SAP Q2 2017 Quarterly Statement

SAP Raises Outlook -

Q2 Total Revenue Up Double-Digit

  • Strong new cloud bookings, up 33%

  • Stellar software revenue, up 5% -beating a record Q2 2016

  • Operating profit down 27% (IFRS) and up 4% (Non-IFRS) -compared with exceptional profits in Q2 2016

  • Digital core business soars with over 6,300 S/4HANA customers -up over 70% year over year

    4,359 4,361

    1,516

    1,570

    1,269

    926

  • Share buyback announced, up to €500 million in 2017 - following strong operating cash flow, up 20% in HY

Cloud & Software Revenue

in €millions

Q2/16 Q2/17

Operating Profit

in €millions

Q2/16 Q2/17

4,757

4,758

IFRS

+9%

Non-IFRS

+9% (+8% cc)

IFRS

-27%

Non-IFRS

+4% (+3% cc)

Cloud Subscriptions & Support Revenue

in € millions

IFRS

Non-IFRS

932

932

+29%

+29% (+27% cc)

Share of Predictable Revenue

in percent

Q2 2017

63%

+0 p.p.

Total Revenue

in € millions

IFRS

Non-IFRS

5,782

5,782

+10%

+10% (+9% cc)

"This strong quarter is the latest in SAP's 8-year run of consistent, profitable growth. Our winning strategy is again validated by fast adoption of S/4HANA and our full portfolio of cloud solutions. We expect continuing momentum in the second half and confidently raise our guidance for the full year. SAP has never been better positioned."

Bill McDermott, CEO

"Our fantastic momentum continued with double-digit growth in total revenue. Our cloud & software revenue growth rate in the first half of the year is at the upper end of our full-year guidance range. Based on our strong growth and cash generation we are pleased to share SAP's success with our shareholders by initiating a share buyback of up to€500 million in thesecond half."

Luka Mucic, CFO

Walldorf, Germany - July 20, 2017

SAP SE (NYSE: SAP) today announced its financial results for the second quarter 2017 ended June 30, 2017.

Business Highlights Financial Highlights Second Quarter 2017‌‌

SAP'sfast growth in the cloud continued in the second quarter. New cloud bookings1grew by 33% (33% at constant currencies) in the second quarter and reached €340million. Both IFRS and non-IFRS cloud subscriptions and support revenue grew 29% year- over-year (27% at constant currencies) to €932 million. IFRS and non-IFRS software revenue was €1.09 billion, up5% year-over- year (4% at constant currencies). New cloud and software license order entry2grew by more than 20% year-over-year in the second quarter. IFRS and non-IFRS cloud and software revenue was €4.76 billion, an increase of 9% (8% at constant currencies). SAP's "predictable revenue", i.e. the total of cloud subscriptions & support revenue and software support revenue, was 63% of total revenue.

IFRS operating profit was down 27% to €926 million. Non-IFRS operating profit grew 4% to €1.57 billion (3% at constant currencies). IFRS earnings per share decreased 18% to €0.56. Non-IFRS earnings per share increased 14% to €0.94. The IFRS operating profit and EPS were primarily impacted by a strong increase in restructuring related expenses and share-based compensation expenses in the second quarter.

Operating cash flow for the first six months was €3.51 billion, an increase of 20% year-over-year and free cash flow increased 15% year-over-year to €2.90 billion. At quarter end, net debt was €1.79 billion, an improvement of €2.5 billion year over year. SAP'sstrong growth and cash generation provide significant flexibility around capital allocation aimed at driving shareholder value. After evaluating the expected cash flow development for the second half of 2017 and consistent with the company's capital allocationpriorities, SAP has decided on a share buyback of up to €500 millionin 2017. The share buyback will start shortly and will be executed in several tranches.

SAP S/4HANA

With S/4HANA customers can massively simplify their IT landscape, run live and reinvent their business model for the digital economy across both cloud and on-premise deployments. S/4HANA adoption grew to more than 6,300 customers, up over 70% year over year. In the second quarter, approximately 500 additional customers signed up of which around 30% were net new customers. Google, Centrica, and Mercadona selected S/4HANA in the second quarter.

SAP Leonardo

SAP Leonardo is a set of cutting-edge tools which turn systems of record into systems of intelligence. SAP Leonardo integrates breakthrough technologies such as Artificial Intelligence, Machine Learning and Internet of Things and runs them seamlessly in the cloud. It offers design thinking methodology and SAP expertise to help companies rapidly adopt new capabilities and business models and accelerate digital transformation. CITIC Pacific Mining among many others adopted SAP Leonardo solutions in the second quarter.

1 New cloud bookings is the total of all orders received in a given period the revenue from which is expected to be classified as cloud subscription and support revenue and that result from purchases by new customers and from incremental purchases by existing customers. Consequently, orders to renew existing contracts are not included in this metric. The order amount must be committed. Consequently, due to their pay-per-use nature, business network transaction fees which do not include a committed minimum consumption are not reflected in the bookings metric (e.g. SAP Ariba and SAP Fieldglass transaction-based fees). Amounts included in the measures are generally annualized (annualized contract value ACV).

2New cloud and software license order entry is the total of new cloud order entry and software license order entry. The new cloud order entry metric is identical to the new cloud bookings metric defined above except that it considers the total contract value (TCV) of the orders where the new cloud bookings metric considers the orders' annualized contract value (ACV). Software license order entry is the total of all orders received in a given period the revenue from which is expected to be classified as software license revenue. The support services commonly sold with the software licenses are not included in the software license order entry metric.

Human Capital Management

With SuccessFactors and Fieldglass, SAP delivers total workforce management across both permanent and contingent labor, localized for 84 countries and 42 languages. Top industry analysts recently gave SAP SuccessFactors the highest rankings in Cloud HCM for Core HR and Talent Management for global organizations with more than 5,000 workers as well as for mid-market European-headquartered enterprises. SuccessFactors Employee Central, which is the core of our HCM offering, had more than 1,800 customers at the end of the second quarter. Companies like Vitra and Swiss Post selected SAP's workforce management solutions in the second quarter.

Customer Engagement and Commerce

SAP's next generation customer engagement solutions enable businesses to manage their front office across the entire spectrum from marketing to sales to services- seamlessly and in real-time. Businesses get a single view of their customer- be it social, retail or e-commerce. SAP's CEC solutions serve both B2C and B2B across a wide range of industries, including retail, telco, financial services, manufacturing and the public sector. Top industry analysts recently named SAP Hybris a leader for both B2C and B2B Digital Commerce and Multichannel Marketing Campaign Management.SAP's CEC solutions once again achieved strong double- digit new cloud bookings growth as well as double-digit growth in software revenue.

Business Networks

Each of SAP's business network solutions provides a rich, open, global platform that connects a large ecosystem of customers, suppliers, partners and developers delivering ever expanding content and innovation. On the Ariba Network, more than 2.8 million companies in over 180 countries collaborate and trade nearly $1 trillion in goods and services annually. Concur helps more than 49 million end users effortlessly process travel and expenses. With SAP Fieldglass customers manage over 3.5 million contingent workers in more than 140 countries. Total revenue in the SAP Business Network segment was up 22% in the second quarter to €570million.

Regional Revenue Performance in the Second Quarter 2017

SAP had a strong performance in the EMEA region with cloud and software revenue increasing 9% (IFRS). Cloud subscriptions and support revenue grew 48% (IFRS) with an especially strong quarter in Germany and Russia. SAP also had double-digit software revenue growth in Germany and MENA (Middle East and North Africa) and triple-digit software revenue growth in Russia.

The Company had solid growth in the Americas region with cloud and software revenue growing by 8% (IFRS) and cloud subscriptions and support revenue increasing by 20% (IFRS). In North America, Canada had double-digit growth in software revenue. In Latin America Mexico and Chile were highlights with double-digit software revenue growth.

In the APJ region, SAP had an exceptional performance in both cloud and software revenue and cloud subscriptions and support revenue. Cloud and software revenue was up 13% (IFRS) with cloud subscriptions and support revenue growing by 52% (IFRS). China was very strong in cloud subscriptions and support revenue while Japan and Australia both had strong double-digit growth in software revenue.

Financial Results at a Glance

Second Quarter 20171) IFRS Non-IFRS2)

€ million, unless otherwise statedQ2 2017 Q2 2016 ∆in % Q2 2017 Q2 2016 ∆in % ∆in % const. curr.

New Cloud Bookings3)

N/A

N/A N/A

340

255 33 33

Cloud subscriptions and support

932

720 29

932

721 29 27

Software licenses and support

3,826

3,639 5

3,826

3,640 5 4

Cloud and software

4,757

4,359 9

4,758

4,361 9 8

Total revenue

5,782

5,237 10

5,782

5,239 10 9

Share of predictable revenue (in %)

63

63 0pp

63

63 0pp

Operating profit

926

1,269 -27

1,570

1,516 4 3

Profit after tax

666

813 -18

1,120

979 14

Basic earnings per share (€)

0.56

0.68 -18

0.94

0.82 14

Number of employees (FTE)

87,114

79,962 9

N/A

N/A N/A N/A

€ million, unless otherwise stated

Six months ended June 20171)

Q1-Q2

Q1-Q2

∆ in %

Q1-Q2

Q1-Q2

∆ in %

∆ in %

2017

2016

2017

2016

const.

curr.

IFRS Non-IFRS2)

New Cloud Bookings3)

N/A

N/A

N/A

555

400

39

37

Cloud subscriptions and support

1,837

1,397

31

1,837

1,399

31

28

Software licenses and support

7,248

6,811

6

7,248

6,813

6

4

Cloud and software

9,085

8,208

11

9,085

8,212

11

8

Total revenue

11,066

9,964

11

11,067

9,967

11

9

Share of predictable revenue (in %)

66

66

0pp

66

66

0pp

Operating profit

1,599

2,082

-23

2,768

2,620

6

3

Profit after tax

1,197

1,382

-13

2,006

1,742

15

Basic earnings per share (€)

0.99

1.16

-14

1.67

1.46

14

Number of employees (FTE)

87,114

79,962

9

N/A

N/A

N/A

N/A

1) All figures are unaudited.

2)For a detailed description of SAP's non-IFRS measures see Explanation of Non-IFRS Measures online. For a breakdown of the individual adjustments see table "Non-IFRS Adjustments by Functional Areas"in this Quarterly Statement.

3) As this is an order entry metric, there is no IFRS equivalent. Due to rounding, numbers may not add up precisely.

Business Outlook 2017

The Company is raising its outlook for the full year 2017:

  • Based on the continued strong momentum in SAP's cloud business, the Company expects full year 2017 non-IFRS cloudsubscriptions and support revenue to be in a range of €3.8 billion to €4.0 billion at constant currencies (2016: €2.99 billion). The upper end of this range represents a growth rate of 34% at constant currencies.

  • Due to increasing adoption of S/4HANA and our Digital Business Platform the Company now expects full year 2017 non-IFRS cloud & software revenue to increase by 6.5% to 8.5% at constant currencies (2016: €18.43 billion).

  • The Company now expects full year 2017 non-IFRS total revenue in a range of €23.3 billion to €23.7 billion at constant currencies (2016: €22.07 billion).

  • The Company expects full-year 2017 non-IFRS operating profit to be in a range of €6.8 billion to €7.0 billion at constant currencies (2016: €6.63 billion).

    While the Company's full-year 2017 business outlook is at constant currencies, actual currency reported figures are expected to continue to be impacted by exchange rate fluctuations. If exchange rates remain at the June 2017 average level for the rest of the year, we expect non-IFRS cloud and software revenue and non-IFRS operating profit growth rates to experience a currency headwind in a range of -2 to 0pp in Q3 2017 (-1 to +1pp for the full year 2017).

    Additional Information

    Media reports have raised questions surrounding contracts and third-party business practices in South Africa. SAP embodies an unwavering commitment to maintain the highest standards of integrity and transparency across its business. SAP has initiated an independent investigation spearheaded by a multinational law firm and overseen by Executive Board Member Adaire Fox-Martin to vigorously review contracts awarded by SAP South Africa.

    General Remarks about this Quarterly Statement and the SAP Integrated Report

    Since Q1 2016, we issue a quarterly statement for each of the four fiscal quarters. Additionally, we issue a half year report and a full year integrated report. SAP's 2016 Integrated Report and Annual Report to Shareholders, and 2016 Annual Report on Form 20-F were published on February 28, 2017, and are available for download at www.sapintegratedreport.com.

    For a more detailed description of all of SAP's non-IFRS measures and their limitations as well as our constant currency and free cash flow figures see Explanation of Non-IFRS Measures online.

    Webcast

    SAP senior management will host a financial analyst conference call today at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00 AM (Eastern) / 5:00 AM (Pacific). The call will be webcast live on the Company's website atwww.sap.com/investorand will be available for replay. Supplementary financial information pertaining to the second quarter results can be found atwww.sap.com/investor.

    About SAP

    As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device -SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 355,000 business and public sector customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.

    For more information, financial community only:

    Stefan Gruber +49 (6227) 7-44872 investor@sap.com, CET Follow SAP Investor Relations on Twitter at @sapinvestor.

    For more information, press only:

    Nicola Leske

    +49 (6227) 7-50852

    nicola.leske@sap.com, CET

    Daniel Reinhardt

    +49 (6227) 7-40201

    daniel.reinhardt@sap.com, CET

    Rajiv Sekhri

    +49 (6227) 7-74871

    rajiv.sekhri@sap.com, CET

    For customers interested in learning more about SAP products:

    Global Customer Center: +49 180 534-34-24

    United States Only: +1 (800) 872-1SAP (+1-800-872-1727)

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    Financial and Non-Financial Key Facts (IFRS and Non-IFRS)

    € millions, unless otherwise stated

    Q1 2016

    Q2 2016

    Q3 2016

    Q4 2016

    TY 2016

    Q1 2017

    Q2 2017

    Revenues

    Cloud subscriptions and support (IFRS)

    677

    720

    769

    827

    2,993

    905

    932

    Cloud subscriptions and support (non-IFRS)

    678

    721

    769

    827

    2,995

    906

    932

    % change -yoy

    33

    30

    28

    31

    30

    34

    29

    % change constant currency -yoy

    33

    33

    29

    29

    31

    30

    27

    Software licenses (IFRS)

    609

    1,040

    1,034

    2,177

    4,860

    691

    1,090

    Software licenses (non-IFRS)

    609

    1,042

    1,034

    2,177

    4,862

    691

    1,090

    % change -yoy

    -13

    6

    2

    1

    1

    13

    5

    % change constant currency -yoy

    -10

    10

    2

    0

    1

    10

    4

    Software support (IFRS)

    2,564

    2,598

    2,653

    2,756

    10,571

    2,731

    2,736

    Software support (non-IFRS)

    2,564

    2,598

    2,653

    2,756

    10,572

    2,731

    2,736

    % change -yoy

    5

    3

    6

    6

    5

    7

    5

    % change constant currency -yoy

    5

    6

    6

    5

    6

    3

    4

    Software licenses and support (IFRS)

    3,172

    3,639

    3,686

    4,933

    15,431

    3,422

    3,826

    Software licenses and support (non-IFRS)

    3,173

    3,640

    3,687

    4,934

    15,434

    3,422

    3,826

    % change -yoy

    1

    4

    5

    4

    3

    8

    5

    % change constant currency -yoy

    2

    7

    5

    3

    4

    5

    4

    Cloud and software (IFRS)

    3,850

    4,359

    4,455

    5,760

    18,424

    4,328

    4,757

    Cloud and software (non-IFRS)

    3,851

    4,361

    4,456

    5,761

    18,428

    4,328

    4,758

    % change -yoy

    5

    7

    8

    7

    7

    12

    9

    % change constant currency -yoy

    6

    11

    9

    6

    8

    9

    8

    Total revenue (IFRS)

    4,727

    5,237

    5,375

    6,724

    22,062

    5,285

    5,782

    Total revenue (non-IFRS)

    4,728

    5,239

    5,375

    6,724

    22,067

    5,285

    5,782

    % change -yoy

    5

    5

    8

    6

    6

    12

    10

    % change constant currency -yoy

    6

    9

    8

    5

    7

    8

    9

    Share of predictable revenue (IFRS, in %)

    69

    63

    64

    53

    61

    69

    63

    Share of predictable revenue (non-IFRS, in %)

    69

    63

    64

    53

    61

    69

    63

    Profits

    Operating profit (IFRS)

    813

    1,269

    1,103

    1,950

    5,135

    673

    926

    Operating profit (non-IFRS)

    1,104

    1,516

    1,638

    2,375

    6,633

    1,198

    1,570

    % change

    5

    9

    1

    4

    4

    8

    4

    % change constant currency

    4

    11

    1

    2

    4

    2

    3

    Profit after tax (IFRS)

    570

    813

    725

    1,526

    3,634

    530

    666

    Profit after tax (non-IFRS)

    763

    979

    1,089

    1,826

    4,658

    887

    1,120

    % change

    9

    2

    -7

    9

    3

    16

    14

    Margins

    Cloud subscriptions and support gross margin (IFRS, in %)

    57.0

    56.6

    56.3

    54.8

    56.1

    57.7

    56.0

    Cloud subscriptions and support gross margin (non-IFRS, in %)

    65.9

    64.8

    64.5

    62.7

    64.4

    64.6

    62.4

    Software license and support gross margin (IFRS, in %)

    84.2

    86.1

    85.4

    87.1

    85.9

    83.3

    85.3

    Software license and support gross margin (non-IFRS, in %)

    85.9

    87.4

    87.4

    88.4

    87.4

    85.1

    86.6

    Cloud and software gross margin (IFRS, in %)

    79.4

    81.2

    80.4

    82.4

    81.0

    77.9

    79.6

    Cloud and software gross margin (non-IFRS, in %)

    82.3

    83.6

    83.4

    84.7

    83.7

    80.8

    81.8

    Gross margin (IFRS, in %)

    66.9

    70.4

    69.3

    73.0

    70.2

    66.7

    69.0

    Gross margin (non-IFRS, in %)

    69.6

    72.6

    72.7

    75.5

    72.9

    69.9

    71.5

    Operating margin (IFRS, in %)

    17.2

    24.2

    20.5

    29.0

    23.3

    12.7

    16.0

    Operating margin (non-IFRS, in %)

    23.4

    28.9

    30.5

    35.3

    30.1

    22.7

    27.2

    AT&S segment -Cloud subscriptions and support gross margin (in

    %)

    54

    51

    51

    48

    50

    52

    49

    AT&S segment -Gross margin (in %)

    70

    73

    74

    76

    73

    70

    72

    AT&S segment -Segment margin (in %)

    34

    39

    40

    45

    40

    32

    37

    € millions, unless otherwise stated

    Q1 2016

    Q2 2016

    Q3 2016

    Q4 2016

    TY 2016

    Q1 2017

    Q2 2017

    SAP BN segment -Cloud subscriptions and support gross margin (in %)

    75

    76

    77

    75

    76

    77

    77

    SAP BN segment -Gross margin (in %)

    67

    68

    68

    66

    67

    68

    68

    SAP BN segment -Segment margin (in %)

    17

    18

    20

    16

    18

    16

    17

    Key Profit Ratios

    Effective tax rate (IFRS, in %)

    23.3

    28.9

    28.4

    22.3

    25.3

    20.6

    26.6

    Effective tax rate (non-IFRS, in %)

    26.2

    29.6

    29.7

    23.5

    26.8

    25.7

    27.8

    Earnings per share, basic (IFRS, in €)

    0.48

    0.68

    0.61

    1.27

    3.04

    0.43

    0.56

    Earnings per share, basic (non-IFRS, in €)

    0.64

    0.82

    0.91

    1.53

    3.90

    0.73

    0.94

    Order Entry

    New Cloud Bookings

    145

    255

    265

    483

    1,147

    215

    340

    Deferred cloud subscriptions and support revenue (IFRS, quarter end)

    953

    1,003

    1,081

    1,271

    1,271

    1,376

    1,293

    Orders -Number of on-premise software deals (in transactions)

    12,884

    14,468

    13,048

    16,891

    57,291

    13,115

    14,361

    Share of orders greater than € 5 million based on total software order entry volume (in %)

    17

    29

    26

    34

    29

    27

    31

    Share of orders smaller than € 1 million based on total software order entry volume (in %)

    48

    38

    40

    35

    38

    46

    40

    Liquidity and Cash Flow

    Net cash flows from operating activities

    2,482

    439

    707

    1,000

    4,628

    2,872

    642

    Free cash flow

    2,313

    202

    446

    665

    3,627

    2,581

    322

    % of total revenue (IFRS)

    49

    4

    8

    10

    16

    49

    6

    % of profit after tax (IFRS)

    406

    25

    61

    44

    100

    487

    48

    Group liquidity, gross

    5,853

    4,347

    4,388

    4,673

    4,673

    7,345

    4,927

    Group debt

    -9,080

    -8,593

    -8,134

    -7,826

    -7,826

    -7,805

    -6,716

    Group liquidity, net

    -3,227

    -4,245

    -3,746

    -3,153

    -3,153

    -460

    -1,789

    Days' sales outstanding (DSO, in days)1)

    72

    73

    74

    74

    74

    72

    72

    Financial Position

    Cash and cash equivalents

    5,743

    4,206

    4,112

    3,702

    3,702

    5,937

    4,236

    Goodwill

    21,922

    22,354

    22,279

    23,311

    23,311

    23,091

    21,949

    Total assets

    42,884

    41,788

    41,604

    44,277

    44,277

    47,724

    42,900

    Equity ratio (total equity in % of total assets)

    53

    55

    57

    60

    60

    56

    57

    Non-Financials

    Number of employees (quarter end)2)

    78,230

    79,962

    82,426

    84,183

    84,183

    85,751

    87,114

    Employee retention (in %, rolling 12 months)

    92.0

    92.6

    93.4

    93.7

    93.7

    94.1

    94.3

    Women in management (in %, quarter end)

    23.6

    24.1

    24.3

    24.5

    24.5

    24.8

    25.0

    Greenhouse gas emissions (in kilotons)

    120

    95

    85

    80

    380

    100

    55

    1) Days' sales outstanding measures the length of time it takes to collect receivables. SAP calculates DSO by dividing the average invoiced accounts receivables balance of the last 12 months by the average monthly sales of the last 12 months.

    2) In full-time equivalents

    Due to rounding, numbers may not add up precisely.

    Consolidated Income Statements of SAP Group (IFRS) - Quarter

    € millions, unless otherwise stated Q2 2017Q2 2016∆ in %

    Cloud subscriptions and support

    932

    720

    29

    Software licenses

    1,090

    1,040

    5

    Software support

    2,736

    2,598

    5

    Software licenses and support

    3,826

    3,639

    5

    Cloud and software

    4,757

    4,359

    9

    Services

    1,024

    878

    17

    Total revenue

    5,782

    5,237

    10

    Cost of cloud subscriptions and support

    -410

    -312

    31

    Cost of software licenses and support

    -563

    -507

    11

    Cost of cloud and software

    -972

    -819

    19

    Cost of services

    -822

    -733

    12

    Total cost of revenue

    -1,794

    -1,552

    16

    Gross profit

    3,987

    3,685

    8

    Research and development

    -842

    -710

    19

    Sales and marketing

    -1,707

    -1,470

    16

    General and administration

    -278

    -229

    21

    Restructuring

    -237

    -11

    >100

    Other operating income/expense, net

    3

    4

    -24

    Total operating expenses

    -4,856

    -3,968

    22

    Operating profit9261,269 27

    Other non-operating income/expense, net

    8

    -101

    Finance income

    36

    38 -6

    Finance costs

    -62

    -62 0

    Financial income, net

    -26

    -23 10

    Income tax expense

    -242

    -331-27

    Profit before tax9081,144 21

    Profit after tax666813 18

    Attributable to owners of parent

    668

    816

    -18

    Attributable to non-controlling interests

    -2

    -3

    -35

    Earnings per share, basic (in €)1)

    0.56

    0.68

    -18

    Earnings per share, diluted (in €)1)

    0.56

    0.68

    -18

    1) For the three months ended June 30, 2017 and 2016, the weighted average number of shares was 1,199 million (diluted 1,200 million) and 1,198 million (diluted: 1,199 million), respectively (treasury stock excluded).

    Due to rounding, numbers may not add up precisely.

    Consolidated Income Statements of SAP Group (IFRS) - Half Year

    € millions, unless otherwise statedQ1-Q2 2017

    Q1-Q2 2016

    ∆ in %

    Cloud subscriptions and support

    1,837

    1,397

    31

    Software licenses

    1,781

    1,649

    8

    Software support

    5,467

    5,162

    6

    Software licenses and support

    7,248

    6,811

    6

    Cloud and software

    9,085

    8,208

    11

    Services

    1,981

    1,755

    13

    Total revenue

    11,066

    9,964

    11

    Cost of cloud subscriptions and support

    -793

    -603

    31

    Cost of software licenses and support

    -1,134

    -1,007

    13

    Cost of cloud and software

    -1,927

    -1,610

    20

    Cost of services

    -1,628

    -1,506

    8

    Total cost of revenue

    -3,555

    -3,116

    14

    Gross profit

    7,512

    6,848

    10

    Research and development

    -1,694

    -1,419

    19

    Sales and marketing

    -3,415

    -2,865

    19

    General and administration

    -569

    -460

    24

    Restructuring

    -242

    -22

    >100

    Other operating income/expense, net

    8

    -1

    Total operating expenses

    -9,467

    -7,882

    20

    Operating profit1,5992,082 23

    Other non-operating income/expense, net

    -10

    -136-93

    Finance income

    143

    73 94

    Finance costs

    -156

    -132 18

    Financial income, net

    -13

    -59-78

    Income tax expense

    -379

    -504-25

    Profit before tax1,5761,887 16

    Profit after tax1,1971,382 13

    Attributable to owners of parent

    1,189

    1,388 -14

    Attributable to non-controlling interests

    7

    -5

    Earnings per share, basic (in €)1)

    0.99

    1.16 -14

    Earnings per share, diluted (in €)1)

    0.99

    1.16 -14

    1) For the six months ended June 30, 2017 and 2016, the weighted average number of shares was 1,199 million (diluted 1,199 million) and 1,198 million (diluted: 1,199 million), respectively (treasury stock excluded).

    Due to rounding, numbers may not add up precisely.

    Consolidated Statements of Financial Position of SAP Group (IFRS)

    as at June 30, 2017 and December 31, 2016

    € millions 20172016

    Cash and cash equivalents

    4,236

    3,702

    Other financial assets

    868

    1,124

    Trade and other receivables

    5,408

    5,924

    Other non-financial assets

    751

    581

    Tax assets

    375

    233

    Total current assets11,63811,564

    Goodwill

    21,949

    23,311

    Intangible assets

    3,273

    3,786

    Property, plant, and equipment

    2,719

    2,580

    Other financial assets

    1,497

    1,358

    Trade and other receivables

    117

    126

    Other non-financial assets

    557

    532

    Tax assets

    441

    450

    Deferred tax assets

    710

    571

    Total non-current assets

    31,263

    32,713

    Total assets

    42,900

    44,277

    € millions 20172016

    Trade and other payables

    1,142

    1,281

    Tax liabilities

    288

    316

    Financial liabilities

    863

    1,813

    Other non-financial liabilities

    2,758

    3,699

    Provisions

    369

    183

    Deferred income

    4,898

    2,383

    Total current liabilities10,3189,674

    Trade and other payables

    124

    127

    Tax liabilities

    436

    365

    Financial liabilities

    6,260

    6,481

    Other non-financial liabilities

    545

    461

    Provisions

    235

    217

    Deferred tax liabilities

    380

    411

    Deferred income

    78

    143

    Total non-current liabilities

    8,058

    8,205

    Total liabilities

    18,376

    17,880

    Issued capital

    1,229

    1,229

    Share premium

    565

    599

    Retained earnings

    22,004

    22,302

    Other components of equity

    1,812

    3,346

    Treasury shares

    -1,091

    -1,099

    Equity attributable to owners of parent

    24,518

    26,376

    Non-controlling interests

    7

    21

    Total equity

    24,525

    26,397

    Total equity and liabilities

    42,900

    44,277

    Due to rounding, numbers may not add up precisely.

    Consolidated Statements of Cash Flows of SAP Group (IFRS)

    € millionsQ1-Q2 2017 Q1-Q2 2016

    Profit after tax1,1971,382

    Adjustments to reconcile profit after tax to net cash flows from operating activities:

    Depreciation and amortization

    642

    615

    Income tax expense

    379

    504

    Financial income, net

    13

    59

    Decrease/increase in sales and bad debt allowances on trade receivables

    -4

    60

    Other adjustments for non-cash items

    -28

    12

    Decrease/increase in trade and other receivables

    303

    114

    Decrease/increase in other assets

    -312

    -309

    Decrease/increase in trade payables, provisions, and other liabilities

    -634

    -1,165

    Decrease/increase in deferred income

    2,722

    2,493

    Interest paid

    -125

    -120

    Interest received

    41

    36

    Income tax paid, net of refunds

    -680

    -760

    Net cash flows from operating activities3,5142,921

    Business combinations, net of cash and cash equivalents acquired

    -22

    -16

    Purchase of intangible assets or property, plant, and equipment

    -610

    -406

    Proceeds from sales of intangible assets or property, plant, and equipment

    47

    33

    Purchase of equity or debt instruments of other entities

    -1,843

    -320

    Proceeds from sales of equity or debt instruments of other entities

    2,064

    308

    Net cash flows from investing activities-365401

    Dividends paid

    -1,499

    -1,378

    Dividends paid on non-controlling interests

    -23

    0

    Proceeds from reissuance of treasury shares

    0

    15

    Proceeds from borrowings

    18

    1

    Repayments of borrowings

    -1,003

    -544

    Transactions with non-controlling interests

    0

    3

    Net cash flows from financing activities-2,506-1,902

    Effect of foreign currency rates on cash and cash equivalents

    -108

    177

    Net decrease/increase in cash and cash equivalents

    534

    796

    Cash and cash equivalents at the beginning of the period

    3,702

    3,411

    Cash and cash equivalents at the end of the period

    4,236

    4,206

    Due to rounding, numbers may not add up precisely.

    Cloud subscriptions and support -SaaS/PaaS1)‌

    376

    368

    273

    38

    35

    Cloud subscriptions and support -IaaS2)

    81

    80

    48

    67

    65

    Cloud subscriptions and support

    457

    448

    321

    42

    40

    Software licenses

    1,056

    1,054

    1,025

    3

    3

    Software support

    2,705

    2,668

    2,572

    5

    4

    Software licenses and support

    3,761

    3,722

    3,596

    5

    4

    Cloud and software

    4,218

    4,171

    3,917

    8

    6

    Services

    890

    874

    827

    8

    6

    Total segment revenue

    5,109

    5,044

    4,745

    8

    6

    Cost of cloud subscriptions and support -SaaS/PaaS1)

    -159

    -156

    -106

    51

    48

    Cost of cloud subscriptions and support -IaaS2)

    -74

    -73

    -52

    43

    41

    Cost of cloud subscriptions and support

    -234

    -229

    -158

    48

    46

    Cost of software licenses and support

    -489

    -480

    -463

    6

    4

    Cost of cloud and software

    -722

    -709

    -620

    16

    14

    Cost of services

    -712

    -701

    -671

    6

    4

    Total cost of revenue

    -1,434

    -1,410

    -1,292

    11

    9

    Segment gross profit

    3,674

    3,634

    3,453

    6

    5

    Other segment expenses

    -1,776

    -1,755

    -1,591

    12

    10

    Segment profit

    1,899

    1,879

    1,862

    2

    1

    Segment Reporting - Quarter

    Applications, Technology & Services

    € millions, unless otherwise stated

    Q2 2017

    Q2 2016

    ∆ in %

    ∆ in %

    Actual Currency

    Constant Currency

    Actual Currency

    Actual Currency

    Constant Currency

    Margins

    Cloud subscriptions and support gross margin -SaaS/PaaS1)(in %)

    58

    58

    61

    -4pp

    -4pp

    Cloud subscriptions and support gross margin -IaaS2)(in %)

    8

    8

    -8

    16pp

    16pp

    Cloud subscriptions and support gross margin (in %)

    49

    49

    51

    -2pp

    -2pp

    Gross margin (in %)

    72

    72

    73

    -1pp

    -1pp

    Segment margin (in %)

    37

    37

    39

    -2pp

    -2pp

    1) Software as a Service/Platform as a Service

    2) Infrastructure as a Service

    Due to rounding, numbers may not add up precisely.

    Cloud subscriptions and support -SaaS/PaaS1)

    461

    451

    389

    19

    16

    Cloud subscriptions and support -IaaS2)

    0

    0

    0

    NA

    NA

    Cloud subscriptions and support

    461

    451

    389

    19

    16

    Software licenses

    0

    0

    0

    63

    66

    Software support

    5

    5

    7

    -33

    -37

    Software licenses and support

    5

    5

    7

    -32

    -37

    Cloud and software

    466

    455

    396

    18

    15

    Services

    104

    103

    72

    45

    43

    Total segment revenue

    570

    558

    468

    22

    19

    Cost of cloud subscriptions and support -SaaS/PaaS1)

    -106

    -104

    -92

    15

    13

    Cost of cloud subscriptions and support -IaaS2)

    0

    0

    0

    NA

    NA

    Cost of cloud subscriptions and support

    -106

    -104

    -92

    15

    13

    Cost of software licenses and support

    -1

    -1

    0

    >100

    >100

    Cost of cloud and software

    -107

    -105

    -92

    16

    14

    Cost of services

    -75

    -74

    -60

    26

    24

    Total cost of revenue

    -183

    -179

    -152

    20

    18

    Segment gross profit

    388

    379

    316

    23

    20

    Other segment expenses

    -290

    -285

    -231

    26

    23

    Segment profit

    97

    94

    85

    15

    11

    SAP Business Network

    € millions, unless otherwise stated

    Q2 2017

    Q2 2016

    ∆ in %

    ∆ in %

    Actual Currency

    Constant Currency

    Actual Currency

    Actual Currency

    Constant Currency

    Margins

    Cloud subscriptions and support gross margin -SaaS/PaaS1)(in %)

    77 77

    76 1pp 1pp

    Cloud subscriptions and support gross margin -IaaS2)(in %)

    NA NA

    NA NA NA

    Cloud subscriptions and support gross margin (in %)

    77 77

    76 1pp 1pp

    Gross margin (in %)

    68 68

    68 0pp 0pp

    Segment margin (in %)

    17 17

    18 -1pp -1pp

    1) Software as a Service/Platform as a Service

    2) Infrastructure as a Service

    Due to rounding, numbers may not add up precisely.

    Reconciliation of Cloud Subscription Revenues and Margins

    € millions, unless otherwise stated Q2 2017Q2 2016∆ in %∆ in %

    Actual Currency

    Constant Currency

    Actual Currency

    Actual Currency

    Constant Currency

    Cloud subscriptions and support revenue -SaaS/PaaS1)

    SAP Business Network segment

    461 451

    389 19 16

    Other

    389 382

    284 37 34

    Total

    851 833

    673 26 24

    Cloud subscriptions and support revenue -IaaS2)

    81 80

    48 67 65

    Cloud subscriptions and support revenue

    932 913

    721 29 27

    Cloud subscriptions and support gross margin -SaaS/PaaS1)(in %)

    SAP Business Network segment

    77 77

    76 1pp 1pp

    Other

    56 57

    61 -5pp -4pp

    Total

    68 68

    70 -2pp -2pp

    Cloud subscriptions and support gross margin -IaaS2)(in %)

    8 8

    -8 16pp 16pp

    Cloud subscriptions and support gross margin (in %)

    62 63

    65 -2pp -2pp

    1) Software as a Service/Platform as a Service

    2) Infrastructure as a Service

    Due to rounding, numbers may not add up precisely.

    Cloud subscriptions and support -SaaS/PaaS1)‌

    728

    710

    527

    38

    35

    Cloud subscriptions and support -IaaS2)

    158

    155

    89

    76

    73

    Cloud subscriptions and support

    885

    865

    616

    44

    40

    Software licenses

    1,731

    1,706

    1,616

    7

    6

    Software support

    5,410

    5,289

    5,112

    6

    3

    Software licenses and support

    7,141

    6,995

    6,728

    6

    4

    Cloud and software

    8,027

    7,860

    7,344

    9

    7

    Services

    1,745

    1,706

    1,630

    7

    5

    Total segment revenue

    9,772

    9,566

    8,973

    9

    7

    Cost of cloud subscriptions and support -SaaS/PaaS1)

    -299

    -290

    -192

    56

    51

    Cost of cloud subscriptions and support -IaaS2)

    -142

    -140

    -102

    39

    36

    Cost of cloud subscriptions and support

    -441

    -430

    -294

    50

    46

    Cost of software licenses and support

    -997

    -979

    -925

    8

    6

    Cost of cloud and software

    -1,438

    -1,409

    -1,219

    18

    16

    Cost of services

    -1,398

    -1,372

    -1,348

    4

    2

    Total cost of revenue

    -2,836

    -2,781

    -2,567

    10

    8

    Segment gross profit

    6,936

    6,785

    6,406

    8

    6

    Other segment expenses

    -3,549

    -3,488

    -3,111

    14

    12

    Segment profit

    3,387

    3,297

    3,295

    3

    0

    Segment Reporting - Half Year

    Applications, Technology & Services

    € millions, unless otherwise stated

    Q1-Q2 2017

    Q1-Q2 2016

    ∆ in %

    ∆ in %

    Actual Currency

    Constant Currency

    Actual Currency

    Actual Currency

    Constant Currency

    Margins

    Cloud subscriptions and support gross margin -SaaS/PaaS1)(in %)

    59

    59

    64

    -5pp

    -4pp

    Cloud subscriptions and support gross margin -IaaS2)(in %)

    10

    10

    -14

    24pp

    24pp

    Cloud subscriptions and support gross margin (in %)

    50

    50

    52

    -2pp

    -2pp

    Gross margin (in %)

    71

    71

    71

    -0pp

    -0pp

    Segment margin (in %)

    35

    34

    37

    -2pp

    -2pp

    1) Software as a Service/Platform as a Service

    2) Infrastructure as a Service

    Due to rounding, numbers may not add up precisely.

    Cloud subscriptions and support -SaaS/PaaS1)

    925

    899

    761

    22

    18

    Cloud subscriptions and support -IaaS2)

    0

    0

    0

    NA

    NA

    Cloud subscriptions and support

    925

    899

    761

    22

    18

    Software licenses

    0

    0

    0

    Software support

    11

    11

    14

    -26

    -25

    Software licenses and support

    11

    11

    14

    -25

    -25

    Cloud and software

    936

    910

    776

    21

    17

    Services

    202

    198

    143

    41

    38

    Total segment revenue

    1,138

    1,107

    919

    24

    21

    Cost of cloud subscriptions and support -SaaS/PaaS1)

    -213

    -208

    -184

    16

    13

    Cost of cloud subscriptions and support -IaaS2)

    0

    0

    0

    NA

    NA

    Cost of cloud subscriptions and support

    -213

    -208

    -184

    16

    13

    Cost of software licenses and support

    -2

    -2

    0

    >100

    >100

    Cost of cloud and software

    -215

    -209

    -184

    17

    14

    Cost of services

    -152

    -149

    -116

    31

    29

    Total cost of revenue

    -367

    -358

    -300

    22

    19

    Segment gross profit

    771

    749

    619

    25

    21

    Other segment expenses

    -582

    -568

    -459

    27

    24

    Segment profit

    189

    181

    160

    18

    13

    SAP Business Network

    € millions, unless otherwise stated

    Q1-Q2 2017

    Q1-Q2 2016

    ∆ in %

    ∆ in %

    Actual Currency

    Constant Currency

    Actual Currency

    Actual Currency

    Constant Currency

    Margins

    Cloud subscriptions and support gross margin -SaaS/PaaS1)(in %)

    77

    77

    76

    1pp

    1pp

    Cloud subscriptions and support gross margin -IaaS2)(in %)

    NA

    NA

    NA

    NA

    NA

    Cloud subscriptions and support gross margin (in %)

    77

    77

    76

    1pp

    1pp

    Gross margin (in %)

    68

    68

    67

    0pp

    0pp

    Segment margin (in %)

    17

    16

    17

    -1pp

    -1pp

    1) Software as a Service/Platform as a Service

    2) Infrastructure as a Service

    Due to rounding, numbers may not add up precisely.

    Reconciliation of Cloud Subscription Revenues and Margins

    € millions, unless otherwise statedQ1-Q2 2017 Q1-Q2 2016

    ∆ in %∆ in %

    Actual Currency

    Constant Currency

    Actual Currency

    Actual Currency

    Constant Currency

    Cloud subscriptions and support revenue -SaaS/PaaS1)

    SAP Business Network segment

    925

    899

    761

    22

    18

    Other

    755

    737

    548

    38

    35

    Total

    1,680

    1,636

    1,309

    28

    25

    Cloud subscriptions and support revenue -IaaS2)

    158

    155

    89

    76

    73

    Cloud subscriptions and support revenue

    1,837

    1,791

    1,399

    31

    28

    Cloud subscriptions and support gross margin -SaaS/PaaS1)(in %)

    SAP Business Network segment

    77

    77

    76

    1pp

    1pp

    Other

    58

    59

    64

    -5pp

    -5pp

    Total

    69

    69

    71

    -2pp

    -2pp

    Cloud subscriptions and support gross margin -IaaS2)(in %)

    10

    10

    -14

    24pp

    24pp

    Cloud subscriptions and support gross margin (in %)

    63

    64

    65

    -2pp

    -2pp

    1) Software as a Service/Platform as a Service

    2) Infrastructure as a Service

    Due to rounding, numbers may not add up precisely.

    Reconciliation from Non-IFRS Numbers to IFRS Numbers - Quarter

    € millions, unless otherwise stated Q2 2017 Q2 2016 ∆in %

    IFRS Adj.1)Non- IFRS1) Currency Impact2) Non-IFRS Constant Currency2)

    IFRS Adj.1)Non- IFRS1)

    IFRS Non- IFRS1)

    Non-IFRS

    Constant Currency2)

    Revenue Numbers

    Cloud subscriptions and support

    932

    0

    932

    -19

    913

    720

    1

    721

    29

    29

    27

    Software licenses

    1,090

    0

    1,090

    -3

    1,087

    1,040

    2

    1,042

    5

    5

    4

    Software support

    2,736

    0

    2,736

    -39

    2,697

    2,598

    0

    2,598

    5

    5

    4

    Software licenses and support

    3,826

    0

    3,826

    -42

    3,784

    3,639

    2

    3,640

    5

    5

    4

    Cloud and software

    4,757

    0

    4,758

    -61

    4,696

    4,359

    2

    4,361

    9

    9

    8

    Services

    1,024

    0

    1,024

    -18

    1,006

    878

    0

    878

    17

    17

    15

    Total revenue

    5,782

    0

    5,782

    -80

    5,702

    5,237

    2

    5,239

    10

    10

    9

    Operating Expense Numbers

    Cost of cloud subscriptions and support

    -410

    59

    -350

    -312

    59

    -254

    31

    38

    Cost of software licenses and support

    -563

    49

    -514

    -507

    47

    -460

    11

    12

    Cost of cloud and software

    -972

    108

    -865

    -819

    106

    -713

    19

    21

    Cost of services

    -822

    38

    -784

    -733

    12

    -721

    12

    9

    Total cost of revenue

    -1,794

    146

    -1,648

    -1,552

    118

    -1,434

    16

    15

    Gross profit

    3,987

    146

    4,133

    3,685

    120

    3,805

    8

    9

    Research and development

    -842

    65

    -777

    -710

    21

    -689

    19

    13

    Sales and marketing

    -1,707

    164

    -1,544

    -1,470

    82

    -1,388

    16

    11

    General and administration

    -278

    32

    -245

    -229

    12

    -217

    21

    13

    Restructuring

    -237

    237

    0

    -11

    11

    0

    >100

    NA

    Other operating income/expense, net

    3

    0

    3

    4

    0

    4

    -24

    -24

    Total operating expenses

    -4,856

    644

    -4,212

    76

    -4,135

    -3,968

    245

    -3,724

    22

    13

    11

    Profit Numbers

    Operating profit

    926

    644

    1,570

    -3

    1,567

    1,269

    247

    1,516

    -27

    4

    3

    Other non-operating income/expense, net

    8

    0

    8

    -101

    0

    -101

    Finance income

    36

    0

    36

    38

    0

    38

    -6

    -6

    Finance costs

    -62

    0

    -62

    -62

    0

    -62

    0

    0

    Financial income, net

    -26

    0

    -26

    -23

    0

    -23

    10

    10

    Profit before tax

    908

    644

    1,552

    1,144

    247

    1,391

    -21

    12

    Income tax expense

    -242

    -191

    -432

    -331

    -81

    -412

    -27

    5

    Profit after tax666 453 1,120813 167 979-18 14

    Attributable to owners of parent

    668 453 1,122

    816 167 982 -18 14

    Attributable to non-controlling interests

    -2 0-2

    -3 0-3-35-35

    Key Ratios

    Operating margin (in %)

    16.0 27.2 27.5

    24.2 28.9 -8.2pp -1.8pp -1.5pp

    Effective tax rate (in %)3)

    26.6 27.8

    28.9 29.6 -2.3pp -1.8pp

    Earnings per share, basic (in €)

    0.56 0.94

    0.68 0.82 -18 14

    1) Adjustments in the revenue line items are for software support revenue, cloud subscriptions and support revenue, and other similarly recurring revenues that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges, share-based payment expenses, as well as restructuring expenses.

    2) Constant currency revenue and operating income figures are calculated by translating revenue and operating income of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period.

    For a more detailed description of these adjustments and their limitations as well as our constant currency figures, see our Web site www.sap.com/corporate- en/investors/newsandreports/reporting-framework.epx under "Non-IFRS Measures, Adjustments and Full-Year Estimates".

    3) The difference between our effective tax rate (IFRS) and effective tax rate (non-IFRS) in Q2 2017 and Q2 2016 mainly results from tax effects of acquisition- related charges and share-based payment expenses.

    Due to rounding, numbers may not add up precisely.

    Reconciliation from Non-IFRS Numbers to IFRS Numbers - Half Year

    IFRS

    Adj.1)

    Non-

    Currency

    Non-IFRS

    IFRS

    Adj.1)

    Non-

    IFRS

    Non-

    Non-IFRS

    IFRS1)

    Impact2)

    Constant

    IFRS1)

    IFRS1)

    Constant

    Currency2)

    Currency2)

    € millions, unless otherwise stated Q1-Q2 2017Q1-Q2 2016∆ in %

    Revenue Numbers

    Cloud subscriptions and support

    1,837

    0

    1,837

    -47

    1,791

    1,397

    1

    1,399

    31

    31

    28

    Software licenses

    1,781

    0

    1,781

    -26

    1,755

    1,649

    2

    1,651

    8

    8

    6

    Software support

    5,467

    0

    5,467

    -123

    5,345

    5,162

    0

    5,163

    6

    6

    4

    Software licenses and support

    7,248

    0

    7,248

    -148

    7,100

    6,811

    2

    6,813

    6

    6

    4

    Cloud and software

    9,085

    0

    9,085

    -195

    8,891

    8,208

    4

    8,212

    11

    11

    8

    Services

    1,981

    0

    1,981

    -44

    1,938

    1,755

    0

    1,755

    13

    13

    10

    Total revenue

    11,066

    0

    11,067

    -239

    10,828

    9,964

    4

    9,967

    11

    11

    9

    Operating Expense Numbers

    Cost of cloud subscriptions and support

    -793

    122

    -671

    -603

    118

    -485

    31

    38

    Cost of software licenses and support

    -1,134

    110

    -1,024

    -1,007

    99

    -908

    13

    13

    Cost of cloud and software

    -1,927

    232

    -1,695

    -1,610

    217

    -1,393

    20

    22

    Cost of services

    -1,628

    85

    -1,543

    -1,506

    30

    -1,476

    8

    5

    Total cost of revenue

    -3,555

    317

    -3,237

    -3,116

    247

    -2,869

    14

    13

    Gross profit

    7,512

    318

    7,829

    6,848

    250

    7,098

    10

    10

    Research and development

    -1,694

    153

    -1,541

    -1,419

    49

    -1,370

    19

    12

    Sales and marketing

    -3,415

    375

    -3,041

    -2,865

    191

    -2,674

    19

    14

    General and administration

    -569

    82

    -487

    -460

    27

    -433

    24

    13

    Restructuring

    -242

    242

    0

    -22

    22

    0

    >100

    NA

    Other operating income/expense, net

    8

    0

    8

    -1

    0

    -1

    Total operating expenses

    -9,467

    1,168

    -8,299

    164

    -8,135

    -7,882

    535

    -7,348

    20

    13

    11

    Profit Numbers

    Operating profit

    1,599

    1,168

    2,768

    -75

    2,693

    2,082

    538

    2,620

    -23

    6

    3

    Other non-operating income/expense, net

    -10

    0

    -10

    -136

    0

    -136

    -93

    -93

    Finance income

    143

    0

    143

    73

    0

    73

    94

    94

    Finance costs

    -156

    0

    -156

    -132

    0

    -132

    18

    18

    Financial income, net

    -13

    0

    -13

    -59

    0

    -59

    -78

    -78

    Profit before tax

    1,576

    1,168

    2,744

    1,887

    538

    2,425

    -16

    13

    Income tax expense

    -379

    -359

    -738

    -504

    -178

    -683

    -25

    8

    Profit after tax

    1,197

    810

    2,006

    1,382

    360

    1,742

    -13

    15

    Attributable to owners of parent

    1,189

    810

    1,999

    1,388

    360

    1,748

    -14

    14

    Attributable to non-controlling interests

    7

    0

    7

    -5

    0

    -5

    Key Ratios

    Operating margin (in %)

    14.5

    25.0

    24.9

    20.9

    26.3

    -6.4pp

    -1.3pp

    -1.4pp

    Effective tax rate (in %)3)

    24.1

    26.9

    26.7

    28.1

    -2.7pp

    -1.3pp

    Earnings per share, basic (in €)

    0.99

    1.67

    1.16

    1.46

    -14

    14

    1) Adjustments in the revenue line items are for software support revenue, cloud subscriptions and support revenue, and other similarly recurring revenues that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a

    result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges, share-based payment expenses, as well as restructuring expenses.

    2) Constant currency revenue and operating income figures are calculated by translating revenue and operating income of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period.

    For a more detailed description of these adjustments and their limitations as well as our constant currency figures, see our Web site www.sap.com/corporate- en/investors/newsandreports/reporting-framework.epx under "Non-IFRS Measures, Adjustments and Full-Year Estimates".

    3) The difference between our effective tax rate (IFRS) and effective tax rate (non-IFRS) in the first half of 2017 and 2016 mainly results from tax effects of acquisition-related charges and share-based payment expenses.

    Due to rounding, numbers may not add up precisely.

    Non-IFRS Adjustments - Actuals and Estimates

    € millions

    Estimated Amounts for

    Full Year 2017

    Q2 2017

    Q1-Q2 2017

    Q2 2016

    Q1-Q2 2016

    Operating profit (IFRS)

    926

    1,599

    1,269

    2,082

    Revenue adjustments

    0

    0

    2

    4

    Adjustment for acquisition-related charges

    610 to 640

    152

    309

    166

    336

    Adjustment for share-based payment expenses

    900 to 1,150

    254

    618

    67

    177

    Adjustment for restructuring1)

    200 to 250

    237

    242

    11

    22

    Operating expense adjustments

    644

    1,168

    245

    535

    Operating profit adjustments

    644

    1,168

    247

    538

    Operating profit (non-IFRS)

    1,570

    2,768

    1,516

    2,620

    1) Reflects our expectations for restructuring activities in our services and support business

    Non-IFRS Adjustments by Functional Areas

    € millions

    Q2 2017

    Q2 2016

    IFRS

    Acqui- sition- Related

    SBP1)

    Restruc- turing

    Non- IFRS

    IFRS

    Acqui- sition- Related

    SBP1)

    Restruc- turing

    Non- IFRS

    Cost of cloud and software

    -972

    81

    27

    0

    -865

    -819

    97

    9

    0

    -713

    Cost of services

    -822

    2

    36

    0

    -784

    -733

    3

    9

    0

    -721

    Research and development

    -842

    3

    62

    0

    -777

    -710

    2

    19

    0

    -689

    Sales and marketing

    -1,707

    67

    97

    0

    -1,544

    -1,470

    59

    23

    0

    -1,388

    General and administration

    -278

    0

    32

    0

    -245

    -229

    4

    8

    0

    -217

    Restructuring

    -237

    0

    0

    237

    0

    -11

    0

    0

    11

    0

    Other operating income/expense, net

    3

    0

    0

    0

    3

    4

    0

    0

    0

    4

    Total operating expenses

    -4,856

    152

    254

    237

    -4,212

    -3,968

    166

    67

    11

    -3,724

    1) Share-based payments

    IFRS

    Acqui- SBP1)

    Restruc-

    Non-

    IFRS

    Acqui- SBP1)

    Restruc-

    Non-

    sition-

    turing

    IFRS

    sition-

    turing

    IFRS

    Related

    Related

    € millionsQ1-Q2 2017 Q1-Q2 2016

    Cost of cloud and software

    -1,927

    164

    68

    0

    -1,695

    -1,610

    195

    22

    0

    -1,393

    Cost of services

    -1,628

    4

    81

    0

    -1,543

    -1,506

    6

    24

    0

    -1,476

    Research and development

    -1,694

    5

    148

    0

    -1,541

    -1,419

    5

    44

    0

    -1,370

    Sales and marketing

    -3,415

    135

    240

    0

    -3,041

    -2,865

    123

    67

    0

    -2,674

    General and administration

    -569

    1

    81

    0

    -487

    -460

    7

    20

    0

    -433

    Restructuring

    -242

    0

    0

    242

    0

    -22

    0

    0

    22

    0

    Other operating income/expense, net

    8

    0

    0

    0

    8

    -1

    0

    0

    0

    -1

    Total operating expenses

    -9,467

    309

    618

    242

    -8,299

    -7,882

    336

    177

    22

    -7,348

  • Share-based payments

If not presented in a separate line item in our income statement, the restructuring expenses would break down as follows:

€ millions

Q2 2017

Q1-Q2 2017

Q2 2016

Q1-Q2 2016

Cost of cloud and software

104

105

1

2

Cost of services

109

110

2

5

Research and development

16

17

0

3

Sales and marketing

9

10

8

11

General and administration

0

0

0

1

Restructuring expenses

237

242

11

22

Revenue by Region (IFRS and Non-IFRS) - Quarter

Q2 2017

Q2 2016

∆ in %

IFRS Adj.1)Non- Currency

IFRS1)Impact2)

Non-IFRS

Constant Currency2)

IFRS

Adj.1)

Non- IFRS1)

IFRS

Non- IFRS1)

Non-IFRS

Constant Currency2)

€ millions

Cloud subscriptions and support revenue by region

EMEA

249

0

249

0

248

168

0

168

48

48

48

Americas

577

0

577

-15

562

482

0

483

20

19

16

APJ

106

0

106

-3

103

70

0

70

52

52

47

Cloud subscriptions and support revenue

932

0

932

-19

913

720

1

721

29

29

27

Cloud and software revenue by region

EMEA

2,044

0

2,044

-10

2,035

1,872

0

1,872

9

9

9

Americas

1,948

0

1,948

-42

1,906

1,809

2

1,812

8

8

5

APJ

765

0

765

-10

756

678

0

678

13

13

11

Cloud and software revenue

4,757

0

4,758

-61

4,696

4,359

2

4,361

9

9

8

Total revenue by region

Germany

781

0

781

-2

779

681

0

681

15

15

14

Rest of EMEA

1,678

0

1,678

-10

1,668

1,588

0

1,589

6

6

5

Total EMEA

2,459

0

2,459

-12

2,447

2,270

0

2,270

8

8

8

United States

1,914

0

1,915

-41

1,873

1,739

2

1,741

10

10

8

Rest of Americas

480

0

480

-12

468

427

0

427

13

13

10

Total Americas

2,394

0

2,395

-54

2,341

2,165

2

2,167

11

10

8

Japan

252

0

252

3

255

200

0

200

26

26

28

Rest of APJ

676

0

676

-17

659

602

0

602

12

12

9

Total APJ

928

0

928

-14

914

802

0

802

16

16

14

Total revenue

5,782

0

5,782

-80

5,702

5,237

2

5,239

10

10

9

1) Adjustments in the revenue line items are for support revenue, cloud subscriptions and support revenue, and other similarly recurring revenues that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules.

2) Constant currency revenue figures are calculated by translating revenue of the current period using the average exchange rate s from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period.

For a more detailed description of these adjustments and their limitations as well as our constant currency figures, see our Web site www.sap.com/corporate-en/investors/newsandreports/reporting-framework.epx under "Non-IFRS Measures and Estimates".

Due to rounding, numbers may not add up precisely.

Revenue by Region (IFRS and Non-IFRS) - Half Year

€ millions Q1-Q2 2017Q1-Q2 2016∆ in %

IFRS Adj.1)

Non-

Currency

Non-IFRS

IFRS

Adj.1)

Non-

IFRS

Non-

Non-IFRS

IFRS1)

Impact2)

Constant

IFRS1)

IFRS1)

Constant

Currency2)

Currency2)

Cloud subscriptions and support revenue by region

EMEA

479

0

479

-1

478

329

0

329

46

45

45

Americas

1,159

0

1,159

-37

1,122

942

1

943

23

23

19

APJ

200

0

200

-9

191

127

0

127

58

58

51

Cloud subscriptions and support

1,837

0

1,837

-47

1,791

1,397

1

1,399

31

31

28

Cloud and software revenue by region

EMEA

3,892

0

3,892

-44

3,848

3,557

1

3,558

9

9

8

Americas

3,723

0

3,724

-111

3,613

3,393

3

3,396

10

10

6

APJ

1,469

0

1,469

-40

1,429

1,259

0

1,259

17

17

14

Cloud and software revenue

9,085

0

9,085

-195

8,891

8,208

4

8,212

11

11

8

Total revenue by region

Germany

1,455

0

1,455

-2

1,453

1,286

0

1,286

13

13

13

Rest of EMEA

3,250

0

3,250

-48

3,202

3,030

0

3,031

7

7

6

Total EMEA

4,705

0

4,705

-50

4,655

4,316

1

4,317

9

9

8

United States

3,688

0

3,688

-101

3,587

3,344

3

3,347

10

10

7

Rest of Americas

911

0

911

-38

873

798

0

798

14

14

10

Total Americas

4,599

0

4,599

-139

4,460

4,142

3

4,145

11

11

8

Japan

450

0

450

-5

445

369

0

369

22

22

21

Rest of APJ

1,313

0

1,313

-45

1,268

1,137

0

1,137

15

15

12

Total APJ

1,763

0

1,763

-50

1,713

1,506

0

1,506

17

17

14

Total revenue

11,066

0

11,067

-239

10,828

9,964

4

9,967

11

11

9

1) Adjustments in the revenue line items are for support revenue, cloud subscriptions and support revenue, and other similarly recurring revenues that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules.

2) Constant currency revenue figures are calculated by translating revenue of the current period using the average exchange rate s from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period.

For a more detailed description of these adjustments and their limitations as well as our constant currency figures, see our Web site www.sap.com/corporate-en/investors/newsandreports/reporting-framework.epx under "Non-IFRS Measures and Estimates".

Due to rounding, numbers may not add up precisely.

Employees by Region and Functional Areas

30.6.2017

30.6.2016

Full-time equivalents

EMEA

Americas

APJ

Total

EMEA

Americas

APJ

Total

Cloud and software

7,994

3,811

4,880

16,686

6,214

4,054

5,084

15,352

Services

5,281

4,789

4,752

14,821

6,443

4,006

3,738

14,187

Research and development

10,831

5,122

8,270

24,223

9,927

4,501

7,382

21,810

Sales and marketing

9,030

9,044

4,778

22,851

8,109

8,350

4,202

20,661

General and administration

2,708

1,824

1,039

5,572

2,542

1,677

990

5,208

Infrastructure

1,650

845

466

2,961

1,530

772

443

2,745

SAP Group (June 30)

37,494

25,435

24,184

87,114

34,764

23,359

21,838

79,962

Thereof acquisitions 1)

4

13

0

17

25

25

0

50

SAP Group (six months' end average)

36,998

25,234

23,778

86,011

34,284

22,861

21,416

78,561

1) Acquisitions closed between January 1 and June 30 of the respective year

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" andsimilar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

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