Q3 2025 SAP SE Earnings Call

October 22, 2025

Speaker #3: Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the SAP Q3 2025 financial results conference call.

Operator: Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the SAP Q3 2025 Financial Results Conference Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press star followed by one on your touch tone telephone. I would now like to turn the conference over to Alexandra Steiger, Global Head of Investor Relations. Please go ahead.

Speaker #3: Throughout today's recorded presentation , all participants will be in a listen only mode . The presentation will be followed by a question and answer session .

Speaker #3: If you would like to ask a question , you may press star , followed by one on your touchtone telephone . I would now like to turn the conference over to Alexandra Steiger .

Operator: I would now like to turn the conference over to Alexandra Steiger, Global Head of Investor Relations. Please go ahead.

Speaker #3: Global Head of Investor Relations . Please go ahead .

Speaker #4: Good evening everyone , and welcome . Thank you for joining us . With me today are CEO , Christian Klein and CFO Dominik Asam .

Alexandra Steiger: Good evening, everyone, welcome. Thank you for joining us. With me today are CEO Christian Klein and CFO Dominik Asam. On this call, we will discuss SAP's Q3 2025 results. You can find the deck supplementing this call, as well as our quarterly statement on our investor relations website. During this call, we will 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 risks and uncertainties that could cause actual results and outcomes to differ materially. Additional information regarding these risks and uncertainties may be found in our filings with the SEC, including, but not limited to, the Risk Factors section of our annual report on Form 20-F for 2024.

Alexandra Steiger: Good evening, everyone, and welcome. Thank you for joining us. With me today are CEO Christian Klein and CFO Dominik Asam. On this call, we will discuss SAP's third quarter 2025 results. You can find the deck supplementing this call, as well as our quarterly statement on our investor relations website. During this call, we will 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 differ materially. Additional information regarding these risks and uncertainties may be found in our filings with the SEC, including but not limited to the risk factor section of our annual report on Form 20-F for 2024.

Speaker #4: On this call, we will discuss SAP's third quarter 2025 results. You can find the deck supplementing this call as well as our quarterly statement on our Investor Relations website.

Speaker #4: During this call , we will 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 risks and uncertainties that could cause actual results and outcomes to differ materially .

Speaker #4: Additional information regarding these risk and uncertainties may be found in our filings with the SEC , including , but not limited to , the Risk Factors section of our annual Report on Form 20 , F for 2024 .

Speaker #4: Unless otherwise stated , all numbers on this call are non IFRS and growth rates and percentage point changes are non IFRS . Year on year at constant currencies , the 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 .

Alexandra Steiger: Unless otherwise stated, all numbers on this call are non-IFRS, and growth rates and percentage point changes are non-IFRS, year-on-year at constant 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. With that, over to you, Christian.

Speaker #4: And with that , over to you , Christian .

Speaker #5: Thank you . Alexandra , and a warm welcome to everyone on the line . We are already entering the final stretch of 2025 , and I'm very happy to report SAP had a great Q3 and keeps delivering our cloud revenue growth and current cloud backlog performance have been strong business in the US .

Christian Klein: Thank you, Alexandra, and a warm welcome to everyone on the line. We are already entering the final stretch of 2025, and I'm very happy to report SAP had a great Q3 and keeps delivering. Our cloud revenue growth and current cloud backlog performance have been strong. Business in the U.S. public sector has started to pick up again. Overall, we are gaining market share as our customers are adopting solutions across the entire business suite, including SAP Business Data Cloud and AI at an accelerated pace. A recent IDC study shows that we grew 10 percentage points faster than the rest of the market in 2024. Looking ahead, the pipeline for Q4 and 2026 looks great as we unlocked a few key industries where business had stalled in half year one. As a result, we can confirm with high confidence our ambition to accelerate total revenue growth through 2027.

Christian Klein: Yes. Thank you, Alexandra, a warm welcome to everyone on the line. We are already entering the final stretch of 2025, and I'm very happy to report SAP had a great Q3 and keeps delivering. Our cloud revenue growth and current cloud backlog performance have been strong. Business in the US public sector has started to pick up again. Overall, we are gaining market share as our customers are adopting solutions across the entire business suite, including Business Data Cloud and AI at an accelerated pace. A recent IDC study shows that we grew 10 percentage points faster than the rest of the market in 2024. Looking ahead, the pipeline for Q4 and 2026 looks great as we unlocked a few key industries where business had stalled in half year 1.

Speaker #5: Public sector has started to pick up again . Overall , we are gaining market share as our customers are adopting solutions across the entire business suite , including business data , cloud and AI .

Speaker #5: At an accelerated pace . A recent IDC study shows that we grew ten percentage points faster than the rest of the market in 2024 .

Speaker #5: Looking ahead, the pipeline for Q4 and 2026 looks great as we unlocked a few key industries where business had stalled in half year one.

Speaker #5: As a result , we can confirm with high confidence our ambition to accelerate total revenue growth through 2027 . And I'm very excited about that .

Christian Klein: As a result, we can confirm with high confidence our ambition to accelerate total revenue growth through 2027. I'm very excited about that AI is becoming the key enabler of our growth. First, let's have a closer look at the board of financial results and our customer wins. In Q3, cloud revenue growth 27%. Cloud revenue has consistently grown more than 25% for 5 quarters in a row, and it was coming with a very solid cloud cost margin of about 75% in Q3. Total revenue growth came in, again, double digits at 11%. Current Cloud Backlog increased 27%. A strong performance considering that the WalkMe acquisition is now in the base. Once again, our bottom line performance was excellent.

Christian Klein: I'm very excited that AI is becoming the key enabler of our growth. First, let's have a closer look at the quarter's financial results and our customer wins. In Q3, cloud revenue rose 27%. Cloud revenue has consistently grown more than 25% for five quarters in a row, and it was coming with a very solid cloud cost margin of about 75% in Q3. Total revenue growth came in again double digits at 11%. Current cloud backlog increased 27%, a strong performance considering that the WalkMe acquisition is now in the base. Once again, our bottom line performance was excellent. Free cash flow increased by 5%, while operating profit came in 19% higher despite negative impacts of around $200 million, which Dominik will explain happily in a moment.

Speaker #5: AI is becoming the key enabler of our growth . So first , let's have a closer look at the quarter's financial results and our customer wins in Q3 cloud revenue was 27% .

Speaker #5: Cloud revenue has consistently grown more than 25% for five quarters in a row . And it was coming with a very solid cloud , gross margin of about 75% in Q3 .

Speaker #5: Total revenue growth came in again , double digits at 11% . Common cloud backlog increased 27% , a strong performance considering that the Walk acquisition is now in the base and once again , our bottom line performance was excellent .

Speaker #5: Free cash flow increased by 5%, while operating profit came in 19% higher, despite negative impacts of around €200 million, which Dominik will explain happily in a moment.

Christian Klein: Free cash flow increased by 5%, while operating profit came in 19% higher despite negative impacts of around EUR 200 million, which Dominik will explain happily in a moment. The customer stories from Q3 add color to the picture. Alphabet, Ericsson, Lufthansa, The Magnum Ice Cream Company, STIHL, Syngenta Crop Protection, Tapestry. These companies are known around the world. They are industry leaders with iconic brands, they all opted for the RISE journey in Q3. Their business transformation journey doesn't stop at cloud ERP. Ericsson, Lufthansa, Magnum, Syngenta, STIHL, and Tapestry also adopted SAP Business Data Cloud and SAP Business AI and expanded their SAP footprint with our business suite LOB solutions. Alphabet, for its part, selected BDC, we deepened our relationship with plans to further support our SAP Business AI roadmap with Google Gemini. The picture is the same wherever you look.

Speaker #5: The customer stories from Q3 at Color to the picture alphabet Ericsson , Lufthansa , the Magnum ice Cream Company , Steel , Syngenta , Crop Protection , tapestry .

Christian Klein: The customer stories from Q3 add color to the picture: Alphabet, Ericsson, Lufthansa, the Magnum ice cream company, Steel, Syngenta Crop Protection, and Pepper Street. These companies are known around the world. They are industry leaders with iconic brands, and they all opted for the wise journey in Q3. Their business transformation journey doesn't stop at Cloud ERP Suite. Ericsson, Lufthansa, Magnum, Syngenta, Steel, and Pepper Street also adopted SAP Business Data Cloud and SAP Business AI and expanded their SAP footprint with our business suite LOB solutions. Alphabet, for its part, selected SAP Business Data Cloud, and we deepened our relationship with plans to further support our SAP Business AI roadmap with Google Gemini. The picture is the same wherever you look.

Speaker #5: These companies are known around the world . They are industry leaders with iconic brands and they all opted for the wise journey in Q3 .

Speaker #5: But their business transformation journey doesn't stop at cloud ERP . Ericsson , Lufthansa , Magnum , Syngenta , Seal and Tapestry also adopted SAP Business Data Cloud and business AI and expanded the SAP footprint with our business suite solutions .

Speaker #5: Alphabet for its part , selected B2C and we deepened our relationship with plans to further support our business . AI roadmap with Google Gemini .

Speaker #5: The picture is the same wherever you look . In addition to their new wise journeys in Q3 , we won Jisc for CX for supply chain , Takeda for Ariba and Supply chain and all three customers also signed up for business data , cloud , Panasonic for their part .

Christian Klein: In addition to their new RISE journeys in Q3, we won Jysk for CX, CheckWalzkin for supply chain, Takeda for Ariba and supply chain, and all three customers also signed up for SAP Business Data Cloud. Panasonic, for their part, signed up for RISE in 2022, and now in Q3, selected our complete human capital management portfolio. As you already know from the analyst conference at Sapphire, we see the potential to convert one euro of on-premise revenue into five and more euros of cloud revenue by transforming the end-to-end value chain of our customers through RISE with SAP. About half of that potential is upselling and cross-selling. The conclusion from these stories is very clear: our strategy works, land-and-expand works, and the AI-infused integrated business suite is the way forward for customers as well as for SAP.

Christian Klein: In addition to their new RISE journeys in Q3, we won JYSK for CX, Jack Wolfskin for supply chain, Takeda for Ariba and supply chain, and all three customers also signed up for Business Data Cloud. Panasonic, for their part, signed up for RISE in 2022, and now in Q3, selected our complete human capital management portfolio. As you already know from the analyst conference at Sapphire, we see the potential to convert 1 EUR of on-premise revenue into 5 and more EUR of cloud revenue by transforming the end-to-end value chain of our customers through RISE with SAP. About half of that potential is upselling and cross-selling. The conclusion from these stories is very clear: Our strategy works, land and expand works, and the AI-infused integrated business suite is the way forward for customers as well as for SAP.

Speaker #5: Signed up for Wise in 2022 and now in Q3 , selected our complete human Capital Management portfolio . As you already know from the analyst conference at Sapphire , we see the potential to convert €1 of on premise revenue into five and more euros of cloud revenue by transforming the end to end value chain of our customers through wise with SAP .

Speaker #5: About half of that potential is upselling and cross-selling . The conclusion from these stories is very clear . Our strategy works land and expand works , and the AI infused , integrated business suite is the way forward for customers as well as for SAP .

Speaker #5: As for the cloud journey , our strategy is playing out very nicely as well . Among those that embarked on their cloud journeys , where the AI companies perplexity , Connector and Kodiak AI , it is great to see that many fast growing tech companies built their unique growth stories with SAP's business suite next to the Q3 wins .

Christian Klein: As for the growth journey, our strategy is playing out very nicely as well. Among those that embarked on their growth journeys were the AI companies Perplexity, Konecta, and Kodiak AI. It is great to see that many fast-growing tech companies built their unique growth stories with SAP Business Suite. Next to the Q3 wins are also Bending Spoons, Topt, and Solvay, for example. They all embrace our growth journey because of the following reasons: they will be able to go live in a matter of weeks. They can scale our platform from small to big without any effort in over 60 countries, growing towards the IPO and beyond. They will never have to think about upgrades again and can instead invest their IT money in continuous innovation like AI. Finally, let's have a look at our software and cloud offering. I already mentioned that business in the U.S.

Christian Klein: As for the growth journey, our strategy is playing out very nicely as well. Among those that embarked on their growth journeys were the AI companies Perplexity, Konecta, and Kodiak AI. It is great to see that many fast-growing tech companies build their unique growth stories with SAP's Business Suite. Next to the Q3 wins, also Bending Spoons, TOP, and SOLAI, for example. They all embrace our growth journey because of the following reasons. They will be able to go live in a matter of weeks. They can scale our platform from small to big without any effort in over 60 countries, growing towards the IPO and beyond. They will never have to think about upgrades again and can instead invest their IT money in continuous innovation like AI. Finally, let's have a look at our software and cloud offering.

Speaker #5: Also, bending spoons on top and solely. For example, they all embrace our journey because of the following reasons. They will be able to go live in a matter of weeks.

Speaker #5: They can scale our platform from small to big without any effort. In over 60 countries, we are growing towards the IPO and beyond.

Speaker #5: And they will never have to think about upgrades again and can instead invest their IT money in continuous innovation like AI . Finally , let's have a look at our sovereign cloud offering .

Speaker #5: I already mentioned that business in the U.S. public sector is picking up again. SAP NS2 was awarded a major framework contract with the U.S. government, and we are very happy that we have already won first orders under this framework in Q3.

Christian Klein: I already mentioned that business in the US public sector is picking up again. SAP NS2 was awarded a major framework contract with the US government, and we are very happy that we have already won first orders under this framework in Q3. For example, the United States Army signed a contract enabling the migration from on-premise systems to the cloud. In the US and worldwide, more and more customers are approaching us with their software needs. While some companies pursue high growth in the infrastructure business, we are sticking to our strategy. SAP will not build gigafactories. Instead, we provide software and cloud solutions together with strong cloud infrastructure partners. This allows us to offer customers the best of the best across the technology stack, and it allows us to reach great global coverage at a healthy margin without any long-term bets.

Christian Klein: public sector is picking up again. SAP NS2 was awarded a major framework contract with the U.S. government, and we are very happy that we have already won first orders under this framework in Q3. For example, the United States Army signed a contract enabling the migration from on-premise systems to the cloud. In the U.S. and worldwide, more and more customers are approaching us with their software needs. While some companies pursue high growth in the infrastructure business, we are sticking to our strategy. SAP will not build gigafactories. Instead, we provide software and cloud solutions together with strong cloud infrastructure partners. This allows us to offer customers the best of the best across the technology stack, and it allows us to reach great global coverage at a healthy margin without any long-term bans. Together with AWS, we recently launched software and offerings for India and Europe.

Speaker #5: For example , the United States Army signed a contract enabling the migration from on premise systems to the cloud in the US and worldwide .

Speaker #5: More and more customers are approaching us with their software needs , while some companies pursue high growth in the infrastructure business , we are sticking to our strategy .

Speaker #5: SAP will not build Gigafactories . Instead , we provide sovereign cloud solutions together with strong cloud infrastructure partners . This allow us to offer customers the best of the best across the technology stack , and it allows us to reach great global coverage at the healthy margin without any long term bets .

Speaker #5: Together with AWS , we recently launched software and offerings for India and Europe , and with Omai , we launched a partnership providing German public sector customers sovereign access to one of the world's leading LLM .

Christian Klein: Together with AWS, we recently launched software and offerings for India and Europe. With OpenAI, we launched a partnership providing German public sector customers software and access to one of the world's leading LLM. On top of that, we just introduced a game-changing new software and cloud offering for highly regulated customers and governments. We can now offer our entire cloud portfolio in a customer data center at a highly competitive cost. The offering delivers the highest levels of data, operational, technical, and legal sovereignty, while customers have access to all SAP Cloud solutions, BTP, BDC, and AI. We see tremendous customer interest in this software and cloud on-site offering and have built already strong pipeline for 2025 and 2026 within a few weeks. With regard to AI, our strategy is playing out as well.

Christian Klein: With OpenAI, we launched a partnership providing German public sector customers software and access to one of the world's leading LLMs. On top of that, we just introduced a game-changing new software and cloud offering for highly regulated customers and governments. We can now offer our entire cloud portfolio in a customer data center at a highly competitive cost. The offering delivers the highest levels of data, operational, technical, and legal sovereignty while customers have access to all SAP cloud solutions, BTP, BDC, and AI. We see tremendous customer interest in this software and cloud on-site offering and have built already strong pipelines for 2025 and 2026 within a few weeks. With regard to AI, our strategy is playing out as well. For high-value AI cases in B2B, a large language model alone is not sufficient. To make it simple, no apps, no data, no AI.

Speaker #5: On top of that, we just introduced a game-changing new software and cloud offering for highly regulated customers and governments. We can now offer our entire cloud portfolio in a customer data center at a highly competitive cost.

Speaker #5: The offering delivers the highest levels of data operational , technical and legal sovereignty . While customers have access to all SAP cloud solutions , BTP , BTC and AI .

Speaker #5: We see tremendous customer interest in this software and cloud on-site offering, and we have already built a strong pipeline for 2025 and 2026 within a few weeks.

Speaker #5: With regard to AI , our strategy is playing out as well for high value AI cases in B2B , a large language model alone is not sufficient to make it simple .

Christian Klein: For high-value AI cases in B2B, a large language model alone is not sufficient. To make it simple, no apps, no data, no AI. Only the combination of LLMs with business process and contextual data results in high-value AI use cases. That is our strategy. That is where SAP is better than anyone else, and that is where we innovate and invest. We are proud of releasing more and more AI agents. It is not the number that counts. It is about how we automate and infuse intelligence across end-to-end business processes. It is about orchestrating AI agents across the company's value chain, something only SAP can do. That's why we are introducing AI assistants in Joule, orchestrating our agents to support specific per-personas and functions in a company.

Speaker #5: No apps , no data , no AI , only the combination of Llms with business process and contextual data results results in high value AI use cases .

Christian Klein: Only the combination of LLMs with business process and contextual data results in high-value AI use cases. That is our strategy. That is where SAP is better than anyone else, and that is where we innovate and invest. We are proud of releasing more and more AI agents, but it is not the number that counts. It is about how we automate and infuse intelligence across end-to-end business processes. It is about orchestrating AI agents across the company's value chain, something only SAP can do. That's why we are introducing AI assistants in tool, orchestrating our agents to support specific personas and functions in a company. Imagine, for example, an AI assistant for supply chain management supporting a planner to reroute goods, optimize inventories, or connect new suppliers seamlessly.

Speaker #5: That is our strategy . That is where SAP is better than anyone else , and that is where we innovate and invest . We are proud of releasing more and more AI agents , but it is not the number that counts .

Speaker #5: It is about how we automate and infuse intelligence across end to end business processes . It is about orchestrating AI agents across the company's value chain , something only SAP can do .

Speaker #5: That's why we are introducing AI assistants in Joule , orchestrating our agents to support specific personas and functions in the company . Imagine , for example , an AI assistant for supply chain management , supporting a planner to reroute goods , optimize inventories , or connect new suppliers seamlessly .

Christian Klein: Imagine, for example, an AI assistant for supply chain management, supporting a planner to reroute goods, optimize inventories, or connect new suppliers seamlessly. Think of these assistants as team leads who bring just the right technical agents into the conversation from a pool of hundreds. For example, bringing in a maintenance planner agent as part of the production planning process and supporting the planner to reduce downtimes of important assets, significantly increasing the productivity of the planner by up to 40%. We are currently working with customers across all industries and functions to co-develop and refine these assistants to maximize the business value. We are also releasing the Joule Everywhere and Everything functionality to customers in Q4. Thanks to our partnership with Perplexity, our AI copilot can now work with both SAP and non-SAP data, and it can provide high-quality answers to very complex business questions.

Speaker #5: Think of these assistants as team leads who bring just the right technical agents into the conversation . From a pool of hundreds . For example , bringing in a maintenance planner agent as part of the production planning process and supporting the planner to .

Christian Klein: Think of these assistants as team leads who bring just the right technical agents into the conversation from a pool of hundreds. For example, bringing in a maintenance planner agent as part of the production planning process and supporting the planner to reduce downtimes of important assets significantly, increasing the productivity of the planner by up to 40%. We are currently working with customers across all industries and functions to co-develop and refine these assistants to maximize the business value. We are also releasing the tool everywhere and everything functionality to customers in Q4. Thanks to our partnership with Perplexity, our AI copilot can now work with both SAP and non-SAP data, and it can provide high-quality answers to very complex business questions.

Speaker #5: Reduce downtimes of important assets significantly increasing the productivity of the planner by up to 40% . We are currently working with customers across all industries and functions to co-develop and refine these assistants to maximize the business value .

Speaker #5: We are also releasing the tool everywhere and everything . Functionality to customers . In Q4 . Thanks to our partnership with perplexity , our AI copilot can now work with both SAP and Non-sap data , and it can provide high quality answers to very complex business questions .

Speaker #5: Finally , our latest research publication publication on SAP's Foundation module for Tabular Data will be a spotlight paper at one of the world's top AI research conferences .

Christian Klein: Finally, our latest research publication on SAP's foundation module for Tableau data will be a spotlight paper at one of the world's top AI research conferences this year. We are at the cutting edge of research and turning now these insights into tangible benefits for our customers. In Q4, we are going to sign wise deals initially planned in 2026 because customers want to start now using SAP Business AI. Even more important for us at SAP, AI adoption is going up significantly because end users are consuming SAP Business AI at a higher frequency and across a broader scope. Some examples: Johnson Controls saves 3,000 hours annually by automating routine IT system monitoring with our IT agent. Bosch saves 2,500 hours per customer service center per year with our services agent. JK Cement from India has cut the time for purchase-related processes by 50% with our sourcing agent.

Christian Klein: Finally, our latest research publication on SAP's foundation module for tabular data will be a spotlight paper at one of the world's top AI research conferences this year. We are at the cutting edge of research and turning now these insights into tangible benefits for our customers. In Q4, we are going to sign RISE deals initially planned in 2026 because customers want to start now using SAP Business AI. Even more important for us at SAP, AI adoption is going up significantly because end users are consuming SAP Business AI at a higher frequency and across a broader scope. Some examples. Johnson Controls saves 3,000 hours annually by automating routine IT system monitoring with our IT agent.

Speaker #5: This year , we are at the cutting edge of research and turning now . These insights into tangible benefits for our customers . In Q4 , we are going to sign wise deals initially planned in 2026 because customers want to start now using SAP business AI , and even more important for us at SAP , AI adoption is going up significantly because end users are consuming SAP business AI at a higher frequency and across a broader scope .

Speaker #5: Some examples . Johnson Controls saves 3000 hours annually by automating routine IT system monitoring with our IT agent . Bosch saves 2500 hours per customer service center per year .

Christian Klein: Bosch saves 2,500 hours per customer service center per year with our services agent. JK Cement from India has cut the time for purchase related processes by 50% with our sourcing agent. We build use cases not just for the horizontal layer. Super happy to report that we are going, in the meantime, deep into the industry verticals as well. To give you two examples, Wärtsilä, a manufacturing company, is infusing SAP Business AI in their mission-critical spare part quotation process. This results in a significantly higher process accuracy and a much better customer and supplier experience. With CHS, an agriculture company, we are enabling traders to create commodity contracts in natural language with SAP Joule, with estimated efficiency gains in the $tens of thousands per trader, as well as improved data integrity and accuracy.

Speaker #5: With our services agent , JK cement from India has cut the time for purchase . Related processes by 50% . With our sourcing agent and we build use cases not just for the horizontal layer .

Christian Klein: We build use cases not just for the horizontal layer. Super happy to report that we are going, in the meantime, deep into the industry verticals as well. To give you two examples, Wärtsilä, a manufacturing company, is infusing SAP Business AI in their mission-critical spare part quotation process. This results in a significantly higher process accuracy and a much better customer and supplier experience. With CHS, an agriculture company, we are enabling traders to create commodity contracts in natural language with SAP tool, with estimated efficiency gains in the tens of thousands of dollars per trader, as well as improved data integrity and accuracy. Looking at the data layer and our business data cloud offering, we are also pushing ahead.

Speaker #5: Super happy to report that we are going in the meantime , deep into the industry verticals as well . To give you two examples , Wasilla , a manufacturing company , is infusing SAP business AI in their mission critical spare part quotation process .

Speaker #5: This results in a significantly higher process accuracy and a much better customer and supplier experience . And with HHS and agriculture company , we are enabling traders to create commodity contracts in natural language with SAP tool with estimated efficiency gains in the tens of thousands of dollars per trader .

Speaker #5: As well as improved data integrity and accuracy . Looking at the data layer and our business data Cloud offering , we are also pushing ahead for example , with the hundreds of data products released to date and new capabilities for intelligent apps such as people Intelligence and Revenue Intelligence .

Christian Klein: Looking at the data layer and our SAP Business Data Cloud offering, we are also pushing ahead. For example, with the hundreds of data products released to date and new capabilities for intelligent apps, such as People Intelligence and Revenue Intelligence. We are also strengthening our position in data with our new offering, SAP Business Data Cloud Connect, a zero-copy service to connect BDC with partner data platforms such as Databricks and also Google BigQuery. Customers receive live and secure access to Google's AI ecosystem and Google Gemini models, among many other things. More exciting data partnerships will soon follow at our SAP TechEd event in November. Internally at SAP, we are also doubling down on AI adoption. Acting as customer zero for our own solutions, we boost productivity. Some of the greatest internal levers are in development, go-to-market, customer support, pricing, and process simplification in the corporate functions.

Christian Klein: For example, with the hundreds of data products released to date and new capabilities for intelligent apps such as people intelligence and revenue intelligence, we are also strengthening our position in data with our new offering, SAP Business Data Cloud Connect, a zero-copy service to connect BDC with partner data platforms such as Databricks and also Google BigQuery. Customers receive live and secure access to Google's AI ecosystem and Gemini modules, among many other things. More exciting data partnerships will soon follow at our TechEd event in November. Internally at SAP, we are also doubling down on AI adoption. Acting as customer zero for our own solutions, we boost productivity. Some of the greatest internal levers are in development, go-to-market, customer support, pricing, and process simplification in the corporate functions, for example, in the deal approval process. SAP wants SAP. That is the guiding principle.

Speaker #5: We are also strengthening our position in data with our new offering, SAP Business Data Cloud Connect, a zero-copy service to connect BDC with partner data platforms such as Databricks and Google BigQuery.

Speaker #5: Customers receive live and secure access to Google's AI ecosystem and Gemini modules , among many other things . More exciting data partnerships will soon follow at at our at our TechEd event in November .

Speaker #5: Internally at SAP , we are also doubling down on AI adoption , acting as customer zero for our own solutions . We boost productivity .

Speaker #5: Some of the greatest internal levels are in development . Go to market , customer support , pricing and process simplification in the corporate functions .

Speaker #5: For example , in the deal approval process , SAP runs SAP . That is the guiding principle . As for Jul , our AI copilot answers thousands of employee questions every day from simple tasks such as travel bookings to complex quoting support at quarter end .

Christian Klein: For example, in the deal approval process. SAP wants SAP. That is the guiding principle. As for Joule, our AI copilot answers thousands of employee questions every day, from simple tasks such as travel bookings to complex quoting support at quarter end. We believe that simplification and internal AI adoption will enable our headcount to grow significantly below revenue. Let me now summarize. SAP is in a very good shape. We closed a great Q3 and are ready for Q4, thanks to a very healthy pipeline. At the same time, we are building a strong position for SAP to be a leader in the AI race with apps, data and AI as the winning formula. As 2025 is coming to a close, we are already looking ahead to the next chapter. Our product strategy and business model are spot on.

Christian Klein: As for tool, our AI assistant answers thousands of employee questions every day, from simple tasks such as travel bookings to complex quoting support at quarter end. We believe that simplification and internal AI adoption will enable our headcount to grow significantly below revenue. Let me now summarize. SAP is in a very good shape. We closed a great Q3 and are ready for Q4, thanks to a very healthy pipeline. At the same time, we are building a strong position for SAP to be a leader in the AI race with apps, data, and AI as the winning formula. As 2025 is coming to a close, we are already looking ahead to the next chapter. Our product strategy and business model are spot on. This gives us resilience across regions and industries. AI will be the key enabler for accelerating double-digit total revenue growth through 2027.

Speaker #5: We believe that simplification and internal AI adoption will enable our headcount to grow significantly below revenue . Let me now summarize SAP is in a very good shape .

Speaker #5: We closed a great Q3 and are ready for Q4, thanks to a very healthy pipeline. At the same time, we are building a strong position for SAP to be a leader in the AI race, with apps, data, and AI as the winning formula.

Speaker #5: As 2025 is coming to a close, we all look ahead. We are already looking forward to the next chapter. Our product strategy and business model are spot on.

Speaker #5: This gives us resilience across regions and industries . AI will be the key enabler for accelerating double digit total revenue growth through 2027 .

Christian Klein: This gives us resilience across regions and industries. AI will be the key enabler for accelerating double-digit total revenue growth through 2027. Given all that and more, I'm very much looking forward to the future. With that, I'm now handing it over to Dominik. Dominik?

Speaker #5: Given all that and more , I'm very much looking forward to the future . And with that , I'm now handing it over to Dominik .

Christian Klein: Given all that and more, I'm very much looking forward to the future. With that, I'm now handing it over to Dominik. Dominik? Thank you, Christian, and thank you all for joining us this evening. As Christian mentioned, SAP delivered yet another great quarter with performance that underscores the momentum we see across the business despite the persistent challenges and uncertainties in the broader macroeconomic backdrop. In Q3, we saw strong execution on current cloud backlog and cloud revenue. This, coupled with the healthy growth in operating profit, reflects the safeguards we put in place and the discipline with which we are managing the business. The Cloud ERP Suite delivered its 15th consecutive quarter with growth exceeding 30%, highlighting the progress we are making in helping customers migrate to the cloud and validating the strength of our strategy.

Speaker #5: Dominik .

Speaker #6: Thank you , Christian , and thank you all for joining us this evening . As Christian mentioned , SAP delivered yet another great quarter with performance that underscores the momentum we see across the business .

Dominik Asam: Thank you, Christian. Thank you all for joining us this evening. As Christian mentioned, SAP delivered yet another great quarter with performance that underscores the momentum we see across the business, despite the persistent challenges and uncertainties in the broader macroeconomic backdrop. In Q3, we saw strong execution on Current Cloud Backlog and cloud revenue. This, coupled with the healthy growth in operating profit, reflects the safeguards we put in place and the discipline with which we are managing the business. The Cloud ERP Suite delivered its 15th consecutive quarter with growth exceeding 30%, highlighting the progress we are making in helping customers migrate to the cloud and validating the strength of our strategy. These achievements show that SAP remains a bellwether for digital transformation, reflecting the trust customer place in our mission-critical solutions and positioning us for durable growth in the years ahead.

Speaker #6: Despite the persistent challenges and uncertainties in the broader macroeconomic backdrop in Q3 , we saw strong execution on current cloud backlog and cloud revenue .

Speaker #6: This , coupled with the healthy growth in operating profit , reflects the safeguards we put in place and the discipline with which we are managing the business .

Speaker #6: The cloud , ERP suite delivered . It's 15th consecutive quarter with growth exceeding 30% , highlighting the progress we are making in helping customers migrate to the cloud and validating the strength of our strategy .

Speaker #6: These achievements show that SAP remains a bellwether for digital transformation , reflecting the trust customers place in our mission critical solutions and positioning us for durable growth .

Christian Klein: These achievements show that SAP remains a bellwether for digital transformation, reflecting the trust customers place in our mission-critical solutions and positioning us for durable growth in the years ahead. Now, more details around our financial highlights. Cloud backlog exceeded €18.8 billion, up 27%. Cloud revenue also increased 27%, driven once again by the strong performance of the Cloud ERP Suite. It delivered 31% growth in Q3, demonstrating the unabated momentum of strong market share gains in what by now represents 87% of cloud revenues and actually more than 100% of the year-over-year increase in cloud revenues. The magnitude of these market share gains becomes even more evident if adjusted from 31% Cloud ERP Suite growth at constant currencies to the holding currency of our competitors, which is obviously the U.S. dollar. During the quarter, we also closed our acquisition of SmartRecruiters.

Speaker #6: In the years ahead . Now , more details around our financial highlights count . Cloud backlog exceeded €18.8 billion , up 27% . Cloud revenue also increased 27% , driven once again by the strong performance of cloud ERP suite .

Dominik Asam: Now more details around our financial highlights. Current Cloud Backlog exceeded EUR 18.8 billion, up 27%. Cloud revenue also increased 27%, driven once again by the strong performance of Cloud ERP Suite. It delivered 31% growth in Q3, demonstrating the unabated momentum of strong market share gains in what by now represents 87% of cloud revenues and actually more than 100% of the year-over-year increase in cloud revenues. The magnitude of these market share gains becomes even more evident if adjusted from 31% Cloud ERP Suite growth at constant currencies with the reporting currency of our competitors, which is obviously the US dollar. During the quarter, we also closed our acquisition of SmartRecruiters. This tuck-in strengthens our capabilities in talent acquisition and supports our long-term strategy.

Speaker #6: It delivered 31% growth in Q3 , demonstrating the unabated momentum of strong market share gains in what by now represents 87% of cloud revenues and actually more than 100% of the year over year increase in cloud revenues .

Speaker #6: The magnitude of these market share gains becomes even more evident if adjusted from 31% cloud ERP suite growth at constant currencies to the currency of our competitors , which is obviously the US dollar .

Speaker #6: During the quarter , we also closed our acquisition of Smart . This stuck in strengthens our capabilities and talent acquisition and supports our long term strategy despite our solid operating momentum in Q3 .

Christian Klein: This tuck-in strengthens our capabilities in talent acquisition and supports our long-term strategy. Despite our solid operating momentum in Q3, please keep in mind that as we progress through the remainder of 2025, we need to stay mindful of the broader environment. We were also awarded a major U.S. public sector framework agreement in Q3 with the United States Army, which we expect will expand our access to future opportunities in this market, giving us confidence that this industry is seeing early signs of improving engagement. Software licenses revenue decreased by 42% in Q3. Finally, total revenue came in at €9.1 billion, up 11%, and the share of more predictable revenue rose by two percentage points to 87%. Now, a brief look at our regional performance. In Q3, SAP's cloud revenue performance was particularly strong in APJ and EMEA and solid in the Americas region.

Dominik Asam: Despite our solid operating momentum in Q3, please keep in mind that as we progress through the remainder of 2025, we need to stay mindful of a broader environment. We were also awarded a major US public sector framework agreement in Q3 with the United States Army, which we expect will expand our access to future opportunities in this market, giving us confidence that this industry is seeing early signs of improving engagement. Software licenses revenue decreased by 42% in Q3. Total revenue came in at EUR 9.1 billion, up 11%, and the share of more predictable revenue rose by 2 percentage points to 87%. Now a brief look at our regional performance. In Q3, SAP's cloud revenue performance was particularly strong in APJ and EMEA, and solid in the Americas region.

Speaker #6: Please keep in mind that as we progress through the remainder of 2025 , we need to stay mindful of the broader environment . We were also awarded a major US public sector Framework Agreement in Q3 with the United States Army , which we expect will expand our access to future opportunities in this market , giving us confidence that this industry is seeing early signs of improvement , improving engagement , software licenses , revenue decreased by 42% in Q3 .

Speaker #6: Finally , total revenue came in at €9.1 billion , up 11% , and the share of more predictable revenue rose by two percentage points to 87% .

Speaker #6: Now , a brief look at our regional performance in Q3 . SAP's cloud revenue performance was particularly strong in APJ and EMEA , and solid in the Americas region .

Speaker #6: Brazil , France , Germany , India , Italy and South Korea all had outstanding performance , while Japan , Spain and the US were particularly strong .

Christian Klein: Brazil, France, Germany, India, Italy, and South Korea all had outstanding performance, while Japan, Spain, and the U.S. were particularly strong. Now, moving down the income statement, our non-IFRS cloud gross margin for the quarter expanded by 1.1 percentage points to 75.1%, driving cloud gross profit up by 28%. IFRS operating profit increased 12% to €2.5 billion in the quarter. In the third quarter, non-IFRS operating profit was up 19% to €2.6 billion. Both IFRS and non-IFRS operating profit growth were negatively impacted by approximately €100 million as a result of a change in case law that affected SAP's other tax litigation provisions, as well as more than €100 million related to the workforce transformation. In light of the timing for some of the measures related to this program, we anticipate another €100 million of expenses to be recognized in the fourth quarter of 2025.

Dominik Asam: Brazil, France, Germany, India, Italy, and South Korea all had outstanding performance, while Japan, Spain, and the US were particularly strong. Now moving down the income statement. Our non-IFRS cloud gross margin for the quarter expanded by 1.1 percentage points to 75.1%, driving cloud gross profit up by 28%. IFRS operating profit increased 12% to EUR 2.5 billion in the quarter. In Q3, non-IFRS operating profit was up 19% to EUR 2.6 billion. Both IFRS and non-IFRS operating profit growth were negatively impacted by approximately EUR 100 million as a result of a change in case law that affected SAP's other tax litigation provisions, as well as a more than EUR 100 million related to the workforce transformation.

Speaker #6: Now, moving down the income statement, our non-IFRS cloud gross margin for the quarter expanded by 1.1 percentage points to 75.1%, driving cloud gross profit up by 28%.

Speaker #6: IFRS operating profit increased 12% to €2.5 billion in the quarter . In the third quarter , IFRS operating profit was up 19% to €2.6 billion .

Speaker #6: Both IFRS and IFRS operating profit growth were negatively impacted by approximately €100 million. This was due to a change in case law that affected SAP's other tax litigation provisions, as well as more than €100 million related to the workforce transformation.

Speaker #6: In light of the timing for some of the measures related to this program , we anticipate another 100 million of expenses to be recognized in the fourth quarter of 2025 .

Dominik Asam: In light of the timing for some of the measures related to this program, we anticipate another EUR 100 million of expenses to be recognized in Q4 2025. I'll now touch on our results below the operating line. The IFRS effective tax rate in Q3 was 25.3%, and the non-IFRS tax rate was 27.9%. The IFRS effective tax rate is lower than the non-IFRS effective tax rate due to the tax benefits from tax-exempt income. Operating cash flow in Q3 was up by 7% to EUR 1.5 billion and free cash flow increased by 5% to EUR 1.3 billion. Increase was mainly attributable to the higher profitability and to lower restructuring payments, which were partially offset by higher tax payments.

Speaker #6: I now touch on our results below the operating line . The effective tax rate in Q3 was at 25.3% , and the IFRS tax rate was 27.9% .

Christian Klein: I'll now touch on our results below the operating line. The IFRS effective tax rate in Q3 was 25.3%, and the non-IFRS tax rate was 27.9%. The IFRS effective tax rate is lower than the non-IFRS effective tax rate due to the tax benefits from tax-exempt income. Operating cash flow in the third quarter was up by 7% to €1.5 billion, and free cash flow increased by 5% to €1.3 billion. The increase was mainly attributable to the higher profitability and to lower restructuring payments, which were partially offset by higher tax payments. Finally, basic IFRS earnings per share increased to €1.72, and non-IFRS earnings per share increased to €1.59. Now, on to our outlook.

Speaker #6: The effective tax rate is lower than the non IFRS effective tax rate due to the tax benefits from tax exempt income . Operating cash flow in the third quarter was up by 7% to €1.5 billion , and free cash flow increased by 5% to €1.3 billion .

Speaker #6: Increase was mainly mainly attributable to the higher profitability and to lower restructuring payments , which were partially offset by higher tax payments . Finally , basic IFRS earnings per share increased to €1.72 and earnings per share increased to €1.59 .

Dominik Asam: Finally, basic IFRS earnings per share increased to EUR 1.72, and non-IFRS earnings per share increased to EUR 1.59. Now on to our outlook. As you've seen in today's release, we now expect to reach the range of our cloud revenue outlook for fiscal year 2025 towards its lower end, due to delayed bookings in the first half of the year, as already highlighted in July. We've seen this dynamic of back-end loaded bookings again in Q3, especially in sectors such as industrial manufacturing and public sector. Nonetheless, we're now expecting to lend towards the upper end of our operating profit outlook range and forecast free cash flow to exceed the previous target of EUR 8 billion. We continue to expect CCB growth to slightly decrease in 2025.

Speaker #6: Now on to our outlook . As you've seen in today's release , we now expect to reach the range of our cloud revenue outlook for fiscal year 2025 towards its lower end due to the late bookings in the first half of the year , as already highlighted in July , we've seen this dynamic of back end loaded bookings again in Q3 , especially in sectors such as industrial , manufacturing and public sector .

Christian Klein: As you've seen in today's release, we now expect to reach the range of our cloud revenue outlook for fiscal year 2025 towards its lower end due to delayed bookings in the first half of the year, as already highlighted in July. We've seen this dynamic of backend-loaded bookings again in Q3, especially in sectors such as industrial manufacturing and the public sector. Nonetheless, we are now expecting to land towards the upper end of our operating profit outlook range and forecast free cash flow to exceed the previous target of €8 billion. We continue to expect CCB growth to slightly decrease in 2025, while by now we have a quite precise view as to where we will end up within our guided range for cloud revenues for fiscal year 2025.

Speaker #6: Nonetheless, we are now expecting to lend towards the upper end of our operating profit outlook range and forecast free cash flow to exceed the previous target of $8 billion.

Speaker #6: We continue to expect growth to slightly decrease in 2025, but by now we have a quite precise view as to where we will end up within our guided range for cloud revenues for fiscal year 2025.

Dominik Asam: While by now we have a quite precise view as to where we will end up within our guided range for cloud revenues for fiscal year 2025. Given that Q4 is by far the biggest quarter in terms of bookings seasonality, we still have a larger range of potential outcomes for CCB growth. Nonetheless, our robust pipeline of opportunities and our strong competitive momentum give us confidence to reiterate our ambition to accelerate total revenue growth through 2027. This performance underscores the strengths of our portfolio, operational discipline, as well as our ability to deliver results. For additional details, please refer to our quarterly statement published earlier today on our investor relations website. Thank you. Now we will be happy to take your questions.

Speaker #6: Given that Q4 is by far the biggest quarter in terms of bookings and seasonality, we still have a larger range of potential outcomes for key growth.

Christian Klein: Given that Q4 is by far the biggest quarter in terms of bookings seasonality, we still have a larger range of potential outcomes for CCB growth. Nonetheless, our robust pipeline of opportunities and our strong competitive momentum give us confidence to reiterate our ambition to accelerate total revenue growth through 2027. This performance underscores the strengths of our portfolio, operational discipline, as well as our ability to deliver results. For additional details, please refer to our quarterly statement published earlier today on our investor relations website. Thank you, and now we will be happy to take your questions.

Speaker #6: Nonetheless , our robust pipeline of opportunities and our strong competitive momentum give us confidence to reiterate our ambition to accelerate total revenue growth through 2027 .

Speaker #6: This performance underscores the strength of our portfolio, operational discipline, as well as our ability to deliver results. For additional details, please refer to our quarterly statement published earlier today on our Investor Relations website.

Speaker #6: And thank you. Now we will be happy to take your questions.

Speaker #4: Thank you . Dominique , again . We will take your questions now . Again , I would kindly remind you to only ask one question when prompted .

[Company Representative] (SAP SE): Thank you, Dominik. We will take your questions now. I would kindly remind you to only ask one question when prompted. Operator, please open the line.

Alexandra Steiger: Thank you, Dominik. We will take your questions now. I would kindly remind you to only ask one question when prompted. Operator, please open the line.

Alexandra Steiger: Thank you, Dominik. Again, we will take your questions now. I would kindly remind you to only ask one question when prompted. Operator, please open the line.

Speaker #4: Operator , please open the line .

Speaker #3: Ladies and gentlemen , at this time , we will begin the question and answer session . Anyone who wishes to ask a question may press star followed by one on their touch tone telephone .

Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star, followed by one on their touch tone telephone. If you are using speaker equipment today, please lift the handset before making your selections. Again, anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question is from the line of Toby Ogg with JPMorgan. Your line is now open.

Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star, followed by one on their touch-tone telephone. If you are using speaker equipment today, please lift the handset before making your selections. Again, anyone who has a question may press star, followed by one at this time. One moment for the first question, please. The first question is from the line of Toby Ogg with JPMorgan. Your line is now.

Speaker #3: If you are using speaker equipment today , please lift the handset before making your selections again . Anyone who has a question may press star , followed by one .

Speaker #3: At this time . One moment . For the first question , please . The first question is from the line of Toby Ogg with JP Morgan .

Speaker #3: Your line is now .

Speaker #7: Open . Hi .

Toby Ogg: Yes. Yeah. Hi. Hi, good evening, and thanks for the question. Just on the demand, just on the demand backdrop, Christian, I know you talked previously about elongated sales cycles across various sectors, US public sector and manufacturing. Could you just give us an update on what you're seeing now with respect to these sectors? Obviously, there's the shutdown at the moment, but it sounds like you're seeing some positive early signs. Related on the backlog, Dominik, I think you'd said at a recent conference that 4 percentage points of decline would be a bit more than a slight decline, which is the guidance.

[Analyst]: Yeah, hi. Hi, good evening, and thanks for the question. Just on the demand backdrop, Christian, I know you talked previously about elongated sales cycles across various sectors, U.S. public sector and manufacturing. Could you just give us an update on what you're seeing now with respect to these sectors? Obviously, there's the shutdown at the moment, but it sounds like you're seeing some positive early signs. Just related on the backlog, Dominik, I think you'd said at a recent conference that 4% of decline would be a bit more than a slight decline, which is the guidance. Is it right for us to interpret that as a 25% exit rate being unlikely, as that would be four points deceleration from the 29% that you did in 2024? Thank you.

Speaker #8: Yeah , hi . Hi . Good evening and thanks for the question . Just on the demand . Just on the demand backdrop .

Speaker #8: Christian , I know you talked previously about elongated sales cycles across various sectors . US public sector and manufacturing . Could you just give us an update on on what you're seeing now with respect to these sectors ?

Speaker #8: Obviously there's the shutdown at the moment , but it sounds like you're seeing some positive early signs . And then just related on the backlog .

Speaker #8: Dominic , I think you said at a recent conference that four percentage points of decline would be a bit more than a slight decline , which is the guidance .

Speaker #8: So is it right for us to interpret that as a 25% exit rate , being unlikely as that would be four points deceleration from the 29% that you did in 2024 .

Toby Ogg: Is it right for us to interpret that as a 25% exit rate being unlikely, as that would be 4 points deceleration from the 29% that you did in 2024? Thank you.

Speaker #8: Thank you .

Speaker #5: Yeah . So happy to take your question . And first , I mean on on macro and deal cycles and just to give you also a bit insights into our Q4 pipe , when first what is not only very positive is that we have the coverage .

Dominik Asam: Yeah. Happy to take your question. First, I mean, on macro and deal cycles, just to give you also a bit insights into our Q4 pipe. I mean, first, what is not only very positive is that we have the coverage. Q4 is by far, as you know, our biggest bookings quarter. The coverage looks really good. We even see in the US public sector, I mean, you saw the adjusted cloud revenue guidance. I mean, when you're gonna miss in the US public sector and also in a few deals in the manufacturing space, somehow the bookings in half year one, it's hard to catch up. Now, the good piece is looking at our Q4 pipeline, I find a lot of these deals now coming back.

Christian Klein: Yeah. Happy to take your question. First, I mean, on macro and deal cycles, just to give you also a bit insights into our Q4 pipe. I mean, first, what is not only very positive is that we have the coverage. Q4 is by far, as you know, our biggest bookings quarter. The coverage looks really good. We even see in the US public sector, I mean, you saw the adjusted cloud revenue guidance. I mean, when you're gonna miss in the US public sector and also in a few deals in the manufacturing space, somehow the bookings in half year one, it's hard to catch up. Now, the good piece is looking at our Q4 pipeline, I find a lot of these deals now coming back.

Christian Klein: Yeah, happy to take your question. First, on macro and deal cycles, just to give you also a bit of insights into our Q4 pipe. First, what is not only very positive is that we have the coverage. Q4 is by far, as you know, our biggest bookings quarter, and coverage looks really good. We even see in the U.S. public sector, you saw the adjusted cloud revenue guidance. When you're going to miss in the U.S. public sector and also in a few deals in the manufacturing space, somehow the bookings in half year one, it's hard to catch up. The good piece is looking at our Q4 pipeline, I find a lot of these deals now coming back, and that gives us a lot of confidence for Q4.

Speaker #5: Q4 is by far as you know , our biggest bookings quarter . And coverage looks really good . We even see in the US public sector , I mean , you saw the adjusted cloud revenue guidance .

Speaker #5: I mean , when you're going to miss in the US public sector and also in a few deals in the manufacturing space , somehow the bookings in half year one , it's hard to catch up .

Speaker #5: Now, the good piece is looking at our Q4 pipeline. I find a lot of these deals now coming back, and so that gives us a lot of confidence for Q4.

Christian Klein: That gives us a lot of confidence for Q4. The good piece is also when you look at the pattern of the pipeline, and not even Q4, we had also broader look on rolling for quarter. The good piece is, I always ask the question: are we connected to the C-level? Is it only about IT and end of maintenance, or is there high value? I can tell you in over 90% of the deals, we are talking to the C-level. We are talking about cost optimization with AI, especially in the chemical industries. You know, this is not about, you know, do we do it or do we not do it? It's actually a done deal that they want to do it.

Speaker #5: The good piece is also , when you look at the pattern of the of the pipeline and not even Q4 , we had also bought a look on rolling for quarter .

Christian Klein: The good piece is also when you look at the pattern of the pipeline, and not even Q4, we had also a broader look on rolling fourth quarter. The good piece is I always ask the question, are we connected to the C level? Is it only about IT and end of maintenance, or is there high value? I can tell you in over 90% of the deals, we are talking to the C level. We are talking about cost optimization with AI, especially in the chemical industries. This is not about do we do it or do we not do it. It's actually a done deal that they want to do it. It's also about AI being the leading factor for doing this deal and not only to be more safe in the cloud.

Speaker #5: The good piece is I always ask the question , are we connected to the sea level ? Is it only about it ? And end of maintenance , or is there high value ?

Speaker #5: And I can tell you in over 90% of the deals we are talking to the sea level . We are talking about cost optimization with AI , especially in the chemical industries .

Speaker #5: But , you know , this is not about , you know , do we do it or do we not do it ? It's actually a done deal that they want to do it , but it's also about AI lead being the leading the leading factor for doing this deal .

Christian Klein: It's also about AI being the leading factor for doing this deal and not only, you know, to be more safe in the cloud. Second, when we also then look at the Q4 pipeline, what is also very promising is that when we have seen in the past that this kind of pipeline coverage, we could definitely see that when we are executing it in the right way, when we are connected to the C-level, when there is a compelling business case, I mean, then it's all about execution. It's in our hands, nothing else. No macro, no elongated sales cycles. Last but not least, when it comes to the CCB, I mean, I definitely don't see a 25. Q4 can have a big swing.

Speaker #5: And not only , you know , to be more safe on on , on in the cloud . Second , when we also then look at the Q4 pipeline , what is also very promising is that when we have seen in the past that this kind of pipeline coverage , we could definitely see that when we executing it in the right way , when we are connected to the sea level , when there is a compelling business case , I mean , then it's all about execution .

Christian Klein: Second, when we also then look at the Q4 pipeline, what is also very promising is that when we have seen in the past this kind of pipeline coverage, we could definitely see that when we are executing it in the right way, when we are connected to the C level, when there is a compelling business case, then it's all about execution. It's in our hands, nothing else. No macro, no elongated sales cycles. Last but not least, when it comes to the CCB, I definitely don't see a 2025 Q4 can have a big swing. I would be rather a bit more optimistic when we are talking about the CCB and the exit rate for this year, given the momentum in our business.

Speaker #5: It's in our hands , nothing else . No macro , no elongated sales cycles , and then last but not least , when it comes to the CCP , I mean , I definitely don't see a 25 Q4 can have a big swing .

Speaker #5: And so I would be rather a bit more optimistic when when we are talking about , you know , the CCP and the exit rate for this year , given the momentum in our business .

Christian Klein: I would be rather a bit more optimistic, when we are talking about, you know, the CCB and the exit rate for this year, given the momentum in our business.

Speaker #3: The next question is from the line of Mohammad Mewawalla with Goldman Sachs . Please go ahead .

Operator: The next question is from the line of Mohammed Moawalla with Goldman Sachs. Please go ahead.

Operator: The next question is from the line of Mohammed Essaji Moawalla with Goldman Sachs. Please go ahead.

Speaker #9: Great . Thank you . Hi , Christian . Hi , Dominic . Just from me . Again on the sort of the delay you're seeing in terms of the backlog and the back end loaded nature of the deals falling into kind of cloud revenue , how should we think of that ?

Mohammed Moawalla: Great. Thank you. Hi Christian. Hi Dominik. Just for me, again, on the sort of the delay you're seeing in terms of the backlog and the back-end loaded nature of the deals falling into kind of cloud revenue, how should we think of that? Because the Q4 implies a kind of significant step down. When we think of cloud revenue going into next year, do you still expect to be around that sort of mid-twenties level, ±?

Dominik Asam: Great. Thank you. Hi, Christian. Hi, Dominik. Just for me, again, on the sort of the delay you're seeing in terms of the backlog and the backend-loaded nature of the deals falling into kind of cloud revenue, how should we think of that? The Q4 implies a kind of significant step down. When we think of cloud revenue going into next year, do you still expect to be around that sort of mid-20s level, plus or minus?

Speaker #9: Because the Q4 implies a kind of significant step down . But when we think of cloud revenue going into next year , do you still expect to be around that sort of mid 20s level plus or minus ?

Speaker #5: Yes . And I mean , Q4 is of course a very important quarter , as you know , for the cloud revenue guidance for next year .

Christian Klein: Yes. Q4 is, of course, a very important quarter, as you know, for the cloud revenue guidance for next year. We have the pipeline, we have the coverage, we have the industry back which we were waiting for, and we have the AI in order to build these compelling business cases. Yes, we are definitely very confident that we can not only deliver a good Q4, but also pick up some of the stalled pipeline in half year one now that we were able to open up these markets for SAP again.

Christian Klein: Yes. I mean, Q4 is of course a very important quarter, as you know, for the cloud revenue guidance for next year. We have the pipeline, we have the coverage, we have the industry back, which we were waiting for, and we have the AI in order to build these compelling business cases. Yes, we are definitely very confident that we can not only, you know, deliver a good Q4, but also pick up, you know, some of the stalled pipeline in half year one now that we were able to open up these markets for SAP again.

Speaker #5: We have the pipeline , we have the coverage . We have the industry back , which we were waiting for , and we have the AI in order to build these compelling business cases .

Speaker #5: And so , yes , we we are definitely very confident that we can not only , you know , deliver a good Q4 , but also pick up , you know , some of the pipeline in half year , one , now that we were able to open up these markets for SAP again .

Speaker #9: Great . Thank you .

Mohammed Moawalla: Great. Thank you.

Dominik Asam: Great. Thank you.

Speaker #3: We'll move to our next question from Michael Priest with UBS.

Operator: We'll move to our next question from Michael Briest with UBS.

Speaker #10: Yes . Good evening . Thanks , Christian . I know that you announced some of the details around the SAP ERP transition option for those customers who need longer to to move over to S4 in the cloud .

Michael Briest: Yes. Good evening. Thanks. Christian, I know that you announced some of the details around the SAP ERP transition option for those customers who need longer to move over to S/4 in the cloud. Can you say something about the uptake? I think you've done, you know, quite a smart thing on pricing by flagging increases if people don't sign by the year-end. What sort of uptake do you expect? Does this give you sort of visibility on this hopefully small number of customers who will adopt this option?

[Analyst]: Yes. Good evening. Thanks. Christian, I know that you announced some of the details around the SAP ERP transition option for those customers who need longer to move over to S4 in the cloud. Can you say something about the uptake? I think you've done quite a smart thing on pricing by flagging increases if people don't sign by the year end. What sort of uptake do you expect? Does this give you sort of visibility on the hopefully small number of customers who will adopt this option?

Speaker #10: Can you say something about the uptake ? And I think you've done quite a smart thing on pricing by by flagging increases . If people don't sign by the year end , what what sort of uptake do you expect ?

Speaker #10: And does this give you sort of visibility on the hopefully small number of customers who will adopt this option?

Speaker #5: Yeah , I'm happy to do so , Michael . I mean , first , when you look at the hype and analyzing the pipe and how we also delivered , now the increase in pipeline over the last , I would say 3 to 4 months .

Christian Klein: Yeah, happy to do so, Michael. First, when you look at the pipe and analyzing the pipe and how we also delivered now the increase in pipeline over the last, I would say, three to four months, there was positive momentum. First, yes, it's this transitioning option. Also, Michael, don't overestimate the potential. Yes, we have a lot of large customers, and they cannot transform all ERP businesses at the same time. I mentioned in the past a few examples, and for these customers, it's great. Yes, indeed, it's helping to move those customers also more faster to the cloud to secure their landscape, to give them also the security on the support, on the cyber side, on the SLAs around the operations of the system.

Christian Klein: Yeah, happy to do so, Michael. I mean, first, when you look at the pipe and analyzing the pipe and how we also delivered now, the increase in pipeline, over the last, I would say 3 to 4 months, there was positive momentum. I mean, first, yes, it's this transitioning option. Also, Michael, don't overestimate the potential. I mean, yes, we have a lot of large customers, and they cannot, you know, transform all, you know, ERP businesses at the same time. I mentioned in the past a few examples, and for these customers, it's great.

Speaker #5: That was positive momentum . I mean , first , yes , it's this transitioning option , but also Michael , don't overestimate the potential .

Speaker #5: I mean , yes , we have a lot of large customers and they cannot , you know , transform all you know , ERP businesses at the same time , I mentioned in the past a few examples and these for these customers , it's great .

Speaker #5: And yes , and then indeed it's helping to move those customers also more faster to the cloud , to secure their landscape , to give them also the security on , on , on the support on the cyber side , on the SLAs around , you know , the operations of the system , even more important , I would say , is when I saw now in the last three months what really moved the pipeline was software and cloud .

Christian Klein: Yes, indeed, it's helping to move those customers also more faster to the cloud to secure their landscape, to give them also the security on the support, on the cyber side, on the SLAs around, you know, the operations of the system. Even more important, I would say is, when I saw now in the last three months, what really moved the pipeline was around software and cloud. I know, you know, others playing a big bet on infrastructure, SAP rather focusing on the value creation at the upper part of the stack. That doesn't mean that we not competitive in the software and cloud.

Christian Klein: Even more important, I would say, is when I saw now in the last three months what really moved the pipeline was around software and cloud. I know others are playing a big bet on infrastructure. SAP rather focusing on the value creation at the upper part of the stack. That doesn't mean that we are not competitive in the software and cloud. We are opening up in every country in the world almost now new options with our infrastructure partners on software and cloud, and especially the public sector, be it in MENA, be it even in Germany. Not only the U.S., Australia is now really, really coming along. What I also mentioned in my statement, that we can put the whole stack into a customer data center and can operate it in a SaaS-like environment. That was for many customers in these industries really great news.

Speaker #5: And I know , you know , others playing a big bet on , on , on infrastructure , SAP , rather focusing on the value creation at the upper part of the stack .

Speaker #5: But that doesn't mean that we not competitive in the software cloud . I mean , we are opening up in every , in every country in the world almost now .

Christian Klein: I mean, we are opening up in every country in the world, almost now, new options with our infrastructure partners, you know, on software and cloud, and especially the public sector, be it in MENA, be it even in Germany. Not only the US, Australia is now really coming along. What I also mentioned in my statement that we can put the whole stack into a customer data center and can operate it in a SaaS-like environment. That was for many customers in these industries, really great news. We see now high interest, and I would say we can even sign the first deals in Q4 if everything works out well. Yes, the transition option helped. Software helped. Then as I mentioned, AI.

Speaker #5: New options with our infrastructure partners , you know , on software and cloud and especially the public sector , be it in Mena , be it in , in Germany .

Speaker #5: So not only the US , Australia is now really , really coming along . And what I also mentioned in my statement that we can put the whole stack into a customer data center and can operate it in a SaaS like environment , and that was for many customers in these industries , really great news .

Speaker #5: And we see now . Hi interest . And I would say we can even sign the first deals in Q4 if everything works out well .

Christian Klein: We see now high interest, and I would say we can even sign the first deals in Q4 if everything works out well. Yes, the transition option helped, software helped, and then, as I mentioned, AI. Look, I know you're always looking for numbers on AI. I'm also not wanting to play into hype on, oh, we deliver now 800 agents in the cloud. What do 800 agents do? Which salesperson can actually sell 800 technical agents? For me, it's more important when we talk to a Wärtsilä, when we talk now to the Q4 opportunities. There's, for example, a big hardware store market, one of the largest in the world. They want to build AI use cases, giving them a marketing agent to do more targeted marketing campaigns to understand better the consumer trends. We are delivering an agent on supply chain.

Speaker #5: So yes , the transition option helped . Zofran helped . And then as I mentioned , AI and look , I know you're always looking for numbers on AI .

Christian Klein: Look, I know you're always looking for numbers on AI, and, you know, I'm also not want to play into hype on, oh, we deliver now 800 agents in the cloud. I mean, what do 800 agents do? Which salesperson can actually sell 800 technical agents? For me, it's more important when we talk to a Wärtsilä, when we talk now to the Q4 opportunities that, for example, a big hardware store market, one of the largest in the world. They want to build AI use cases, giving them a marketing agent to do more targeted marketing campaigns to understand better the consumer trends. We are delivering an agent on supply chain. All these agents having all the technical agents underneath to cover the complete supply chain, no. The customers are seeing, Hey, this is what we want.

Speaker #5: And, you know, I also don't want to play into the hype on, oh, we deliver now 800 agents in the cloud. I mean, what do 800 agents do?

Speaker #5: Which salesperson can actually sell 800 technical agents ? For me , it's more important when we talk to a when we talk now to the Q4 opportunities , for example , a big hardware store market , one of the largest in the world .

Speaker #5: They want to build AI use cases, giving them a marketing agent to do more targeted marketing campaigns and to better understand consumer trends.

Speaker #5: We are delivering an agent on supply chain . All these agents having all the technical and agents underneath to cover the complete supply chain , no .

Christian Klein: Are all these agents having all the technical agents underneath to cover the complete supply chain? No. The customers are seeing, hey, this is what we want. We don't want to get sold on 800 technical agents. We need actually, here's the business process. Here's the persona. SAP, tell me what does it do for this persona, how much productivity, and how much more intelligence do I get, for example, in the supply chain planning process? That is working. Even if then there is 20, 30% of the technical agents missing underneath to orchestrate an end-to-end process, we say, hey, come on. I mean, this is also what SAP is strong about. We come to you, and we develop together standard agents to really make sure that you can cover this very important business capability.

Speaker #5: But the customers are saying , hey , this is what we want . We don't want , don't want to get sold on on 800 technical agents .

Christian Klein: We don't wanna get sold on 800 technical agents. We need actually, here's the business process, here's the persona. SAP, tell me what does it do for this persona? How much productivity and how much more intelligence do I get, for example, in the supply chain planning process?" That is working. Again, even if then there is 20%, 30% of the technical agents missing underneath to orchestrate an end-to-end process, then we say, "Hey, come on." I mean, this is also what SAP is talking about. We come to you, and we develop together standard agents to really make sure that you can cover this very important business capability. That is, in the meantime, really the key reason for many of our deals, especially now in Q4.

Speaker #5: We need actually , here's a business process . Here's a persona , a SAP . Tell me , what does it do for this persona ?

Speaker #5: How much productivity and how much more intelligence do I get ? For example , in the supply chain planning process and that is working .

Speaker #5: And again , and even if then there is 2,030% of the technical agents missing underneath to orchestrate an end to end process , then we say , hey , come on .

Speaker #5: I mean , this is also what SAP is talking about . We come to you and we develop together standard agents to really make sure that you can cover this very important business capability .

Speaker #5: And that is , in the meantime , really a key reason for , for many of our deals , especially now in Q4 .

Christian Klein: In the meantime, that is really the key reason for many of our deals, especially now in Q4. That last piece also reduces the slippage risk because you not only talk about cloud, you not only talk about end-of-maintenance, you have a compelling business reason. That, again, gives me also a good confidence that we will also see a good pipeline conversion because a strong pipeline alone doesn't help. You need to close it. There I see also the wide maturity in the pipeline in Q4.

Speaker #5: And that last piece also reduces the slippage risk because you not only talk about the cloud, you not only talk about the end of maintenance, you have a compelling business reason.

Christian Klein: That last piece also reduces the slippage risk, yeah. You not only talk about cloud, you not only talk about end of maintenance, you have a compelling business reason. That, again, gives me also a good confidence that we will also see a good pipeline conversion because a strong pipeline alone doesn't help. You need to close it. There I see also the wide maturity in the pipeline in Q4.

Speaker #5: And that , again , gives me also a good confidence that we will also see a good pipeline conversion because a pipeline strong pipeline alone doesn't help .

Speaker #5: You need to close it . But there I see also the right maturity in the pipeline . In Q4 .

Speaker #3: The next question is from Mark Mortler with Bernstein Research . Please go ahead .

Operator: The next question is from Mark Moerdler with Bernstein Research. Please go ahead.

Operator: The next question is from Mark L. Moerdler with Bernstein Research. Please go ahead.

Speaker #11: Thank you so much for taking my question . And great to hear . In terms of the strength of what we should see at the back half of the year , I've got a higher level question I'd like to ask .

Mark Moerdler: Thank you so much for taking my question. Great to hear in terms of the strength of what we should see at the back half of the year. Got a higher level question I'd like to ask. SAP is taking the approach through SAP Business Data Cloud in terms of allowing the data to flow out to systems like Databricks and Google for analytics and the rest. How should we think about the effect that could have on the future economics for SAP, for AI, analytics, et cetera? Thank you.

[Analyst]: Thank you so much for taking my question, and great to hear in terms of the strength of what we should see at the back half of the year. I've got a higher-level question I'd like to ask. SAP is taking the approach through business cloud in terms of allowing the data to flow out to systems like Databricks and Google for analytics and the rest. How should we think about the effect that could have on the future economics for SAP, for AI analytics, etc.? Thank you.

Speaker #11: SAP is taking the approach through Business Cloud in terms of allowing the data to flow out to systems like Databricks and Google for analytics and the rest.

Speaker #11: How should we think about the effect that could have on the future economics for SAP, for AI analytics, etc.? Thank you.

Speaker #5: Yeah , Michael , very good question . Because I know the there are also , you know , other people asking similar questions around BDC .

Christian Klein: Yeah. Mark, a very good question because I know there are also, you know, other people asking similar questions around BDC. I mean, first, Mark, I wanna also make this very clear, because some of the discussions around the role of SaaS, the role of the apps in the future, I don't see one AI use case in the B2B world where you can only deliver high value with an LLM module. I mean, no matter if it's about predictive asset management, we are working on autonomous payrolls, foster quadrants, strategic workforce in HR. It's always about the combination of the two. You always need the data. You always need high quality data, by the way.

Dominik Asam: Yeah. Mark, a very good question because I know there are also, you know, other people asking similar questions around BDC. I mean, first, Mark, I wanna also make this very clear, because some of the discussions around the role of SaaS, the role of the apps in the future, I don't see one AI use case in the B2B world where you can only deliver high value with an LLM module. I mean, no matter if it's about predictive asset management, we are working on autonomous payrolls, foster quadrants, strategic workforce in HR. It's always about the combination of the two. You always need the data. You always need high quality data, by the way.

Christian Klein: Yeah. Mike, a very good question because I know there are also other people asking similar questions around BDC. First, and Mike, I want to also make this very clear because some of the discussions around the role of SaaS, the role of the apps in the future, I don't see one AI use case in the B2B world where you can only deliver high value with an LLM module. No matter if it's about predictive asset management, we are working on autonomous payrolls, faster quarter ends, strategic workforce in HR. It's always about the combination of the two. You always need the data. You always need high-quality data, by the way. You wouldn't imagine some of the adoption challenges customers sometimes have when they're coming to us that, Christian, I have here a lot of custom agents, but they are really constantly delivering the wrong prediction.

Speaker #5: I mean, first and Mark, I want to also make this very clear because some of the discussions around the role of SARS and the role of the APS in the future, I don't see one AI use case in the B2B world where you can only deliver high value with an LLM module.

Speaker #5: I mean , no matter if it's about predictive asset management , we are talking we are working on autonomous payrolls faster quarter and strategic workforce in HR .

Speaker #5: It's always about the combination of the two . So you always need the data . You always need high quality data . By the way .

Speaker #5: I mean you wouldn't imagine , you know , some of the adoption challenges customers sometimes have when they're coming to us . That Christian I have here a lot of customer agents , but they are really constantly delivering the wrong prediction .

Christian Klein: I mean, you wouldn't imagine, you know, some of the adoption challenges customers sometimes have when they're coming to us, that Christian and I have here a lot of custom agents, but they are really constantly delivering the wrong prediction. I mean, okay, because, you know, again, the agent cannot do matching if the underlying data structure is not harmonized. If the agent, technical agent, again, to my point, you can deliver 800 agents when they don't talk to each other, when they don't understand the business context, they are lost. Now to BDC and the data side of the house. BDC is in the meantime involved in every AI wide scale we are doing. Because customers are getting, okay, I get it.

Speaker #5: I mean , okay , yeah , because , you know , again , the agent cannot do magic if the underlying data structure is not harmonized .

Christian Klein: OK, because again, the agent cannot do magic if the underlying data structure is not harmonized. If the technical agent, again, to my point, you can deliver 800 agents, when they don't talk to each other, when they don't understand the business context, they are lost. Now to BDC and the data side of the house. BDC is, in the meantime, involved in every AI wise deal we are doing. Customers are getting, OK, I get it. These data products give me the harmonization, the data quality I need to deliver the high-value AI use cases on top. Now, to your question, what does this mean when we are now closing partnerships with Google and Databricks? First, it's all about better data processing. Yeah, zero-copy data integration is value. The data products, the semantics, the business context, the orchestration of the agents in a business context is all with SAP.

Speaker #5: And if the agent technical agent . Again , to my point , you can deliver 800 agents when they don't talk to each other , when they don't understand the business context , they are lost .

Speaker #5: And now to BDC and and and the data side of the house . So BDC is in the meantime involved in every AI wise deal we are doing .

Speaker #5: And because customers are getting okay , I get it . These data products give me the harmonization , the data quality , I need to deliver the high value AI use cases on top .

Christian Klein: These data products give me the harmonization, the data quality I need to deliver the high value AI use cases on top. To your question, what does this mean when we are now closing partnerships with Google and Databricks? First, it's all about better data processing. Yeah. Zero data copy is the value. The data products, the semantics, the business context, the orchestration of the agents in a business context is all with SAP. I mean obviously, you can use some of the data products for data engineering in the Databricks world. Everything, what happens on AI agents in the context of the SAP applications, in the context of the business processes, in the context of enterprise analytics, that is SAP.

Dominik Asam: These data products give me the harmonization, the data quality I need to deliver the high value AI use cases on top. To your question, what does this mean when we are now closing partnerships with Google and Databricks? First, it's all about better data processing. Yeah. Zero data copy is the value. The data products, the semantics, the business context, the orchestration of the agents in a business context is all with SAP. I mean obviously, you can use some of the data products for data engineering in the Databricks world. Everything, what happens on AI agents in the context of the SAP applications, in the context of the business processes, in the context of enterprise analytics, that is SAP.

Speaker #5: Now to to your question , what does this mean when we are now closing partnerships with Google and Databricks ? First , it's all about better data processing .

Speaker #5: Yeah , data copy is value . The data products , the semantics , the business context , the orchestration of the agents in in a business context is all with SAP .

Speaker #5: I mean , obviously you can use some of the data products for data engineering on on the Databricks world . But everything what happens on AI agents in the context of the SAP applications , in the context of the business processes , in the context of enterprise analytics , that is SAP .

Christian Klein: Obviously, you can use some of the data products for data engineering in the Databricks world. Everything that happens on AI agents in the context of the SAP applications, in the context of the business processes, in the context of enterprise analytics, that is SAP. Of course, we will never, ever give up this crown jewel because this is clearly what SAP is best at. We are getting the best of both worlds. As I mentioned, it's not only Google. There are a few more now coming in Q4, which again is even also relevant already now in the Q4 pipeline for BDC because customers are loving what they see and that SAP is really having now this open data platform, which is again also very essential for almost every AI use case we are building together with our customers.

Speaker #5: And of course , we will never , ever give up . You know , this tool because this is clearly what SAP is best at .

Christian Klein: Of course, we will never, ever give up, you know, this cloud tool because this is clearly what SAP is best at. We are getting the best of both worlds. I mean, as I mentioned, it's not only Google, there are a few more now coming in Q4, which again, is even also relevant already now in the Q4 pipeline for BDC because customers are loving what they see and that SAP is really having now this open data platform, which is again, also very essential for almost every AI use case we are building together with our customers.

Dominik Asam: Of course, we will never, ever give up, you know, this cloud tool because this is clearly what SAP is best at. We are getting the best of both worlds. I mean, as I mentioned, it's not only Google, there are a few more now coming in Q4, which again, is even also relevant already now in the Q4 pipeline for BDC because customers are loving what they see and that SAP is really having now this open data platform, which is again, also very essential for almost every AI use case we are building together with our customers.

Speaker #5: And so we are getting the best of both worlds . And I mean , as I mentioned , it's not only Google , there are a few more now coming in Q4 , which again is even also relevant already .

Speaker #5: Now in the Q4 pipeline for BDC , because customers are loving what they see and that SAP is really having now this open data platform , which is , again , also very essential for almost every AI use case we are building together with our customers .

Speaker #3: The next question comes from Adam Wood with Morgan Stanley . Please go ahead .

Operator: The next question comes from Adam Wood with Morgan Stanley. Please go ahead.

Operator: The next question comes from Adam Dennis Wood with Morgan Stanley. Please go ahead.

Speaker #12: Hi. Good evening, and thanks for taking my question. I just wanted to wonder if we could come back to the confidence on the revenue acceleration for next year.

Adam Wood: Hi, good evening, and thanks for taking the question. I just wonder if we could come back to the confidence on the revenue acceleration for next year. I think you're suggesting we probably end the year on CCB of 26, but obviously there is a little bit more risk of the range on that one. It sounds like the cloud guide suggests that we exit Q4 maybe around 25% growth. I think on my calcs, you need around 24% growth on cloud revenues next year to get that revenue acceleration. If you're exiting at 25, it doesn't feel like there's a huge amount of room for error on that to be able to hit that revenue acceleration. Could you maybe just give us a few more insights into why that confidence is there?

[Analyst]: Hi, good evening, and thanks for taking the question. I just wondered if we could come back to see the confidence on the revenue acceleration for next year. I think you're suggesting we probably end the year on CCB of $26 billion, but obviously, there is a little bit more risk of the range on that one. It sounds like the cloud guide suggests that we exit Q4 maybe around 25% growth. I think on my calculation, you need around 24% growth on cloud revenues next year to get that revenue acceleration. If you're exiting at 25%, it doesn't feel like there's a huge amount of room for error on that to be able to hit that revenue acceleration. Could you maybe just give us a few more insights into why that confidence is there? Is it the other revenues within cloud that you're more optimistic on?

Speaker #12: I think you're suggesting we probably end the year on KBE of 26, but obviously there is a little bit more risk of the range on that one.

Speaker #12: And it sounds like the cloud guide suggests that we exit Q4 maybe around 25% growth . I think on my calcs you need around 24% growth on cloud revenues next year to get that revenue acceleration .

Speaker #12: And if you're exiting at 25, it doesn't feel like there's a huge amount of room for error on that to be able to hit that revenue acceleration.

Speaker #12: Could you maybe just give us a few more insights into why that confidence is there? Is it the other revenues within Cloud that you're more optimistic on?

Adam Wood: Is it the other revenues within cloud that you're more optimistic on? Is it that CCB just starts to slow dramatically less because you're starting to close some of the deals that slipped earlier in this year? Thank you.

Speaker #12: Is it that the KB just starts to slow dramatically less because you're starting to close some of the deals that slipped earlier in this year?

[Analyst]: Is it that CCB just starts to slow dramatically less because you're starting to close some of the deals that slipped earlier in this year? Thank you.

Speaker #12: Thank you .

Speaker #5: I'm happy to do so . I mean look the adjusted cloud revenue guidance is just yeah a result of some of the stalled pipeline we had in half year one .

Christian Klein: Happy to do so. I mean, look, the adjusted cloud revenue guidance is just a result of some of the stalled pipeline we had in half year one. Yes, mathematically, you know how it works. It's hard then to pick up even if you close these deals in August, September. Some of the deals we started to close in September, you cannot make up six months of revenue you couldn't realize. Now, for the revenue one rate next year, obviously, they're fully in the backlog. Actually, now everything we can pick up from half year one, plus having a good pipeline, a strong pipeline for Q4 helps. On the CCB side, as I said before, yes, look, there's always a big swing. I would be, again, also a bit more optimistic than the 25%. We have the pipeline to do more. Again, there is a big swing.

Christian Klein: Yeah, happy to do so. I mean, look, the adjusted cloud revenue guidance is just a result of some of the stalled pipeline we had in half year 1. Yes, I mean, mathematically, you know how it works. It's hard to pick up even if you close these deals in August, September. Some of the deals we started to close in September, you cannot make up 6 months of revenue you couldn't realize. Now, for the revenue 1 right next year, obviously, I mean, they are fully in, they're fully in the backlog. There are actually now everything what we can pick up from half year 1, plus having a good pipeline, a strong pipeline for Q4 helps. On the CCB side, as I said before, I mean, yes.

Speaker #5: And yes , I mean , mathematically , you know how it works . It's hard . And to pick up even if you close these deals in August , September , some of the deals we started to close in September .

Speaker #5: You cannot make up six months of revenue . You couldn't realize now for the revenue one way next year . Obviously . I mean , they are fully in .

Speaker #5: They're fully in the backlog . So they're actually now everything what we can pick up from half year one plus having a good pipeline , a strong pipeline for Q4 helps .

Speaker #5: And on the ECB side , as I said before , I mean , yes , I mean , look , there's always a big swing , but I would .

Christian Klein: I mean, look, there's always a big swing, but I would be, again, also a bit more optimistic than the 25%. We have the pipeline to do more. Again, yes, there is a big swing. There are large deals, but they are very mature, so I'm more confident than the 25%. With that, obviously, that also sets us up for the total cloud for the total revenue acceleration in 2026. Given the high recurring revenue share we are having in the meantime, I mean, we can say this with confident with confidence that if we now deliver on our strong pipeline in Q4, that it's very likely that you're also gonna see this guidance for SAP next year. Dominik?

Speaker #5: Be , again , also a bit more optimistic than the 25% we have the pipeline to do more . And again , yeah , there is a big swing .

Speaker #5: There are large deals , but they are very mature . So I'm more confident than the 25% . And with that , obviously that's also sets us up for the total cloud , for the total revenue acceleration in 2026 .

Christian Klein: There are large deals, but they are very mature. I'm more confident than the 25%. With that, that also sets us up for the total cloud, for the total revenue acceleration in 2026. Given the high recurring revenue share we are having in the meantime, we can say this with confidence that if we now deliver on our strong pipeline in Q4, it's very likely that you're also going to see this guidance for SAP next year. Dominik?

Speaker #5: And given the high the high recurring revenue share we are having in the meantime , I mean , we can say this with confidence , with confidence that if we now deliver on our strong pipeline in Q4 , that it's very likely that you also going to see this guidance for next year .

Speaker #5: Dominic .

Speaker #6: Just adding that probably the delta between CCP growth exiting 25 and the cloud revenues should be not more than a percentage point because the famous transactional business is really currently still languishing.

Dominik Asam: No, just adding that probably the delta between CCB growth exiting 2025 and the cloud revenues should be not more than a percentage point because the famous transactional business is really currently still languishing, I would say. The biggest reason for that, actually, the overwhelming reason for that being lower travel activity for Concur on bookings, and that's again, very much related to the shutdown, which is actually resulting lower travel activity on, yeah, government officials.

Dominik Asam: No, just adding that probably the delta between CCB growth exiting 2025 and the cloud revenues should be not more than a percentage point because the famous transactional business is really currently still languishing, I would say. The biggest reason for that, actually, the overwhelming reason for that being lower travel activity for Concur on bookings. That's, again, very much related to the shutdown, which is actually resulting in lower travel activity on government officials.

Speaker #6: I would say . And the biggest reason for that , actually , the overwhelming reason for that being lower travel activity for concur on bookings and that's that's again , very much related to the shutdown , which is actually resulting in lower travel activity and on , on , on , on government officials .

Speaker #3: The next question comes from Ben Castillo with BNP Paribas. Please go ahead.

Operator: The next question comes from Ben Castillo-Bernaus with BNP Paribas. Please go ahead.

Speaker #13: Hi . Good evening . Thanks very much for having me on question . Maybe for you , Dominic , on free cash flow .

Ben Castillo-Bernaus: Hi, good evening. Yeah, thanks very much for having me on. Question maybe for you, Dominik, on free cash flow. Obviously, you've nudged up the guidance for this year up to EUR 8.2 billion. You're at EUR 7.2 billion through 9 months this year. I guess I can't recall the last time Q4 was less than EUR 1 billion in free cash flow, excluding one-offs. Is there anything that's different this year that we should be thinking about? I guess, you know, the cash conversion so far this year has been very strong. I know you've given us some indications for next year with various headwinds, but nevertheless, just welcome any comments on, you know, this year's free cash conversion and thoughts into next year. Thank you.

Ben Castillo: Hi, good evening. Yeah, thanks very much for having me on. Question maybe for you, Dominik, on free cash flow. Obviously, you've nudged up the guidance for this year up to EUR 8.2 billion. You're at EUR 7.2 billion through 9 months this year. I guess I can't recall the last time Q4 was less than EUR 1 billion in free cash flow, excluding one-offs. Is there anything that's different this year that we should be thinking about? I guess, you know, the cash conversion so far this year has been very strong. I know you've given us some indications for next year with various headwinds, but nevertheless, just welcome any comments on, you know, this year's free cash conversion and thoughts into next year. Thank you.

[Analyst]: Hi, good evening. Thanks very much for having me on. Question maybe for you, Dominik, on free cash flow. Obviously, you've nudged up the guidance for this year up to €8.2 billion. You're at €7.2 billion through nine months this year. I guess I can't recall the last time Q4 was less than €1 billion in free cash flow, excluding one-off. Is there anything that's different this year that we should be thinking about? I guess the cash conversion so far this year has been very strong. I know you've given us some indications for next year with various headwinds, but nevertheless, just welcome any comments on this year's free cash conversion and thoughts into next year. Thank you.

Speaker #13: Obviously you've nudged up the guidance for this year up to 8.2 billion . You're at 7.2 through nine months this year . I guess I can't recall the last time Q4 was less than a billion in free cash flow , excluding one offs .

Speaker #13: So, is there anything that's different this year that we should be thinking about? And I guess the cash conversion so far this year has been very strong.

Speaker #13: I know you've given us some indications for next year with various headwinds , but nevertheless just welcome any comments on this year's free cash conversion and thoughts into next year .

Speaker #13: Thank you .

Speaker #6: Yeah, I mean, one source is really also the phasing of the tax cash out because we had modeled cash takes out in H1 a little bit higher in Q3.

Dominik Asam: Yeah. I think one source is really also the phasing of the tax cash out because we had modeled cash tax out in H1 a little bit higher in Q3, Q4 will be higher. Then obviously, yeah, we have to always be cautious about the consumption of transformation credits and how much of that will be used by year-end, which can trigger some cash headwinds. There's nothing magic in there. It's just a myriad of smaller things that happen in the working capital that can make that number a little bit noisy. We be sharpen the pencil as well as we could for Q4 and come up with this number. I think this is the best we can estimate as of today.

Dominik Asam: Yeah, I mean, one source is really also the phasing of the tax cash out because we had moderate cash takes out in H1, a little bit higher in Q3, but Q4 will be higher. Obviously, we have to always be cautious about the consumption of transformation credits, how much of that will be used by year end, which can trigger some cash headwind. There is nothing magic in there. It's just a myriad of smaller things that happen in the working capital that can make that number a little bit noisy. We sharpened the pencil as well as we could for Q4 and come up with this number. I think this is the best we can estimate as of today.

Speaker #6: But Q4 will be higher then . Then obviously we have to always be cautious about the consumption of transformation credits . How much of that will be used by year end , which can trigger some cash headwind .

Speaker #6: So there's nothing magic in there . It's just a myriad of smaller things that happen in the working capital that can make that number a little bit noisy , but we sharpen the pencil as well as we could for Q4 and come up with this number .

Speaker #6: So I think this is a is the best we can estimate as of today . And yeah , it's really a topic within the quarter .

Dominik Asam: Yeah, it's really a phasing topic within the quarter, and it's always a question of receipts and payments of certain activities that happen at the end, which can be flipping either side of the turn.

Dominik Asam: It's really a phasing topic within the quarter, and it's always a question of receipts and payments of certain activities that happen at year end, which can be flipping either side of the turn.

Speaker #6: And it's always a question of receipts and payments of certain activities that happen at the year-end, which can be flipping either side of the turn.

Speaker #3: The next question comes from Frederick Bullen with Bank of America . Please go ahead .

Operator: The next question comes from Frederic Boulan with Bank of America. Please go ahead.

Operator: The next question comes from Frederic Emile Alfred Boulan with Bank of America. Please go ahead.

Christian Klein: Yes.

Speaker #14: Hi . Good evening , Dominic . If I can ask a question on your competitive position versus Oracle , do you see an incremental risk from there ?

Frederic Boulan: Hi. Good evening, Christian and Dominik. If I can ask a question on your competitive position versus Oracle. Do you see an incremental risk from their pivot to infrastructure in terms of offering? They mentioned you guys a number of times at their recent CMD, so looking to get a bit of an update on where you see yourself positioning this.

[Analyst]: Hi, good evening, Christian and Dominik. If I can ask a question on your competitive position versus Oracle, do you see an incremental risk from their pivot to infrastructure in terms of offering? They mentioned you guys a number of times at their recent CMV. I'm looking to get a bit of an update on where you see yourself positioned at this time.

Speaker #14: Pivot toward infrastructure in terms of offering and also the mentioned you guys , a number of times that their recent Cmds are looking to get a bit of an update on where you see yourself positioned with them .

Speaker #5: Yeah. Look, I...

Christian Klein: Yeah. Look, I mean, for me, when I see the recent developments out there in the market, I know that some of our competitors are playing the game on scaling their infrastructure, training LLM. I mean, when I listen to our customers, and that is super important, they are super positive around the value creation we are now providing to them for the end users to supply chain, HR, finance. For us, the infrastructure is, of course, part of the stack. When you look at software and cloud, I mean, we can actually always offer, you know, highly competitive offerings in all parts of the world. There is no need, in my eyes at all, to change our strategy and to suddenly start building, you know, data centers everywhere in the world. Our strategy is proven and it works.

Christian Klein: Yeah, look, I mean, for me, when I see the recent developments out there in the market, I know that some of our competitors are playing the game on scaling the infrastructure, training LLMs. I mean, when I listen to our customers, and that is super important, they are super positive around the value creation we are now providing to them for the end users, tool, supply chain, HR, finance. For us, the infrastructure is, of course, part of the stack. When you look at software and cloud, I mean, we can actually always offer highly competitive offerings in all parts of the world. There is no need in my eyes at all to change our strategy and to suddenly start building data centers everywhere in the world. Our strategy is proven and it works.

Speaker #10: Mean .

Speaker #5: For me , when I see the recent developments out there in the market , I know that some of our competitors are playing the game .

Speaker #5: On scaling the infrastructure , training LMS . I mean , when I listen to our customers and that is super important . They are super positive around the value creation .

Speaker #5: We are now providing to them for the end users . Tool , supply chain , H.R finance and for us , the infrastructure is of course part of the stack .

Speaker #5: And when you look at software and cloud , I mean we can actually always offer , you know , highly competitive offerings in all parts of the world .

Speaker #5: And so there is no need in my eyes at all to change our strategy and to suddenly start building, you know, data centers everywhere in the world.

Speaker #5: So our strategy is proven and it works . And I'm deeply , deeply convinced that when we are now looking at some of the large language models , I mean , our goal is not to train them , but our goal is to use them .

Christian Klein: I'm deeply, deeply convinced that when we are now looking at some of the large language models, I mean, our goal is not to train them, but our goal is to use them. Many of them, like OpenAI, you saw our announcement in Germany, are now coming to SAP and say, hey, for this applied AI, I want to do business in the public sector. Can you work with us? Can you give us the BDP? Can you give us Tool Studio to build all of these agents? We need a development platform. We need this applied AI thing. Over time, we need to move up and deliver that. We see a huge momentum there also working with these LLM providers in really not only infusing them in our technical stack, but really now going to customers together and actually deliver AI agents together.

Christian Klein: I'm deeply convinced that when we are now looking at some of the large language models, I mean, our goal is not to train them, but our goal is to use them. Many of them, you know, like an OpenAI, you saw our announcement in Germany, are now coming to SAP and say, Hey, for this applied AI, I wanna do business in the public sector. Can you work with us? Can you give us the SAP BTP? Can you give us Joule Studio to build all of these agents because we need a development platform. We need this applied AI thing. Now, over time, we need to move up and deliver that. We see a huge momentum.

Speaker #5: And many of them , you know , like an open AI , you saw our announcement in Germany are now coming to SAP and say , hey , for this applied AI , I want to do business in the public sector .

Speaker #5: Can you work with us? Can you give us the BTP? Can you give us Q1 studio to build all of these agents?

Speaker #5: Because we need a development platform . We need to supply the AI thing now . Over time , we need to move up and deliver that .

Speaker #5: And so we see a huge momentum . There . Also , working with these large providers in really not only infusing them in our technical stack , but really now going to customers together and and actually deliver AI agents together .

Christian Klein: They're also working with these LLM providers and really not only infusing them in our technical stack, but really now going to customers together and actually deliver AI agents together. That is actually, for me, the absolute winning formula. Again, it's for us super important to make our AI foundation world-class, and we will stick to the winning formula we had throughout the whole year, and it's about the apps. They give us high quality data. BDC was a genius move for us. Now with the high quality data, together with the LLMs, we can provide, you know, more and more value to our customers. We see it in the numbers, we see it in the pipeline. It's working.

Speaker #5: And so that is actually for me , the absolute winning formula . And again , it's for us super , super important to make our AI Foundation world class .

Christian Klein: That is actually, for me, the absolute winning formula. Again, it's for us super, super important to make our AI foundation world-class. We will stick to the winning formula we had throughout the whole year. It's about the apps. They give us high-quality data. BDC was a genius move for us. Now, with the high-quality data together with the LLMs, we can provide more and more value to our customers. We see it in the numbers. We see it in the pipeline. It's working. Again, on software and cloud, we are having everything what we need also on the infrastructure level without building those data centers.

Speaker #5: And we will stick to the winning formula . We had throughout the whole year . And it's about the apps . They give us high quality data .

Speaker #5: BDC was a genius move for us , and now with the high quality data , together with the LMS , we can provide , you know , more and more value to our customers and we see it in the numbers .

Speaker #5: We see it in the pipeline . It's working . And again , on software and cloud , we are having everything . What we need .

Christian Klein: Again, on software and cloud, we are having everything what we need also on the infrastructure level without building those data centers.

Speaker #5: Also in the infrastructure level, without building those data centers.

Speaker #6: Maybe just from a financial numbers point of view . First of all , indeed , infrastructure as a service is now at around 1% of our cloud revenues , and now with sovereign , that might might stabilize or even go up .

Dominik Asam: Maybe just from a finance or numbers point of view, first of all, indeed, Infrastructure as a Service is now at around 1% of our cloud revenues. Now we're discovering that might stabilize or even go up, but we talk about a completely different path we are taking. On the competitive benchmarking, I mean, when you look at the Gartner, IDC, and so forth, they all put the numbers into US dollars. I mean, at the risk of stating the obvious, euro constant currency numbers with a strongly depreciating dollar is a different story than dollar. If we convert our numbers in dollar, you see even higher numbers than the constant currency numbers. What is a headwind for us, namely depreciating dollar, is of course a tailwind for our US competitors.

Dominik Asam: From a finance or numbers point of view, first of all, indeed, infrastructure as a service is now at around 1% of our cloud revenues. With sovereign, that might stabilize or even go up, but we talk about a completely different path we're taking. On the competitive benchmarking, when you look at Gartner's RDCs and so forth, they all put the numbers into U.S. dollars. At the risk of stating the obvious, euro constant currency numbers with a strongly depreciating dollar is a different story than dollar. If we convert our numbers in dollar, we see even higher numbers than the constant currency numbers. What is a headwind for us, namely depreciating dollar, is, of course, a tailwind for our U.S. competitors. That's the comment I tried to make in the interest statement.

Speaker #6: But we talk about a completely different path we're taking . And on the competitive benchmarking . I mean , when you look at the Gartner's , IDC's and so forth , they all put the numbers into US dollars and don't I mean , at the risk of stating the obvious Euro constant currency numbers with a strongly depreciating dollar is a different story than dollar .

Speaker #6: Now , if we convert our numbers in dollar , we see even higher numbers than the constant currency numbers . So what is the headwind for us ?

Speaker #6: Namely , depreciating dollar is of course a tailwind for our US competitors . That's the comment I try to make in a statement .

Dominik Asam: That's the comment I tried to make in the intro statement. I don't quite understand where there is any nervousness if you see Cloud ERP growing at 31% constant currencies, which is even more in US dollars because of the depreciation of the dollar. If you then look at the market data and competitor data, please name us one who is actually anywhere near that.

Speaker #6: So I don't quite understand why there is any nervousness . If you see cloud ERP suite growing at 31% constant currencies , which is even more in US dollars because of the depreciation of the dollar , then if you then look at the market data , a competitor data , please name us one who is actually anywhere near that .

Dominik Asam: I don't quite understand why there is any nervousness if you see Cloud ERP Suite growing at 31% constant currencies, which is even more in U.S. dollars because of the depreciation of the dollar. If you then look at the market data, our competitor data, please name us one who is actually anywhere near that.

Speaker #3: The next question comes from Jackson Ader with KeyBanc Capital Markets . Please go ahead .

Operator: The next question comes from Jackson Ader with KeyBanc Capital Markets. Please go ahead.

Operator: The next question comes from Jackson Edmund Ader with KeyBank Capital Markets. Please go ahead.

Speaker #15: Great . Good evening guys . Thanks for taking our questions . I want to just go back to the to the back end bookings that are happening either in the first half or through the quarter .

Jackson Ader: Great. Good evening, guys. Thanks for taking our questions. I want to just go back to the back end bookings that are happening either in the first half or through the quarter. I mean, I think we've addressed the competitive dynamics, but I'm curious, Christian, you've said that you guys want to focus a little bit on price discipline, so I'm curious how whether that price discipline is impacting the linearity of the bookings through the quarter, and then how that price discipline is actually, you know, holding up as we get closer and closer to the ends of these quarters. Thank you.

[Analyst]: Great. Good evening, guys. Thanks for taking our questions. I want to just go back to the backend-loaded bookings that are happening either in the first half or through the quarter. I think we've addressed the competitive dynamics, but I'm curious, Christian, you've said that you guys want to focus a little bit on pricing discipline. I'm curious whether that pricing discipline is impacting the deal pipeline linearity of the bookings through the quarter and then how that pricing discipline is actually holding up as we get closer and closer to the ends of these quarters. Thank you.

Speaker #15: I mean , I think we've addressed the competitive dynamics , but I'm curious , Christian , you've said that you guys want to focus a little bit on price discipline .

Speaker #15: And so I'm curious how whether that price discipline is , is impacting the linearity of the bookings through the quarter and then how that price discipline is actually , holding up as we get closer and closer to the ends of these quarters .

Speaker #15: Thank you .

Speaker #5: All right . Great question . I mean , look , actually , if you actually a real life example how our AI works , I asked in the afternoon in preparation of this earnings call tool , a tool with my pipeline with the sentiment , with everything .

Christian Klein: Great question. I mean, look, actually give you actually a real-life example how our AI works. I asked in the afternoon in preparation of this earnings call, Joule. Said, Joule, with my pipeline, with the sentiment, with everything what we have compared to the years before, how are we going to end up the year? Joule, happily enough, gave me pretty confident answer. What I also got out is, when you look at the pipeline, when you look at also about, you know, what we see for next year and the business cases we have in the system, it's actually good to see that it's not only about, again, a lift and shift of a system. It's not about training an LLM module and scale commodity hardware.

Christian Klein: Great question. I mean, look, actually, to give you a real-life example of how our AI works, I asked in the afternoon in preparation of this earnings call, Joel, said, "Joel, with my pipeline, with the sentiment, with everything what we have compared to the years before, how are we going to end up the year?" Joel, happily enough, gave me a pretty confident answer. What I also got out is, yeah, when you look.

Speaker #5: What we have compared to the years before , how are we going to end up the year ? Jule happily enough gave me pretty confident answer .

Speaker #5: And what what I also got out is when you look at the pipeline , when you look at also about , you know , what what we see for next year and the business cases we have in the system .

Operator: At the pipeline, when you look at also about, you know, what we see for next year and the business cases we have in the system, it's actually good to see that it's not only about, again, a lift and shift of a system. It's not about training an LLM module and scale commodity hardware. In many, many, I would say, in the predominant number of the deals, it's really about, okay, talking to the C-level, there's a cost optimization program. How can we help on the spend side? How can we help on the automation side? How can we help on the shop floor automation in moving more to in-time, real-time manufacturing with a better prediction of the demand?

Speaker #5: It's actually good to see that it's not only about, again, a lift and shift of a system. It's not about training in the LLM module and scaling commodity hardware.

Speaker #5: It's it's in many , many I would say in the predominant number of the deals really about okay , talking to the C level , there is a cost optimization program .

Christian Klein: It's in many, I would say in the predominant number of the deals, really about, okay, talking to the C-level, there's a cost optimization program. How can we help on the spend side? How can we help on the modern automation side? How can we help on the shop floor automation in moving more to in-time, real-time manufacturing with a better prediction of the demand. That is also, of course, giving us not so much pricing pressure.

Speaker #5: How can we help on the spend side ? How can we help on the automation side ? How can we help on the shop floor ?

Speaker #5: Automation in moving more to in time , real time manufacturing with a better prediction of the demand . And that is also , of course , giving us not so much pricing pressure because this is not only the CIO who is standing up and says , oh , SAP , you know , wants to get a deal done .

Operator: That is also, of course, giving us not so much pricing pressure because this is not only the CIO who is standing up and says, "Oh, SAP, you know, wants to get a deal done." This is the C-level saying, "Hey, you are part of a business case." When it comes to the transformation of the company, no matter if this company has cost pressure or is looking into new business models with AI, we are playing in this game. That is, of course, also then helping us on price protection. As I also mentioned before on pricing, you know, look at all of the software and cloud. I mean, this is really a lot of engineering work, what we have done to make this happen. Now it's paying off. Customers are willing to pay also a premium for that. Honestly, these are highly sophisticated capabilities.

Christian Klein: Because this is not only the CIO who is standing up and says, Oh, SAP, you know, wants to get a deal done. This is the C-level saying, Hey, you are part of a business case when it comes to the transformation of the company, no matter if this company has cost pressure or is looking into new business models with AI, but we are playing in this game. That is of course also then helping us on price protection. As I also mentioned before on pricing, you know, look at all of the software and cloud. I mean, this is really a lot of engineering work, what we have done to make this happen, and now it's paying off. Customers are willing to pay also a premium for that. Because honestly, these are highly sophisticated capabilities.

Speaker #5: This is the sea level saying, "Hey, you are part of a business case when it comes to the transformation of the company."

Speaker #5: No matter if this company has cost pressure or is looking into new business models with AI , but we are playing in this game .

Speaker #5: And that is of course also then helping us on price protection , as I also mentioned before on pricing , you know , look at all of the software and cloud .

Speaker #5: I mean , this is really a lot of engineering work . What we have done to to make this happen . And now it's paying off .

Speaker #5: But are willing to pay also a premium for that . And because honestly , these are highly sophisticated capabilities , this is not only about putting an ERP system on a public cloud infrastructure in a data center , in a country .

Christian Klein: This is not only about putting an ERP system on a public cloud infrastructure in a data center in a country. These are sometimes much higher standards which we can fulfill, but customers again understand that they have to pay a premium for that. Last but not least, our sales team knows that when they want to make the year and they want to make their quota, there is of course a volume included in the quota, but we also have a pricing element into it. We are not, you know, just giving deals away in order to hit our numbers. It always has to be the right mix of both of volume and pricing. One piece, because Alexandra always reminds me about the questions around the migration credits.

Operator: This is not only about putting an ERP system on a public cloud infrastructure in a data center in a country. These are sometimes much higher standards, which we can fulfill. Customers, again, understand that they have to pay a premium for that. Last but not least, our sales team knows that when they want to make the year and they want to make their quota, there is, of course, a volume included in the quota. We also have a pricing element included. We are not, you know, just giving deals away in order to hit our numbers. It always has to be a wide mix of both of volume and pricing. Yeah. One piece, because Alexandra always reminds me about that, the questions around the migration credits. Yeah. We are not taking this lightly and we are not pushing them out every time.

Speaker #5: These are sometimes much higher standards, which we can fulfill. But customers, again, understand that they have to pay a premium for that.

Speaker #5: And last but not least , our sales team knows that they want when they want to make the year and they want to make their quota .

Speaker #5: There is , of course , a volume included in the quota , but we also have a pricing element included . So we are not , you know , just giving deals away in order to hit our numbers .

Speaker #5: So it always has to be the right mix of both of volume and pricing . And then one piece , because Alexandra always reminds me about that , that questions around the migration credits we are not taking this lightly , and we are not pushing them out every time .

Christian Klein: We are not taking this lightly, and we are not pushing them out every time. When a customer says, Oh, I have now cost pressure, but I want to do this. I see the AI, I see what it can do for me on the business side, but can you help me to make this, you know, the business case a bit more attractive? Before we discount the exit price or the point of renewal, we then, in this case, it's very targeted and also work with this migration credits. That's also how we protect our prices on the cloud on the subscription side.

Speaker #5: But when a customer says , oh , I have now cost pressure , but I want to do this , I see the AI , I see what it can do for me on the business side , but can you help me to make this ?

Operator: When a customer says, "Oh, I have now cost pressure, but I want to do this. I see the AI, I see what Wise can do for me on the business side." Can you help me to make this, you know, the business case a bit more attractive? Before we discount the exit price or the point of renewal, in this case, it's very targeted and also work with these migration credits. That's also how we protect our prices on the cloud, on the subscription side.

Speaker #5: You know, the business case is a bit more attractive than before? We discount the exit price or at the point of renewal.

Speaker #5: We then in this case , it's very targeted . And also work with this migration credits . And that's also how we protect our prices on the cloud , on the on the subscription side .

Speaker #3: The next question is from Charlie Brennan with Jefferies . Please go ahead .

Operator: The next question is from Charles Brennan with Jefferies. Please go ahead.

[Company Representative]: The next question is from Charles Brennan with Jefferies. Please go ahead.

Speaker #16: Great . Thanks for taking my question . Can I just ask a higher level question around investment levels ? I think we all want you to remain at the front of the curve with with AI and leading the industry .

Charles Brennan: r taking my question. Can I just ask a high-level question around investment levels? I think we all want you to remain at the front of the curve with AI and leading the industry. I think we all understand that investment comes before revenue streams. Are you confident that you can fund the required AI investment by reallocating R&D spend and reinvesting the efficiencies that you're driving? Or do you think there's a business case for acceleration in investment to guarantee that you remain a leader in this space? Then separately, can I just ask a quick question about the support revenues? It looks like we're finally into the stage where we're seeing an accelerating decline. That's obviously an indication that you've got customers going live, which is very healthy.

Christian Klein: Great. Thanks for taking my question. Can I just ask a high-level question around investment levels? I think we all want you to remain at the front of the curve with AI and leading the industry. I think we all understand that investment comes before revenue streams. Are you confident that you can fund the required AI investment by reallocating R&D spend and maybe reinvesting the efficiencies that you're driving? Do you think there's a business case for an acceleration in investment to guarantee that you remain a leader in this space? Separately, can I just ask a quick question about the support revenues? It looks like we're finally into the stage where we're seeing an accelerating decline. That's obviously an indication that you've got customers going live, which is very healthy. Is there anything you can say about the total cloud backlog moving into the CCB?

Speaker #16: And I think we all understand that investment comes before revenue streams. Are you confident that you can fund the required AI investment by reallocating R&D spend and maybe reinvesting the efficiencies that you're driving? Or do you think there's a business case for an acceleration in investment to guarantee that you remain a leader in this space?

Speaker #16: And then separately, can I just ask a quick question about the support revenues? It looks like we're finally into the stage where we're seeing an accelerating decline.

Speaker #16: That's obviously an indication that you've got customers going live , which is which is very healthy . Is there anything you can say about the total cloud backlog moving into the SCB ?

Charles Brennan: Is there anything you can say about the total cloud backlog moving into the CCB? Does that take some of the in-quarter pressure away to sign new deals because of that transfer of TCB into CCB? Thank you.

Speaker #16: Does that take some of the in-quarter pressure away to sign new deals because of that transfer of TCB into SCB? Thank you.

Christian Klein: Does that take some of the in-quarter pressure away to sign new deals because of that transfer of TCB into CCB? Thank you.

Speaker #5: Yeah , so happy to take the first question on support revenue . Maybe Dominic , you can you can help me . But , you know , we're happy to .

Christian Klein: Yeah. Happy to take the first question on support revenue. Maybe Dominik, you can help me, but, you know,

Operator: Yeah, happy to take the first question on support revenue. Maybe Dominik, you can help me, but you know we're happy to.

Speaker #6: On the support revenue . Yeah , I mean , it's just the acceleration we've always indicated that will come sooner or later . And again , don't don't look too much at one single quarter .

Dominik Asam: On the support revenue, yeah. I mean, it's just the acceleration we've always indicated that will come sooner or later. Again, don't look too much at one single quarter. I think it's always a bit noisy for whatever reasons, and there are some backs and forth on this, but the trend is clearly towards a slight acceleration for the reasons you have highlighted yourself.

Alexandra Steiger: On the support revenue, yeah, it's just the acceleration we've always indicated that will come sooner or later. Again, don't look too much at one single quarter. I think it's always a bit noisy for whatever reasons, and there are some backs and forth from this. The trend is clearly towards a slight acceleration for the reasons you have highlighted yourself.

Speaker #6: I think it's always a bit noisy for whatever reasons . And there are some backs and forth on this . But but the trend is clearly towards a slight acceleration for the reasons you have highlighted yourself .

Speaker #5: Yeah, and it also speaks for the adoption of our customers in the cloud, and the rise journey now continues and even accelerates for many customers.

Christian Klein: Yeah. It also speaks for the adoption of our customers in the cloud and the RISE journey now continues and even accelerates for many customers we signed a few years back. Now on AI. So when you look at our R&D portfolio, I will now talk first about Philipp and our AI foundation. When you would ask Philipp for his budget request next year, he says, Christian, I don't need 2,000 more AI developers. I need the best. I need the PhDs of the Berkeleys. We are working with MIT on our knowledge graph. It's really about the quality of the people. It's not necessarily about the quantity of the people. What we are doing, and you heard me saying about, you know, our research on tabular data.

Operator: Yeah. It also speaks for the adoption of our customers in the cloud, and the Wise journey now continues and even accelerates for many customers we signed a few years back. Now on AI. When you look at our R&D portfolio, I will now talk first about Philip and our AI Foundation. When you would ask Philip for his budget request next year, he says, "Christian, I don't need 2,000 more AI developers. I need the best. I need the PhDs of the Berkeleys. We are working with MIT on our knowledge graph." It's really about the quality of the people. It's not necessarily about the quantity of the people. What we are doing, and you heard me saying about our research on tabular data, that is for us very important that Jules can talk not only HR and finance.

Speaker #5: We find we signed a few years back now on AI . So when you look at our R&D portfolio and I will now talk first about Philip and our AI Foundation , when you would ask Philip for his budget request next year , he says , Christian , I don't need 2000 more AI developers .

Speaker #5: I need the best . I need a PhDs of the Berkeleys . We are working with MIT on our Knowledge Graph . It's really about the quality of the people .

Speaker #5: It's not necessarily about the quantity of the people . And what we are doing . And you heard me saying about , you know , our research on on tablet data , I mean , that is for us very important that Jule can talk not only HR and finance when I'm asking this question , this afternoon about our , you know , financial result prediction for the year , I mean , then you need tool needs to correlate sales , contextual data , unstructured content with finance data .

Christian Klein: I mean, that is for us very important that Joule can talk not only HR and finance. When I'm asking this question this afternoon about our, you know, financial result prediction for the year, I mean, Joule needs to correlate sales, contextual data, unstructured content with finance data. This is, you know, what we are building on the AI foundation. Now, in the lines of businesses with Muhammad, there we already did some work this year. I mean, you have seen us, we did another slightly surgical restructuring round, with, you know, this year, which we ended, and now we adjusted here and there with the workforce. That was predominantly in R&D.

Operator: When I'm asking this question this afternoon about our financial result prediction for the year, then Jules needs to correlate sales, contextual data, unstructured content with finance data. This is what we are building on the AI Foundation. Now in the lines of businesses with Muhammad, we already did some work this year. You have seen us. We did another slightly surgical restructuring round this year, which we ended, and now we adjusted here and there a bit the workforce. That was predominantly in R&D. What we are doing there is when you see the lift and shift in our portfolio, we have now much less developers sitting, coding features and functions, but a really solid shift, I would say, into AI developers, data scientists, building the predictive modules on BDC for the intelligent apps, et cetera. That is actually already happening.

Speaker #5: And this is you know what what we are building on the AI foundation now in the lines of businesses with Muhammad there . We already did some work this year .

Speaker #5: I mean we you have seen us . We did another slightly surgical restructuring round with , you know , this year , which we ended and now we adjust it here and there a bit .

Speaker #5: The workforce that was predominantly in R&D, and what we are doing there, is when you see the lift and shift in our portfolio. We have now much less developers sitting, coding features and functions.

Christian Klein: What we are doing there is when you see the lift and shift in our portfolio, we have now much less developers on sitting coding features and functions, but a really solid shift, I would say, into AI developers, data scientists, building the predictive modules on BDC, you know, for the intelligent apps, et cetera. That is actually already happening. We will see next year probably a further shift, but not a radical shift because a lot of that has already been done. Overall the investment into R&D. I mean, when there's one area where I'm always open to invest is R&D. I also talked about applying AI internally, and obviously Muhammad is great in the team, you know, applying code generation tools. Tool for developer, we have GitHub. We are now rolling out a few more.

Speaker #5: But there is really a solid shift, I would say, into AI developers and data scientists building the predictive models on BDC for the intelligent apps, etc.

Speaker #5: and that is actually already happening . And so we will see next year , probably a further shift , but not a radical shift , because a lot of that has already been done .

Operator: We will see next year probably a further shift, but not a radical shift because a lot of that has already been done. Overall, the investment into R&D, when there is one area where I'm always open to invest, is R&D. I also talked about applying AI internally. Obviously, Muhammad is great in the team, you know, applying code generation tools. So Jules for developer, we have GitHub. We are now rolling out a few more. We have also our own code generation tool now as part of Jules Studio. We even see an increase of adoption of 300% for Jules for developer only in the last three months. Also there, we are working on efficiency. While on the one hand side, we, of course, have a strong development backlog, we also, of course, see the efficiencies now kicking in with AI.

Speaker #5: And overall , the investment into R&D . I mean , when there's one area where I would where I'm always open to invest is R&D , but I also talked about applying AI internally and obviously Mohamed is great in his team .

Speaker #5: You know, applying code generation tools. So, tool for developers, we have GitHub. We are now rolling out a few more.

Speaker #5: We have also our own own Kate code generation tool . Now as part of tools . So and we even see an increase of adoption of 300% for tool for developer only in the last three months .

Christian Klein: We have also our own code generation tool now as part of Joule Studio. We even see an increase of adoption of 300% for tool for developer only in the last three months. Also there we are working on efficiency to while on the one hand side we, of course, have a strong development backlog. We also, of course, see the efficiencies now kicking in with AI and the lift and the shift in the portfolio is good, the pipeline is good. We also find the right resources in India, in Singapore, and parts of the US for also for our AI team. We are very happy with the quality of the people. Again, I wanna underscore for us it's more about the quality of the people we can onboard and hire.

Speaker #5: And so also there we are working on efficiency to while on the one hand side we of course have a strong development backlog .

Speaker #5: We also, of course, see the efficiencies now kicking in with AI, and the lift and the shift in the portfolio is good.

Operator: The lift and the shift in the portfolio is good. The pipeline is good. We also find the right resources in India, in Singapore, parts of the U.S., also for our AI team. We are very happy with the quality of the people. I want to underscore, for us, it's more about the quality of the people we can onboard and hire.

Speaker #5: The pipeline is good , and we also find the right resources in India in Singapore , parts of the US for also for our AI teams .

Speaker #5: So we are very happy with the quality of the people . And again , I want to underscore for us it's more about the quality of the people we can onboard and hire .

Operator: The next question is from Michael Turrin with Wells Fargo. Please go ahead.

Speaker #3: The next question is from Michael Turin with Wells Fargo. Please go ahead.

[Company Representative]: The next question is from Michael James Turrin with Wells Fargo. Please go ahead.

Speaker #17: Hey , great . Thanks . Appreciate you taking the question , Dominic , you mentioned the range of potential outcomes on for Qcb .

Charles Brennan: Hey, great. Thanks. Appreciate you taking the question. Dominik, you mentioned the range of potential outcomes on Q4 CCB. It sounded like from some of Christian's comments, AI is actually pulling RISE deals forward in some cases. Just be curious to hear more around potential swing factors in either direction there on that metric and any higher level commentary you're willing to share to help size the range of potential outcomes as you're exiting the year on the stronger seasonal bookings quarter. Thanks very much.

Michael Turrin: Hey, great. Thanks. Appreciate you taking the question. Dominik, you mentioned the range of potential outcomes on Q4 CCB. It sounded like from some of Christian's comments, AI is actually pulling RISE deals forward in some cases. Just be curious to hear more around potential swing factors in either direction there on that metric and any higher level commentary you're willing to share to help size the range of potential outcomes as you're exiting the year on the stronger seasonal bookings quarter. Thanks very much.

Operator: Hey, great. Thanks. I appreciate you taking the question. Dominik, you mentioned the range of potential outcomes on Q4 CCB. It sounded like from some of Christian's comments, AI is actually pulling RISE deals forward in some cases. I'd just be curious to hear more around potential swing factors in either direction there on that metric and any higher-level commentary you're willing to share to help size the range of potential outcomes as you're exiting the year on the stronger seasonal bookings quarter. Thanks very much.

Speaker #17: It sounded like, from some of Christian's comments, AI is actually pulling forward in some cases. So, I would just be curious to hear more about the potential swing factors in either direction.

Speaker #17: There, on that metric and any higher level commentary you're willing to share to help size the range of potential outcomes as you're exiting the year on the stronger seasonal bookings quarter.

Speaker #17: Thanks very much .

Speaker #6: I mean, the obvious number that drives the CCP from now onwards is the net. Bookings are either gross bookings and then the churn.

Dominik Asam: I mean, the obvious number that drives the CCB from now onwards is the net bookings, either gross bookings and then the churn. On both we wanna do as well as we can. The good thing about the CCB is that the lion's share is really, if you close by the end of the quarter with a certain kind of deployment time, you embark that in your CCB if you can do that, which is not the case for cloud revenues, of course. Now I can really not give any more hints than have already been shared on this call. I mean, it's just useful to, I think, remind ourselves where we started the year. We started the year at exactly 28.7.

Alexandra Steiger: I mean, the obvious number that drives the CCB from now onwards is the net bookings, i.e., the gross bookings and then the churn. On both, we want to do as well as we can. The good thing about the CCB is that the lion's share is really, if you close by the end of the quarter with a certain kind of deployment time, you embark that in your CCB if you can do that, which is not the case for cloud revenues, of course. I can really not give any more hints than have already been shared on this call. It's just useful to, I think, remind ourselves where we started the year. We started the year at exactly 28.7. That was the 29% we jumped off. We said we are going to be slightly down, including an effect from M&A, which back then was 1.5 percentage points roundabout.

Speaker #6: And on both we we want to do as well as we can . And the good thing about the CCP is that the lion's share is really , if you close by the end of the quarter with a certain kind of deployment time , you embark that in your CCP .

Speaker #6: If you can do that , which is not the case for cloud revenues , of course . So now I don't I can't really not give any more hints than have already been shared on this call .

Speaker #6: I mean, it's just useful to, I think, remind ourselves where we started the year. We started the year at exactly 28.7, and it was the 29% we jumped off.

Dominik Asam: That was the 29% we jumped off. We said we are going to be slightly down, including an effect from M&A, which back then was 1.5 percentage points round about. Of course, WalkMe, SmartRecruiters was kind of a slight offset.

Speaker #6: We said , we're going to be slightly down , including an effect from M&A , which back then was 1.5 percentage points around about .

Speaker #6: And of course , walk me sorry , sorry , Smartrecruiters was was kind of a slight offset . So M&A is around about a percentage point .

Alexandra Steiger: Of course, WalkMe, and sorry, sorry, SmartRecruiters was kind of a slight offset. M&A is around about a percentage point in that bridge. If you now think where we are post Q3, it actually gives you a little bit of a feeling between kind of what happened at the beginning of the year, what's there now. I would not look at any individual quarter and read too much into this. If you think about the kind of three quarters that we now have under our belt and the gradient there, and then deep-root that for CCB growth, you see a little bit of a trend. Let's not forget, there's still a difficult situation in the transactional business, but that doesn't impact the CCB. It's more heavy on the cloud revenues.

Christian Klein: M&A is around about a percentage point in that bridge. If you now think where we are post Q3, it actually gives you a little bit of a feeling between kind of what happened beginning of the year, what's there now. I would not look at any individual quarter and read too much into this. If you think about the kind of three quarters that we now have under our belt and the gradient there, and then depollute that for CCB growth, you see a little bit of a trend. Yeah, let's not forget there's still a difficult situation on transactional business, but that doesn't impact the CCB. It's more heavy on the cloud revenues.

Dominik Asam: M&A is around about a percentage point in that bridge. If you now think where we are post Q3, it actually gives you a little bit of a feeling between kind of what happened beginning of the year, what's there now. I would not look at any individual quarter and read too much into this. If you think about the kind of three quarters that we now have under our belt and the gradient there, and then depollute that for CCB growth, you see a little bit of a trend. Yeah, let's not forget there's still a difficult situation on transactional business, but that doesn't impact the CCB. It's more heavy on the cloud revenues.

Speaker #6: And in that bridge and so so if you now think where we are post Q3 , it actually gives you a little bit of a feeling between kind of what happened beginning of the year .

Speaker #6: What's clear now ? I would not look at any individual quarter and read too much into this , but if you think about the kind of three quarters and that we now have under our belt and the gradient there , and then deploy that for CCP growth , you see a little bit of a trend .

Speaker #6: And yeah , let's not forget there's still a difficult situation on transactional business , but that doesn't impact the CCP . It more heavy on the cloud revenues and yeah , if you put these numbers into into the trajectory and then then then think about the type of improbability about bookings and net bookings .

Alexandra Steiger: If you put these numbers into the trajectory and then think about the type of imponderability about bookings, net bookings, it gives you actually this kind of, I'd say, a bandwidth, which the numbers need to be gravitating in and it's not too wide, actually.

Christian Klein: Yeah, if you put these numbers into the trajectory and then think about the type of imponderability about bookings, net bookings, it gives you actually this kind of, I'd say a bandwidth which the numbers need to be gravitating, and it is not too wide actually. Yeah. Maybe just to add it up on because I know, I mean, how important the CCB will be for the, you know, at the exit of the year, also for the outlook next year. I mean, the 25%, I mean, when I look into the first half year, how much pipeline was stalled, I would say 25% would be probably the most likely scenario.

Dominik Asam: Yeah, if you put these numbers into the trajectory and then think about the type of imponderability about bookings, net bookings, it gives you actually this kind of, I'd say a bandwidth which the numbers need to be gravitating, and it is not too wide actually.

Speaker #6: It gives you . Actually this kind of I'd say a bandwidth which , which the numbers need to need to be gravitating in .

Speaker #6: And it's not too wide . Actually .

Speaker #5: Yeah . And maybe just to , to to to net it up on because I know I mean how important the CCP will be for the , you know , at the exit of the year .

Christian Klein: Yeah. Maybe just to add it up on because I know, I mean, how important the CCB will be for the, you know, at the exit of the year, also for the outlook next year. I mean, the 25%, I mean, when I look into the first half year, how much pipeline was stalled, I would say 25% would be probably the most likely scenario.

Operator: Maybe just to add up on, because I know how important the CCB will be for the, you know, at the exit of the year, also for the outlook next year. Look, 25%. When I look into the first half year, how much pipeline was stalled, I would say 25% would be probably the most likely scenario. In the meantime, as I mentioned, the sentiment in some of these industries, which are not insignificant from a size perspective, has changed. Now I would be rather disappointed on 25. 26 would be, in my eyes, a great result. Look at the base. Look at the acquisition impact of WalkMe. I definitely see now that there is a better pipe. We worked hard on some of these things. We have it in our hands. Q4 has a big swing. It can go in all directions.

Speaker #5: Also for the outlook next year , I mean , look , 25% I mean , when I look into the first half year , how much pipeline was stalled , I would say 25% would be probably the most likely scenario .

Speaker #5: In the meantime , as I mentioned , the sentiment in some of these industries , which are not insignificant from a size perspective , has changed .

Christian Klein: In the meantime, as I mentioned, the sentiment in some of these industries, which are not insignificant, from a size perspective, has changed. Now I would be rather disappointed on 25. 26 would be, in my eyes, a great result. Look at the base, look at the acquisition impact of WalkMe, and but I definitely see now that there is a better pipe. We worked hard on some of these things, so we have it in our hands. Again, Q4 has a big swing. It can go in all directions. Right now, if you ask me, and if you look at the pipeline, and I've seen it many times, I would rather see 25% as a disappointment.

Speaker #5: So now I would be rather disappointed on 25 , 26 would be , in my eyes , a great result . Look at the base , look at the acquisition impact of Walk Me and .

Speaker #5: But we definitely see now that there is a better pipe, and we worked hard on some of these things. So we have it in our hands.

Speaker #5: But again Q4 has a big swing . It can go in all directions . But right now , if you ask me , and if you look at the pipeline and I've seen it many times , I would rather see 25% as a disappointment .

Operator: Right now, if you ask me and if you look at the pipeline, and I've seen it many times, I would rather see 25% as a disappointment. There is a swing. I'm now definitely more optimistic than I was three months ago when it comes to Q4, which is by far, of course, our biggest bookings quarter we have in the year.

Speaker #5: Again , you know , there is a swing , but I'm I'm now definitely more optimistic than I was three months ago . When it comes to Q4 , which is by far , of course , our biggest bookings quarter , we have in the year .

Christian Klein: Again, you know, there is a swing, but I'm now definitely more optimistic than I was three months ago when it comes to Q4, which is by far, of course, our biggest bookings quarter we have in the year.

Speaker #3: We'll take our next question from Johannes Schaller with Deutsche Bank. Please go ahead.

Operator: We'll take our next question from Johannes Schaller with Deutsche Bank. Please go ahead.

[Company Representative]: We'll take our next question from Johannes Schaller with Deutsche Bank. Please go ahead.

Speaker #18: Yeah . Good evening . Thanks for letting me on , Christine . I wanted to come back to this comment that you made , that you're now hoping to sign .

Johannes Schaller: Good evening. Thanks for letting me on. Christian, I wanted to come back to this comment that you made that you're now hoping to sign maybe some Rise deals in Q4 that were initially planned for 2026. Guess that's quite a rare comment in an industry that often sells quite large multi-year transformational deals that are maybe not that easy to accelerate. Could you zoom in a little bit more on the customer discussions you had around that and really kind of what role your AI offering played here? Just as a quick follow-up, you used to give the AI attach rate on new deals. I may have missed that, but could you share that maybe for the Q3? Thank you.

Operator: Yeah, good evening. Thanks for letting me on. Christian, I wanted to come back to this comment that you made that you're now hoping to sign maybe some RISE deals in Q4 that were initially planned for 2026. I guess that's quite a rare comment in an industry that often sells quite large, multi-year transformational deals that are maybe not that easy to accelerate. Could you zoom in a little bit more on the customer discussions you had around that and really kind of what role your AI offering played here? Just as a quick follow-up, you used to give the AI attach rate on new deals. I may have missed that, but could you share that maybe for the third quarter? Thank you.

Speaker #18: Maybe some rice deals in Q4 that were initially planned for 20 . Six . Guess that's quite a rare comment in an industry that often sells quite large , multi-year , transformational deals that are maybe not that easy to accelerate .

Speaker #18: So, could you zoom in a little bit more on the customer discussions you had around that? And really, kind of what role your AI offering played here?

Speaker #18: And then just as a quick follow up , you used to give the AI attach rate on new deals . I may have missed that with .

Speaker #18: Could you share that? Maybe for the third quarter? Thank you.

Speaker #5: Yeah . I mean , look , to give you a real life example , I was last week in Japan . Customer . And the big transformation pressure BCG pulled us in and actually also shared with us .

Christian Klein: Yeah. I mean, look, to give you a real-life example, I was last week in Japan. Customer, the big transformation pressure, BCG pulled us in and actually also shared with us, Hey, Christian, can you help not only on, you know, now cloud and, you know, making sure they get rid of these painful ERP upgrades, but really about we're really looking for cost optimization potential. They are looking for a new template on how to monetize their new businesses as they diversify their portfolio. Of course, we see that you have the AI use cases here and there on process automation and then also on the CPQ side for more intelligent quoting and pricing. That is a deal, for example, which I didn't see coming.

Operator: Yeah. I mean, look, to give you a real-life example, I was last week in Japan. Customer and the big transformation pressure, BCG pulled us in and actually also shared with us, "Hey, Christian, can you help not only on now cloud and making sure they get rid of these painful ERP upgrades, but really about we're really looking for cost optimization potential. They are looking for a new template on how to monetize their new businesses as they diversify their portfolio. Of course, we see that you have the AI use cases here and there on process automation and then also on the CPQ side for more intelligent quoting and pricing. That is a deal, for example, which I didn't see coming.

Speaker #5: Hey, can you help not only on you now? Our cloud and, you know, making sure they get rid of this painful ERP upgrades.

Speaker #5: But really, we are looking for cost optimization potential. They are looking for a new template on how to monetize their new businesses as they diversify their portfolio.

Speaker #5: And, of course, we see that you have the AI use cases here and there on process automation. And then also on the CPU side for more intelligent quoting and pricing.

Speaker #5: And that is a deal . For example , which I , I didn't see coming . And there you see that in the meantime , it's also great that the ecosystem pulls us in and says , hey , this is where SVP is .

Christian Klein: There you see that in the meantime, it is also great that the ecosystem pulls us in and says, this is where SAP is in the meantime, really good. That, of course, helps, you know, that you get such deals. Again, not because of maintenance, not because of IT, it is really about the business transformation and AI. We have, you know, some of these deals. Again, they need to materialize. I mean, they came now in, we have it in the pipe, they are looking good, but we see some of them. Yeah. That is a good sign.

Operator: There you see that in the meantime, it's also great that the ecosystem pulls us in and says, 'Hey, this is where SAP is in the meantime really, really good.' That, of course, helps, you know, that we that you get such deals. Again, not because of maintenance, not because of IT. It's really about the business transformation and AI. We have, you know, some of these deals. Again, they need to materialize. I mean, they came now in. We have it in the pipe. They are looking good. We see some of them. Yeah. That is a good sign. Yeah. Last but not least, as I also mentioned, yeah, I mean, you know, half year one, even here when we did the Q2 earnings, I mean, back then I would also say I would have underscored the 25%.

Speaker #5: In the meantime , really , really good . And that , of course helps , you know , that we that we get such deals again , not because of maintenance , not because of it .

Speaker #5: It's really about the business transformation . And AI . And we have , you know , some of these deals . Again , they need to materialize .

Speaker #5: I mean , they came now in we have it in the pipe . They are looking good . But we see some of them , you know , and and that is a good sign .

Speaker #5: And then last but not least , as I also mentioned , yeah , I mean , you know , half year one even here when we did the Q2 earnings , I mean back then I would also say I would have underscored the 25% .

Christian Klein: Last but not least, as I also mentioned, I mean, you know, half year one, even here when we did the Q2 earnings, I mean, back then, I would also say I would have underscored the 25%. Now in the meantime, given, you know, the sentiment, what we are seeing and also again, having the access to the C-level, I'm definitely more optimistic than I was at the Q2 earnings.

Speaker #5: But now in the meantime , given , you know , the sentiment , what we are seeing and , and and also , again , having the access to the sea level , I'm definitely more optimistic than I was at the Q2 earnings then .

Operator: Now in the meantime, given, you know, the sentiment, what we are seeing, and also again having the access to the C-level, I'm definitely more optimistic than I was at the Q2 earnings.

Speaker #4: Great . Thank you , Christian . And this concludes our call for today . Thank you all for joining .

Alexandra Steiger: Great. Thank you, Christian. This concludes our call for today. Thank you all for joining.

[Company Representative]: Great. Thank you, Christian. This concludes our call for today. Thank you all for joining. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining and have a pleasant day. Please stand by. The conference will begin shortly.

Speaker #3: Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining, and have a pleasant day.

Operator: Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Please stand by. The conference will begin shortly.

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