said before we had a very strong cash flow in 2020. So we have ample room to do those debt repayments while at the same time aggressively investing into our growth strategy and at the same time also, you know paying out a decent return to our shareholders, which we absolutely wage.
10 to 2
Thank you Luka. So we have a next question about several questions from Alexander Winkler. It's the best one phone and I know you'd like to have these in Germans But please understand that these has to be an English everyone can understand their whole bunch of questions. So we're just going to take one after the other from a Civic Club. So we'll start with you Christian except for Mister Mukesh Mister Mueller and Mister Klein, no board member of the bill McDermott areas name is still on board middle management. Also saw change is the restructuring of the management now done. Yeah. Absolutely. And when you look now at the Executive Board of sap, I mean honestly spoke my kind of be more delighted that the supervisory board selected now Trulia to join us. She will come with an incredible strong Cloud mindset and asset but we're all of our customers in there. See people benefit fun. So being is now with us in a few weeks and it feels already since years. She's doing a great job and a, New Jersey
What's the last two bolts ponds of a I know Scott in and out and I know that he is exactly the white energetic leader to also then you know, make the numbers work. So I feel very very strong about a new set-up and on top, you know, when you look you know, you know underneath I mean we have an incredible very strong Talent bench. I mean, you know qualtrics without any doubt the best management team in the experience management category we have in the US Incredibles from leaders. We have polar handsome heading CX fantastic water. We have a new human resources notes Lee fantastic colleagues with chill popelka with Magda and Amy Wilson, so we are set up around the globe and we are truly global company and we also know the worst company from a gender but also from a geography field perspective.
This is true. All right, we'll continue here with mr. Winkler question sap wants to do $36 billion Revenue by 2025 sales force wants to do forty billion by then. What is holding sap? Let me start Luca and then you can build on the first of all I don't want to commend so much on competitors, but I also don't see the need that sap is now has to Simply, you know by when you are acquiring you as you have seen with Microsoft we have building water strong Partnerships to really build, you know, market-leading Solutions with great outcomes customer and then organic or innovation and you know, our engineering team, you know is fully warmed up. I see the pipeline is full of innovation and that's the way to go and then also in all fairness. You also have to see our install base is a gift we learn so much every day from four hundred thousand customers I can tell you but it's also a matter of fact that sap.
Going on the business model transformation. So we are moving migrating customers from an upfront license model to recurring Cloud subscription Revenue model and we have seen yesterday with the IPO of qualtrics that that is not such a bad thing to do with regard to close but also with regard to the market cap of a company so it makes total sense. But we also have to make sure that when we compare companies natively born in the cloud with a big software player like that. This is not always Apples to Apples. And again, I'm absolutely confident that we will see a celebrate even further celebrated close our closing. The cloud is Stella if you're going to back out our travel and expense business then actually we already growing at a very high weight and with Weiser SAP with the Innovations coming, we will further accelerate the growth and once the transition is done.
Also form on Prime to Cloud we even see double-digit growth on total revenue.
There's hardly anything that I can add. Other than that any given year is only a point of time but we are working on is to set sap up in a way that in many years to come. We actually have the potential to grow in double-digits and that's what we will actually achieve with the business model transformation. And therefore it's really for the long term that building the company up not for a given year and for any artificial comparisons. Thank you Luka and we're going to stick with you for the next question. Luca Mukesh said there might be a higher dividend after the successful off of qualtrics. What will the dividend look like? Yeah here I need to ask you to you know, except that. I have to respect our governance our dividend will be proposed formally, um at our supervisory board meeting in February and then we'll be item at the resolved by our shareholders obviously, but having said this we have an established policy that we want wage.
Pay out more than 40% of our net profit in IFRS terms. Obviously our IFRS net profit has been growing very strongly and 20/20. I've mentioned 56% earnings per share growth. And so I think the safe assumption is that we are going to propose an increasing dividend to the supervisory board everything else and the exact sizes really subject to their discretion and decision and we will update you as soon as that decision has been taken in February. Thank you. So stay tuned for that decision. Next question comes from Brian McKenna a computer weekly to what extent should we think of Rise as a way to speed up as for Hannah Cloud adoption and how does it compare and contrast with Leonardo? So I am indeed and I get this questions a lot and there's no secret about that. Of course with wise with sap. We are going to accelerate the adoption of s for Hannah cloud and again, you know,
The building this business process intelligence lay on top to make the business case even more attractive going forward because you can go with a power point to a customer and can tell him about all the great things you're doing. You can of course also putting other customers to the customer and convince him. But what is even more powerful is to show him Based on data based on insights on best practices from large large installed base on how do the business closes work best in his industry and this is very important and this is what we are going to do because the technology is there the technology the artificially there and with Leonardo the positioning was a little bit outside of our applications, but we everything what we need to do an sap has to be always in the context of our of our customers of the business process to really show them the outcome why the way I have now a customer where we left off.
For Hannah, for example, we can predict with extremely higher.
Who was the exactly how his p&l will develop instead of asking one? 1,000 fp&a colleagues. He is now getting predictions which I actually close to the point and we are doing this with Hannah with real-time analytics. We are doing this of course with infusing further artificial intelligence into his business processes and finance and these are the business scenarios which are convincing of customers to move. And again, I also want to say one point we forgot to ask for Hannah. I mean, we also doing our internal benchmarks obviously obviously also with s for Hannah but what we are seeing is actually that the adoption curve is extremely good the customer satisfaction of s for Hannah is an all-time high much better. Even you know than compared to previous versions of sap. So that's also for me again also always leading indicator that the adoption is higher that the customer satisfaction is high and with the new offering. Yes, we will definitely also see an acceleration to wage.
as far on a cloud
Thank you for choosing and that's a great segue to the next question from Crystal Kirkman Honda. Would you please break out some details about s4hana Cloud such as Revenue operating profit number of customers signed up in live rep. Yeah. So first of all, we obviously intend now with the launch of rise to going forward provide even more transparency about the momentum in RS for business office will start to happen as of the first quarter of 2021 for now I can tell you directionally that as for Hannah cloud is already approaching a cloud do run rate of $800 million. It actually already has round about 3,300 customers out of which close to 2000 our life and that is building a very very quickly. So the rate of adoption of S4 Cloud vs. On-premise already in 2020 was a totally different level than in Prior years and obviously birth.
Pies with sap this will now achieve much different rate of adoption in a very short time frame.
Thank you. Luka. Next question comes from Alexander yogurt at Manheim American. Good morning. Mister Klein Amazon music. Thank you for the opportunity. Ask a few questions. Very polite reporter. Thank you. How many customers will switch to cloud-based Hannah Hannah this year? And what is your target figure? I mean I can start and you can build on top look. I mean first of all as long already mentioned, the f are on a cloud adoption is really accelerating and of course, we see the predominant share of our customers already moving to ask for on a cloud product issue, you know getting better and better we have now Superior capabilities, you know embedded and as I also showed in my keynote, I mean we have customers like Siemens, you know, of course large customer kind of complex system landscape now who are going to move with sap to s4hana cloud and on the other side we have, you know, smaller customers like lift. Kindly they just did we
Simply a few Acquisitions they want and our globalized their business. They're using the solution, you know to go wide away into the public loud and
Galen quote a business in a massive way and so everyone is invited. Everyone is going to be served with our solution and this is why we're going to see also further acceleration of s for Hannah Cloud. All right, Mr. You and has a follow-up question or second part of the question. Why hasn't sap developed its own business process intelligence projects in the recent past. Are you getting other deals like this year Luca I couldn't get started. So first of all, we are excited about the prospects that we have in business process. In fact, I think the idea of having a listing business Process Management Suite that allows you to design your processes Benchmark them against best practices, then understand how the actual execution process is fair is against the theoretical design then overcoming in efficiencies through automation has a lot of appeal in tremendous business value, and it's now the right time to focus off.
On this and double down on this as we are with rise with sap now really taking our customers and overcoming the you know breaks in their processes based on Legacy systems while moving them to the cloud and modernizing their Enterprise architecture across our intelligent Enterprise applications, including s4hana. That's a way of doubling down on this but it does not mean that we have been silent and on the sidelines with regard to a building out our portfolio in actual fact, we have as part of our Innovation Center Network focused on organic solutions that are now hitting the market around the same time as we hopefully will closed and soon the signal we are Aqueduct. We are going to launch the general availability of our solution portfolio around user Behavior mining as well as benchmarking, which is also part already dead.
Of the sap offering so that customers can get a very quick overview of the business value that they can draw from the migration to sap s4hana. We also have Thursday on the automation front, uh, a very strong offering around automation through robotic process automation through workflow Solutions and and also focused on building out our capabilities around local no code capabilities and that's what also excited signavio in our discussions that we actually can together come up very fast with an out-of-the-box natively integrated end-to-end business process transformation sweet. They did not have the capabilities around automation as well as user behavior my life so far we get from signavio, very strong and leading capabilities around process design and modeling and governance around it as well as a very robust solution around process mining dead.
And with that we are going to be propelled into a media Market leadership. So this is a combination of
Strong assets and not that we have to buy an entire Suite from the market nothing to a beautifully explained just one more the second part of the question any more Acquisitions found like signavio not in this space for sure not as Christian has set we are really focused on an organic growth strategy of meant it where it makes sense by talking positions such a signal or also last year and masses but certainly in this space we have now everything that we need for an end to end solution. Excellent. We've got three more questions. First one from zbozien Smith concerning the very successful IPO of qualtrics you intend to keep a long-term interest in the company, but would you consider selling some of your shares some more shares to increase free float and maybe raise some more cash for sap. Yeah. Let me take this very briefly. I mean as we said all along we are committed to remaining the clear majority wage.
Owner of qualtrics for a very very long time. We have not yet made any decisions for further follow ons after the very successful IPO month. And so while we would of course continue to evaluate options there. You should not expect any shorter message of of sap because we believed the opportunity and the potential of the combination of qualtrics and sap and remain committed to that Vision. So we are not seeing qualtrics as Armani Pazzo Thursday through to grab into we are way more interested in further helping them and helping each other to maximize our opportunities in the marketplace. Thank you ma'am is from Peter fairing at E3 magazine. As far as I understand rise with sap equals a one face to the customer approached but doesn't that change as a piece entire business model doesn't every single job now have a game.
He reorganized good morning Peter. I mean and that question also came, you know in the Q&A after the after the keynote was first of all why so if sap is the most logical system friendly off, I guess SCP has ever launched because we give customers choice on the cloud infrastructure as I mentioned, but of course to all of our services Partners so they can document offering, you know, with great business advisor. We serviced a half, of course, you know, they will offer the business implementation services and that they oughta mention before on the platform. Now, we are going to suck it up and even more massive ecosystem of Partners, you know building new IP on our platform, you know to extend solution so sap cannot and will not develop everything but we cannot sell everything but our own and we can also not service every single customer across the globe. So the ecosystem is super super important to us and this is why we also have a huge focus on Monday.
that ma'am and that brings us to our last question from Nadine sheet music at
Reuters how many of you about 16,000 seventy s for Hannah customers are using S. 4hana Cloud what I think I answered this already, um almost 3,300 wage, and that was a nice short brief answer to our last question this concludes our press conference today. Thank you for joining. Thank you for participating. Thank you for your many questions. I asked Luka and Christian. Thank you for your time. And I think you've got an analyst call this afternoon. So you still have some work to do. Thank you everybody and stay safe. Thank you. All the best buy. Thank you very much. Bye-bye.
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