UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F
 REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
 SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report……………
For the transition period from_______to_________
Commission file number: 1-14251

SAP SE
(Exact name of Registrant as specified in its charter)
SAP EUROPEAN COMPANY
(Translation of Registrant’s name into English)
Federal Republic of Germany
(Jurisdiction of incorporation or organization)
Dietmar-Hopp-Allee 16
69190 Walldorf
Federal Republic of Germany
(Address of principal executive offices)
Wendy Boufford
c/o SAP Labs
3410 Hillview Avenue, Palo Alto, CA, 94304, United States of America
650-849-4000 (Tel), 650-843-2041 (Fax)
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
American Depositary Shares, each Representing one Ordinary New York Stock Exchange
Share, without nominal value
Ordinary Shares, without nominal value New York Stock Exchange*
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered
by the annual report:
Ordinary Shares, without nominal value: 1,228,504,232 (as of December 31, 2018)**
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes  No 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
Yes  No 
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes  No 
Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such files.)
Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth
company. See definition of “accelerated filer,” “large accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer  Accelerated filer  Non-accelerated filer  Emerging growth company 
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards†
provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its

Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP  International Financial Reporting Standards as issued by the International Accounting Standards Board  Other 
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant
has elected to follow.
Item 17  Item 18 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  No 
* Listed not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares representing such ordinary shares
pursuant to the requirements of the Securities and Exchange Commission.
** Including 34,854,354 treasury shares.

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Introduction ....................................................................................................................................................................................5
Forward-Looking Statements .......................................................................................................................................................5
Performance Management System ............................................................................................................................................. 7

PART I 13
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS ....................................................................... 13
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE...................................................................................................... 13
ITEM 3. KEY INFORMATION........................................................................................................................................................ 13
Selected Financial Data ............................................................................................................................................................... 13
Exchange Rates............................................................................................................................................................................ 14
Dividends ...................................................................................................................................................................................... 14
Risk Factors .................................................................................................................................................................................. 15
ITEM 4. INFORMATION ABOUT SAP ......................................................................................................................................... 24
Strategy and Business Model .................................................................................................................................................... 25
Seasonality .................................................................................................................................................................................. 29
Products, Research & Development, and Services .................................................................................................................. 30
Security, Privacy, and Data Protection ..................................................................................................................................... 36
Customers ................................................................................................................................................................................... 38
Energy and Emissions ................................................................................................................................................................ 39
Intellectual Property, Proprietary Rights and Licenses ............................................................................................................ 41
Description of Property ............................................................................................................................................................... 41
ITEM 4A. UNRESOLVED STAFF COMMENTS .......................................................................................................................... 43
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS ........................................................................................ 43
Operating Results (IFRS)............................................................................................................................................................ 46
Foreign Currency Exchange Rate Exposure ............................................................................................................................. 59
Liquidity and Capital Resources ................................................................................................................................................ 59
Off-Balance Sheet Arrangements ............................................................................................................................................. 63
Contractual Obligations.............................................................................................................................................................. 63
Research and Development ....................................................................................................................................................... 64
Critical Accounting Estimates.................................................................................................................................................... 64
New Accounting Standards not yet Adopted ........................................................................................................................... 64
Expected Developments ............................................................................................................................................................ 64
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES ......................................................................................... 69
Compensation Report ................................................................................................................................................................ 72
Employee ..................................................................................................................................................................................... 88
Share Ownership......................................................................................................................................................................... 89
Share-Based Compensation Plans ............................................................................................................................................ 89
ITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS ........................................................................ 89
ITEM 8. FINANCIAL INFORMATION .......................................................................................................................................... 90
ITEM 9. THE OFFER AND LISTING ............................................................................................................................................ 90
ITEM 10. ADDITIONAL INFORMATION...................................................................................................................................... 90
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .......................................................... 99
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES ..................................................................... 99

PART II 101
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES ............................................................................... 101
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS ................... 101
ITEM 15. CONTROLS AND PROCEDURES ............................................................................................................................... 101
ITEM 16. [RESERVED] ...............................................................................................................................................................102
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT ..............................................................................................................102
ITEM 16B. CODE OF ETHICS .....................................................................................................................................................102
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES ................................................................................................102
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES ................................................... 103
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS .............................. 103
ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT................................................................................ 103

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ITEM 16G. DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES ............................................................................. 103

PART III 106

ITEM 17. FINANCIAL STATEMENTS ........................................................................................................................................ 106
ITEM 18. FINANCIAL STATEMENTS ........................................................................................................................................ 106
ITEM 19. EXHIBITS .................................................................................................................................................................... 106
Signatures .................................................................................................................................................................................. 107
Index to the Consolidated Financial Statements ....................................................................................................................... F1
Report of Independent Registered Public Accounting Firm .................................................................................................... F2
Consolidated Financial Statements IFRS .................................................................................................................................. F4

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Introduction Forward-Looking
SAP SE is a European Company (Societas Europaea, or “SE”) Statements
and is referred to in this report, together with its subsidiaries, as
SAP, or as “Company,” “Group,” “we,” “our,” or “us.” This report contains forward-looking statements and information
In this report: (i) references to “US$,” “$,” or “dollars” are to U.S. based on the beliefs of, and assumptions made by, our management
dollars; (ii) references to ‘‘€” or “euro” are to the euro. Our financial using information currently available to them. Any statements
statements are denominated in euros, which is the currency of our contained in this report that are not historical facts are forward-
home country, Germany. Certain amounts that appear in this report looking statements as defined in the U.S. Private Securities
may not add up because of differences due to rounding. Litigation Reform Act of 1995. We have based these forward-looking
Unless otherwise specified herein, euro financial data have been statements on our current expectations, assumptions, and
converted into dollars at the noon buying rate in New York City for projections about future conditions and events. As a result, our
cable transfers in foreign currencies as certified for customs forward-looking statements and information are subject to
purposes by the Federal Reserve Bank of New York (the “Noon uncertainties and risks. A broad range of uncertainties and risks,
Buying Rate”) on December 31, 2018, which was US$1.1456 per many of which are beyond our control, could cause our actual
€1.00. No representation is made that such euro amounts actually results and performance to differ materially from any projections
represent such dollar amounts or that such euro amounts could expressed in or implied by our forward-looking statements. The
have been or can be converted into dollars at that or any other uncertainties and risks include, but are not limited to:
exchange rate on such date or on any other date. On February 8, – Uncertainty in the global economy, financial markets, social and
2019, the Noon Buying Rate for converting euro to dollars was political instability caused by state-based conflicts, terrorist
US$1.1326 per €1.00. attacks, civil unrest, war, or international hostilities could lead to
Unless the context otherwise requires, references in this report disruptions of our business operations or have a negative impact
to ordinary shares are to SAP SE’s ordinary shares, without nominal on our business, financial position, profit, and cash flows.
value. References in this report to “ADRs” are to SAP SE’s American – Laws, regulatory requirements and standards in Germany, the
Depositary Receipts, each representing one SAP ordinary share. United States, and elsewhere continue to be very stringent. Our
References in this report to “ADSs” are to SAP SE’s American international business activities and processes expose us to
Depositary Shares, which are the deposited securities evidenced by numerous and often conflicting laws and regulations, policies,
the ADRs. standards, or other requirements and sometimes even
SAP, ABAP, Adaptive Server, Advantage Database Server, conflicting regulatory requirements, and to risks that could harm
Afaria, Business ByDesign, BusinessObjects, ByDesign,, Crystal our business, financial position, profit, and cash flows.
Reports, ExpenseIt, PartnerEdge, PowerBuilder, PowerDesigner, – Claims and lawsuits against us, such as for IP infringements, or
Quadrem, R/3, Replication Server, SAP Ariba, SAP BusinessObjects our inability to obtain or maintain adequate licenses for third-
Explorer, SAP Business Workflow, SAP C/4HANA, SAP Concur, SAP party technology, could have an adverse effect on our business,
EarlyWatch, SAP Fieldglass, SAP Fiori, SAP HANA, SAP Jam, SAP financial position, profit, cash flows, and reputation. Moreover,
Leonardo, SAP Lumira, SAP NetWeaver, SAP S/4HANA, SAP similar adverse effects could result if we are unable to adequately
SuccessFactors, SAP Vora, SAPPHIRE, SAPPHIRE NOW, SQL protect or enforce our own intellectual property.
Anywhere, The Best Run SAP, TravelTrax, TripIt, TripLink, TwoGo, – Non-compliance with increasingly complex and stringent,
Web Intelligence and other SAP products and services mentioned sometimes even conflicting, applicable data protection and
herein as well as their respective logos are trademarks or registered privacy laws or failure to adequately meet the contractual
trademarks of SAP SE (or an SAP affiliate company) in Germany requirements of SAP’s customers with respect to our products
and other countries. and services could lead to civil liabilities and fines, as well as loss
Throughout this report, whenever a reference is made to our of customers and damage to SAP’s reputation.
website, such reference does not incorporate by reference into this – Unethical behavior and non-compliance with our integrity
report the information contained on our website. standards due to intentional and fraudulent employee behavior
We intend to make this report and other periodic reports publicly could seriously harm our business, financial position, profit, and
available on our web site (www.sap.com) without charge reputation.
immediately following our filing with the U.S. Securities and – A cybersecurity attack or breach, or undetected security
Exchange Commission (SEC). Such reports are also available on the vulnerabilities in our products, infrastructure, or services, or
website maintained by the SEC (www.sec.gov). We assume no economic espionage could result in significant legal and financial
obligation to update or revise any part of this report, whether as a exposure and have a material adverse effect on our customers,
result of new information, future events or otherwise, unless we are our partners, our financial position, our operations, our
required to do so by law. reputation, and our business in general.
We describe these and other risks and uncertainties in the Risk
Factors section.
If one or more of these uncertainties or risks materializes, or if
management’s underlying assumptions prove incorrect, our actual
results could differ materially from those described in or inferred
from our forward-looking statements and information.

5
 The words “aim,” “anticipate,” “assume,” “believe,” “continue,” undertake no obligation to publicly update or revise any forward-
“could,” “counting on,” “is confident,” “development,” “estimate,” looking statements as a result of new information that we receive
“expect,” “forecast,” “future trends,” “guidance,” “intend,” “may,” about conditions that existed upon issuance of this report, future
“might,” “outlook,” “plan,” “predict,” “project,” “seek,” “should,” events, or otherwise unless we are required to do so by law.
“strategy,” “want,” “will,” “would,” and similar expressions as they This report includes statistical data about the IT industry and
relate to us are intended to identify such forward-looking global economic trends that comes from information published by
statements. Such statements include, for example, those made in sources including International Data Corporation (IDC), Gartner, the
the Operating Results section, our quantitative and qualitative European Central Bank (ECB), and the International Monetary Fund
disclosures about market risk pursuant to the International Financial (IMF). This type of data represents only the estimates of IDC,
Reporting Standards (IFRS), namely IFRS 7 and related statements Gartner, ECB, IMF, and other sources of industry data. SAP does not
in our Notes to the Consolidated Financial Statements; Expected adopt or endorse any of the statistical information provided by
Developments section; Risk Factors section; and other forward- sources such as IDC, Gartner, ECB, IMF, or other similar sources
looking information appearing in other parts of this report. To fully that is contained in this report. The data from these sources is
consider the factors that could affect our future financial results, subject to risks and uncertainties, and subject to change based on
both this report and our Annual Report on Form 20-F should be various factors, including those described above, in the Risk Factors
considered, as well as all of our other filings with the U.S. Securities section, and elsewhere in this report. These and other factors could
and Exchange Commission (SEC). Readers are cautioned not to cause our results to differ materially from those expressed in the
place undue reliance on these forward-looking statements, which estimates made by third parties and SAP. We caution readers not to
speak only as of the date specified or the date of this report. We place undue reliance on this data.

6
Performance Management System
We use various performance measures to manage our customers for offerings that generate cloud subscriptions and
performance with regard to our primary financial objectives, which support revenue. For new cloud bookings we take into
are growth and profitability, and our primary non-financial consideration committed deals only, meaning utilization-based
objectives, which are customer loyalty and employee engagement. payments are not included in this measure. In this way, it is an
We view growth and profitability as indicators of our current indicator of cloud-related sales success in a given period and of
performance, while we see customer loyalty and employee secured future cloud subscriptions and support revenue. We focus
engagement as indicators of our future performance. primarily on the average contract value variant of the new cloud
bookings measure that generally takes into account annualized
Measures to Manage Our Financial amounts for contracts. There are no comparable IFRS measures
Performance for these bookings metrics.
Cloud backlog: In addition to new cloud bookings, we use the
Measures to Manage Our Operating Financial measure “cloud backlog” to evaluate our sales success in the cloud
Performance business. We define cloud backlog as a measure that represents
expected future cloud subscriptions and support revenue that, as
In 2018, we used the following key measures to manage our
operating financial performance: of period end, is contracted but not yet billed.
Cloud subscriptions and support revenue (non-IFRS): This Operating profit (non-IFRS): We use operating profit (non-
IFRS) expressed in both actual currencies and constant currencies
revenue driver comprises the main revenues of our fast-growing
cloud business. Revenue from cloud subscriptions and support to measure our overall operational process efficiency and overall
represents fees earned from providing customers with any of the business performance.
Cloud subscriptions and support gross margin (non-IFRS):
following:
– Software as a service (SaaS) We use our cloud subscriptions and support gross margin (non-
– Platform as a service (PaaS) IFRS) to measure our process efficiency in our cloud business.
Cloud subscriptions and support gross margin (non-IFRS) is the
– Infrastructure as a service (IaaS)
– Premium cloud subscription support beyond regular support ratio of our cloud subscriptions and support gross profit (non-IFRS)
For more information regarding cloud subscriptions and support to cloud subscriptions and support revenue (non-IFRS), expressed
as a percentage.
revenue and a description of these services, see the Notes to the
Consolidated Financial Statements, Note (A.1). Operating margin (non-IFRS): We use operating margin to
We use the cloud subscriptions and support revenue (non-IFRS) measure our overall operational efficiency. Operating margin (non-
IFRS) is the ratio of our operating profit (non-IFRS) to total revenue
measure at both actual currencies and constant currencies.
Cloud and software revenue (non-IFRS): We use cloud and (non-IFRS), expressed as a percentage.
software revenue (non-IFRS) expressed in both actual currencies
Measures to Manage Our Non-Operating
and constant currencies to measure our revenue growth. Our cloud
and software revenue includes cloud subscriptions and support
Financial Performance
revenue plus software licenses and support revenue. Cloud We use the following measures to manage our non-operating
subscriptions and support revenue and software revenue are our financial performance:
key revenue drivers because they tend to affect our other revenue Financial income, net: This measure provides insight into the
streams. Generally, customers that buy software licenses also return on liquid assets and capital investments and the cost of
enter into related support contracts, and these generate recurring borrowed funds. To manage our financial income, net, we focus on
revenue in the form of support revenue after the software sale. cash flow, the composition of our liquid assets and capital
Support contracts cover standardized support services that investment portfolio, and the average rate of interest at which
comprise unspecified future software updates and enhancements. assets are invested. We also monitor average outstanding
Software licenses revenue as well as cloud subscriptions and borrowings and associated finance costs.
support revenue also tend to stimulate services revenue, which is Days Sales Outstanding (DSO): We manage working capital by
earned by providing customers with professional services, controlling the DSO of trade receivables. DSO measures the
premium engagement services, training services, messaging average number of days from the raised invoice to cash receipt
services, and payment services. from the customer. We calculate DSO by dividing the average
Total revenue (non-IFRS): We use total revenue (non-IFRS) to invoiced trade receivables balance of the last 12 months by the
measure our growth at both actual currencies and constant average monthly cash receipt of the last 12 months.
currencies. The total of cloud subscriptions and support revenue
and software support revenue divided by total revenue is the share
Measures to Manage Overall Financial
of more predictable revenue. This measure provides additional
Performance
insight into our sustained business success. We use the following measures to manage our overall financial
New cloud bookings: For our cloud activities, we also look at performance:
new cloud bookings (both in actual currencies and constant Earnings per share (EPS) (IFRS and non-IFRS): EPS measures
currencies). This measure reflects the committed order entry from our overall performance because it captures all operating and non-
new customers and from incremental purchases by existing operating elements of profit as well as income tax expense. It

7
represents the portion of profit after tax allocable to each SAP Value-Based Management
share outstanding. EPS is influenced not only by our operating and
Our holistic view of the performance measures described above,
non-operating business and income taxes but also by the number
together with our associated analyses, comprises the information
of shares outstanding.
we use for value-based management. We use planning and control
Effective tax rate (IFRS and non-IFRS): We define our effective
processes to manage the compilation of these key measures and
tax rate as the ratio of income tax expense to profit before tax,
their availability to our decision-makers across various
expressed as a percentage.
management levels.
Operating, investing, and financing cash flows and free cash
SAP’s long-term strategic plans are the point of reference for
flow: Our consolidated statement of cash flows provides insight
our short-term and midterm planning and controlling processes.
into how we generate and use cash and cash equivalents. When
We initially identify future growth and profitability drivers at a highly
applied in conjunction with the other primary financial statements,
aggregated level. In a first step, the resulting financial plan is
it provides information that helps us evaluate the changes in our
broken down into (i) our deployment models “On Premise,”
net assets, our financial structure (including our liquidity and
“Software as a Service/Platform as a Service,” “Infrastructure as a
solvency), and our ability to affect the amounts and timing of cash
Service,” and “Business Networks”; and (ii) functions such as
flows to adapt to changing circumstances and opportunities. We
development, sales, and administration. In a second step, the
use our free cash flow measure to determine the cash flow
planned total revenues and total expenses are generally allocated
remaining after all expenditures required to maintain or expand our
to the areas of functional responsibility of the individual members
organic business have been paid off. This measure provides
of the Executive Board (the board areas). If a board area represents
management with supplemental information to assess our liquidity
not only a functional department but also has a responsibility for
needs. We calculate free cash flow as net cash from operating
operating segments within this board area (for example, SAP
activities minus purchases (other than purchases made in
Business Network segment and Customer Experience segment),
connection with business combinations) of intangible assets and
the allocation is done at the lower segment level. Budget
property, plant, and equipment.
adjustments may be applied during the year to reflect changes in
priorities, to achieve efficiency targets and to reflect endogenous
Measures to Manage Our Non-Financial and exogenous factors. Such budget adjustments, as well as the
Performance assessment of the Executive Board’s performance, are handled at
In 2018, we used the following key measures to manage our the board area level if the board area is part of a segment, or at the
non-financial performance in the areas of customer loyalty, segment level if the board area comprises several segments. It is
employee engagement, and leadership trust: then the individual board member’s responsibility to break down
Customer Net Promoter Score (Customer NPS): This score the allocated budget adjustments within the segment budget
measures the willingness of our customers to recommend or boundary. Based on an integrated portfolio process running in
promote SAP to others. It is derived from ongoing customer parallel to the budgeting process, we ensure aligned investment
surveys that identifies, on a scale of 0–10, whether a customer is behavior across board areas with regards to specific solutions or
likely to recommend SAP to friends or colleagues, is neutral, or is solution areas. In a final step, customer-facing revenue targets and
unwilling to recommend. We introduced this measure in 2012, as cost of sales and marketing targets are broken down into sales
we are convinced that we can achieve our financial goals only when regions.
our customers are loyal to, and satisfied with, SAP and our Based on our detailed annual plans, we determine the budget for
solutions. To derive the Customer NPS, we start with the the respective year. We also have processes in place to forecast
percentage of “promoters” of SAP, that is, those giving us a score revenue and profit on a quarterly basis, to quantify whether we
of 9 or 10 on a scale of 0–10. We then subtract the percentage of expect to realize our financial goals, and to identify any deviations
“detractors,” that is, those giving us a score of 0 to 6. The method from plan. We continuously monitor the affected units in the Group
ignores “passives,” that is, those giving us a score of 7 or 8. to analyze these developments and define any appropriate actions.
Consequently, the range of achievable scores is –100 to +100, with Our entire network of planning, control, and reporting processes is
the latter being the best achievable score for customer loyalty as implemented in integrated planning and information systems,
measured by the Customer NPS methodology. based on SAP software, across all organizational units so that we
Employee Engagement Index: We use this index to measure can conduct the evaluations and analyses needed to make
the motivation and loyalty of our employees, how proud they are of informed decisions.
our company, and how strongly they identify with SAP. The index is
derived from an annual survey of our employees. Applying this Non-IFRS Financial Measures Cited in
measure is recognition that our growth strategy depends on This Report
engaged employees.
Leadership Trust Score: We use this score to further enhance Explanation of Non-IFRS Measures
accountability and to measure our collective effort to foster a work We disclose certain financial measures such as revenue (non-
environment based on trust. It is derived from a question in our IFRS), expense (non-IFRS), and profit measures (non-IFRS) that
annual global employee survey that gauges employees’ trust in our are not prepared in accordance with IFRS and are therefore
leaders. We measure leadership trust by using the same considered non-IFRS financial measures. Our non-IFRS financial
methodology as we do to compute the Net Promoter Score (NPS). measures may not correspond to non-IFRS financial measures that
other companies report. The non-IFRS financial measures that we

8
report should only be considered in addition to, and not as  Settlements of pre-existing business relationships in
substitutes for, or superior to, our IFRS financial measures. connection with a business combination
We believe that the disclosed supplemental historical and  Acquisition-related third-party expenses
prospective non-IFRS financial information provides useful – Share-based payment expenses
information to investors because management uses this – Restructuring expenses, that is, expenses resulting from
information, in addition to financial data prepared in accordance measures which comply with the definition of restructuring
with IFRS, to attain a more transparent understanding of our past according to IFRS.
performance and our anticipated future results. We use non-IFRS We exclude certain acquisition-related expenses for the purpose
revenue and profit measures consistently in our internal planning of calculating operating profit (non-IFRS), operating margin (non-
and forecasting, reporting, and compensation, as well as in our IFRS), and earnings per share (non-IFRS) when evaluating SAP’s
external communications, as follows: continuing operational performance because these expenses
– Our management primarily uses these non-IFRS measures generally cannot be changed or influenced by management after
rather than IFRS measures as the basis for making financial, the relevant acquisition other than by disposing of the acquired
strategic, and operating decisions. assets. Since management at levels below the Executive Board
– The variable components of our Executive Board members’ and does not influence these expenses, we generally do not consider
employees’ remuneration are based on revenue (non-IFRS), these expenses for the purpose of evaluating the performance of
operating profit (non-IFRS), operating margin (non-IFRS), as management units. For similar reasons, we eliminate share-based
well as new cloud bookings measures rather than the respective payment expenses as these costs are impacted by share price
IFRS measures. developments and other factors outside our control. We also
– The annual budgeting process for all management units is based eliminate restructuring expenses because they are volatile and
on revenue (non-IFRS) and operating profit (non-IFRS) numbers mostly cannot be influenced by management at levels below the
rather than the respective IFRS financial measures. Executive Board.
– All forecast and performance reviews with all senior managers
globally are based on these non-IFRS measures, rather than the
Operating Profit (Non-IFRS), Cloud Subscriptions
and Support Gross Margin (Non-IFRS), Operating
respective IFRS financial measures.
Margin (Non-IFRS), Effective Tax Rate (Non-
– Both our internal performance targets and the guidance we
provide to the capital markets are based on non-IFRS revenue
IFRS), and Earnings per Share (Non-IFRS)
and profit measures rather than the respective IFRS financial Operating profit, cloud subscriptions and support gross margin,
measures. operating margin, effective tax rate, and earnings per share
Our non-IFRS financial measures reflect adjustments based on identified as operating profit (non-IFRS), cloud subscriptions and
the items below, as well as adjustments for the related income tax support gross margin (non-IFRS), operating margin (non-IFRS),
effects. effective tax rate (non-IFRS), and earnings per share (non-IFRS)
have been adjusted from the respective IFRS measures by
Revenue (Non-IFRS) adjusting for the aforementioned revenue (non-IFRS) and operating
Non-IFRS revenue measures have been adjusted from the expenses (non-IFRS) and the income tax effects thereon.
respective IFRS financial measures by including the full amount of
Constant Currencies Information
software support revenue, cloud subscriptions and support
revenue, and other similarly recurring revenue that we are not We believe it is important for investors to have information that
permitted to record as revenue under IFRS due to fair value provides insight into our sales. Revenue measures determined
accounting for the contracts in effect at the time of the respective under IFRS provide information that is useful in this regard.
acquisitions. However, both sales volume and currency effects impact period-
Under IFRS, we record at fair value the contracts in effect at the over-period changes in sales revenue. We do not sell standardized
time entities were acquired. Consequently, our IFRS software units of products and services, so we cannot provide relevant
support revenue, IFRS cloud subscriptions and support revenue, information on sales volume by providing data on the changes in
IFRS cloud and software revenue, and IFRS total revenue for product and service units sold. To provide additional information
periods subsequent to acquisitions do not reflect the full amount of that may be useful to investors in breaking down and evaluating
revenue that would have been recorded by entities acquired by SAP changes in sales volume, we present information about our revenue
had they remained stand-alone entities. Adjusting revenue and various values and components relating to operating profit that
numbers for this revenue impact provides additional insight into are adjusted for foreign currency effects.
the comparability of our ongoing performance across periods. We calculate constant currencies measures by translating
foreign currencies using the average exchange rates from the
Operating Expense (Non-IFRS) comparative period instead of the current period.
Operating expense numbers that are identified as operating
expenses (non-IFRS) have been adjusted by excluding the following
expenses:
– Acquisition-related charges
 Amortization expense/impairment charges for intangibles
acquired in business combinations and certain stand-alone
acquisitions of intellectual property (including purchased in-
process research and development)

9
Free Cash Flow  The remaining acquisition-related charges that we eliminate
Among other measures, we use free cash flow to manage our in deriving our profit (non-IFRS) numbers are likely to recur
overall financial performance. should SAP enter into material business combinations in the
future. Similarly, the restructuring expenses that we
€ millions 2018 2017 ∆ in % eliminate in deriving our profit (non-IFRS) numbers are likely
to recur should SAP perform restructurings in the future.
Net cash flows from operating 4,303 5,045 –15
activities  The revenue adjustment for the fair value accounting of the
acquired entities’ contracts and the expense adjustment for
Purchase of intangible assets and –1,458 –1,275 14
acquisition-related charges do not arise from a common
property, plant, and equipment
(without acquisitions) conceptual basis. This is because the revenue adjustment
aims to improve the comparability of the initial post-
Free cash flow 2,844 3,770 –25
acquisition period with future post-acquisition periods, while
the expense adjustment aims to improve the comparability
Usefulness of Non-IFRS Measures between post-acquisition periods and pre-acquisition
We believe that our non-IFRS measures are useful to investors periods. This should particularly be considered when
for the following reasons: evaluating our operating profit (non-IFRS) and operating
– Our revenue (non-IFRS), expense (non-IFRS), and profit (non- margin (non-IFRS) numbers as these combine our revenue
IFRS) measures, along with the “new cloud bookings” and (non-IFRS) and expenses (non-IFRS) despite the absence of
“cloud backlog” measures (see above) provide investors with a common conceptual basis.
insight into management’s decision making because  Our restructuring charges resulted in significant cash
management uses these measures to run our business and outflows in the past and could do so in the future. The same
make financial, strategic, and operating decisions. We include applies to our share-based payment expense because most
the revenue adjustments outlined above and exclude the of our share-based payments are settled in cash rather than
expense adjustments outlined above when making decisions to shares.
allocate resources. In addition, we use these non-IFRS measures  The valuation of our cash-settled share-based payments
to facilitate comparisons of SAP’s operating performance from could vary significantly from period to period due to the
period to period. fluctuation of our share price and other parameters used in
– The non-IFRS measures provide investors with additional the valuation of these plans.
information that enables a comparison of year-over-year  In the past, we have issued share-based payment awards to
operating performance by eliminating certain direct effects of our employees every year and we intend to continue doing so
acquisitions, share-based compensation plans, and in the future. Thus, our share-based payment expenses are
restructuring plans. recurring although the amounts usually change from period
– Non-IFRS and non-GAAP measures are widely used in the to period.
software industry. In many cases, inclusion of our non-IFRS We believe that constant currencies measures have limitations,
measures may facilitate comparison with our competitors’ particularly as the currency effects that are eliminated constitute a
corresponding non-IFRS and non-GAAP measures. significant element of our revenue and expenses and could
materially impact our performance. Therefore, we limit our use of
Limitations of Non-IFRS Measures constant currencies measures to the analysis of changes in volume
We believe that our non-IFRS financial measures described as one element of the full change in a financial measure. We do not
above have limitations including but not limited to the following: evaluate our results and performance without considering both
– Without being analyzed in conjunction with the corresponding constant currencies and nominal measures of revenue (non-IFRS)
IFRS measures, the non-IFRS measures are not indicative of our and operating profit (non-IFRS) measures on the one hand, and
present and future performance, foremost for the following changes in revenue, operating expenses, operating profit, or other
reasons: measures of financial performance prepared in accordance with
 While our profit (non-IFRS) numbers reflect the elimination of IFRS on the other. We caution the readers of our financial reports to
certain acquisition-related expenses, no eliminations are follow a similar approach by considering nominal and constant
made for the additional revenue or other income that results currencies non-IFRS measures only in addition to, and not as a
from the acquisitions. substitute for or superior to, changes in revenue, operating
 While we adjust for the fair value accounting of the acquired expenses, operating profit, or other measures of financial
entities’ recurring revenue contracts, we do not adjust for the performance prepared in accordance with IFRS.
fair value accounting of deferred compensation items that Despite these limitations, we believe that the presentation of our
result from commissions paid to the acquired company’s non-IFRS measures and the corresponding IFRS measures,
sales force and third parties for closing the respective together with the relevant reconciliations, provide useful
customer contracts. information to management and investors regarding present and
 The acquisition-related amortization expense that we future business trends relating to our financial condition and
eliminate in deriving our profit (non-IFRS) numbers is a results of operations.
recurring expense that will impact our financial performance
in future years.

10
Reconciliations of IFRS to Non-IFRS Financial Measures for the Years 2018 and 2017
€ millions, unless otherwise stated 2018 2017

IFRS Adj. Non-IFRS Currency Non-IFRS IFRS Adj. Non-IFRS

Impact Constant
Currency

Revenue measures

Cloud subscriptions and support 4,993 33 5,027 179 5,205 3,769 2 3,771

Software licenses 4,647 0 4,647 231 4,877 4,872 0 4,872

Software support 10,981 0 10,982 513 11,494 10,908 0 10,908

Software licenses and support 15,628 0 15,629 743 16,372 15,780 0 15,780
Cloud and software 20,622 33 20,655 922 21,577 19,549 3 19,552

Services 4,086 0 4,086 297 4,384 3,912 0 3,912

Total revenue 24,708 33 24,741 1,219 25,961 23,461 3 23,464

Operating expense measures

Cost of cloud subscriptions and support –2,068 213 –1,855 –1,660 233 –1,427

Cost of software licenses and support –2,092 130 –1,962 –2,234 190 –2,044

Cost of cloud and software –4,160 343 –3,817 –3,893 423 –3,471

Cost of services –3,302 151 –3,151 –3,158 166 –2,991

Total cost of revenue –7,462 494 –6,969 –7,051 589 –6,462

Gross profit 17,246 527 17,773 16,410 592 17,001

Research and development –3,624 219 –3,406 –3,352 281 –3,072

Sales and marketing –6,781 589 –6,192 –6,924 700 –6,225

General and administration –1,098 106 –992 –1,075 138 –936

Restructuring –19 19 0 –182 182 0

Other operating income/expense, net –20 0 –20 1 0 1

Total operating expenses –19,005 1,426 –17,579 –902 –18,481 –18,584 1,889 –16,694

Profit numbers

Operating profit 5,703 1,459 7,163 317 7,480 4,877 1,892 6,769

Other non-operating income/expense, net –56 0 –56 –36 0 –36

Finance income 371 0 371 476 0 476

Finance costs –418 0 –418 –288 0 –288

Financial income, net –47 0 –47 188 0 188

Profit before tax 5,600 1,459 7,059 5,029 1,892 6,921

Income tax expense –1,511 –349 –1,860 –983 –592 –1,575

Profit after tax 4,088 1,111 5,199 4,046 1,300 5,346

Attributable to owners of parent 4,083 1,111 5,193 4,008 1,300 5,307

Attributable to non-controlling interests 6 0 6 38 0 38

Key ratios

Operating margin (in %) 23.1 29.0 28.8 20.8 28.9

Effective tax rate (in %) 27.0 26.3 19.5 22.8

Earnings per share, basic (in €) 3.42 4.35 3.35 4.43

Due to rounding, the sum of the numbers presented in the table above might not precisely equal the totals we provide.

11
Non-IFRS Adjustments by Functional Areas
€ millions 2018 2017
1) 1)
IFRS Acqui- SBP Restruc- Non-IFRS IFRS Acqui- SBP Restruc- Non-IFRS
sition- turing sition- turing
Related Related

Cost of cloud and software –4,160 264 78 0 –3,817 –3,893 307 115 0 –3,471

Cost of services –3,302 9 142 0 –3,151 –3,158 8 158 0 –2,991

Research and development –3,624 9 210 0 –3,406 –3,352 11 269 0 –3,072

Sales and marketing –6,781 277 312 0 –6,192 –6,924 258 442 0 –6,225

General and administration –1,098 18 88 0 –992 –1,075 3 135 0 –936

Restructuring –19 0 0 19 0 –182 0 0 182 0

Other operating –20 0 0 0 –20 1 0 0 0 1

income/expense, net

Total operating expenses –19,005 577 830 19 –17,579 –18,584 587 1,120 182 –16,694
1)
Share-based payments

12
PART I ITEM 3. KEY INFORMATION

Selected Financial Data

ITEM 1. IDENTITY OF The following table sets forth our selected consolidated financial

DIRECTORS, SENIOR data as of and for each of the years in the five-year period ended
December 31, 2018. The consolidated financial data has been
MANAGEMENT AND derived from, and should be read in conjunction with, our
Consolidated Financial Statements prepared in accordance with
ADVISERS International Financial Reporting Standards as issued by the
International Accounting Standards Board (IFRS), presented in
Not applicable. “Item 18. Financial Statements” of this report.
Our selected financial data and our Consolidated Financial
Statements are presented in euros, unless otherwise stated.
ITEM 2. OFFER STATISTICS
AND EXPECTED
TIMETABLE
Not applicable.

SELECTED FINANCIAL DATA: IFRS

€ millions, unless otherwise stated 2018 2017 2016 2015 2014
Income Statement Data: Years ended December 31,
Cloud subscriptions and support revenue 4,993 3,769 2,993 2,286 1,087
Software licenses and support revenue 15,628 15,780 15,431 14,928 13,228
Cloud and software revenue 20,622 19,549 18,424 17,214 14,315
Total revenue 24,708 23,461 22,062 20,793 17,560
Operating profit 5,703 4,877 5,135 4,252 4,331
Profit after tax 4,088 4,046 3,629 3,056 3,280
Profit attributable to owners of parent 4,083 4,008 3,642 3,064 3,280
Earnings per share1)
Basic in € 3.42 3.35 3.04 2.56 2.75
Diluted in € 3.42 3.35 3.04 2.56 2.74
Other Data:
Weighted-average number of shares outstanding
Basic 1,194 1,197 1,198 1,197 1,195
Diluted 1,194 1,198 1,199 1,198 1,197
Statement of Financial Position Data: At December 31,
Cash and cash equivalents 8,627 4,011 3,702 3,411 3,328
Total assets 51,491 42,484 44,262 41,390 38,565
Current financial liabilities2) 1,125 1,561 1,813 841 2,561
Non-current financial liabilities2) 10,553 5,034 6,481 8,681 8,980
Issued capital 1,229 1,229 1,229 1,229 1,229
Total equity 28,877 25,515 26,382 23,295 19,534

1)
Profit attributable to owners of parent is the numerator and weighted average number of shares outstanding is the denominator in the calculation of earnings per share. See Note (C.6)
to our Consolidated Financial Statements for more information on earnings per share.
2)
The balances include primarily bonds, private placements and bank loans. Current is defined as having a remaining life of one year or less; non-current is defined as having a remaining
term exceeding one year. The significant increase in 2014 was due to a long-term bank loan and the issuance of a three-tranche Eurobond, both in connection with the Concur
acquisition. See Note (E.3) to our Consolidated Financial Statements for more information on our financial liabilities.

13
Exchange Rates Annual Dividends Paid and Proposed
The following table sets forth in euro the annual dividends
The sales prices for our ordinary shares traded on German
stock exchanges are denominated in euro. Fluctuations in the paid or proposed to be paid per ordinary share in respect of each
exchange rate between the euro and the U.S. dollar affect the of the years indicated. One SAP ADR currently represents one
SAP SE ordinary share. Accordingly, the final dividend per ADR is
dollar equivalent of the euro price of the ordinary shares traded
on the German stock exchanges and, as a result, may affect the equal to the dividend for one SAP SE ordinary share and is
price of the ADRs traded on the NYSE in the United States. See dependent on the euro/U.S. dollar exchange rate. The table does
not reflect tax credits that may be available to German taxpayers
“Item 9. The Offer and Listing” for a description of the ADRs. In
addition, SAP SE pays cash dividends, if any, in euro. As a result, who receive dividend payments. If you own our ordinary shares
any exchange rate fluctuations will also affect the dollar amounts or ADRs and if you are a U.S. resident, refer to “Item 10.
received by the holders of ADRs on the conversion into dollars of
Additional Information — Taxation,” for further information.
cash dividends paid in euro on the ordinary shares represented
Dividend Paid per Ordinary Share
by the ADRs. Deutsche Bank Trust Company Americas is the
depositary (the Depositary) for SAP SE’s ADR program. The Year Ended December 31, € US$
2014 1.10 1.22 1)
deposit agreement with respect to the ADRs requires the
Depositary to convert any dividend payments from euro into 2015 1.15 1.30 1)

dollars as promptly as practicable upon receipt. For additional 2016 1.25 1.37 1)

information on the Depositary and the fees associated with SAP’s 2017 1.40 1.65 1)
ADR program see “Item 12. Description of Securities Other Than 2) 2), 3)
2018 (proposed) 1.50 1.70
Equity Securities — American Depositary Shares.”
1)
Translated for the convenience of the reader from euro into U.S. dollars at the Noon
For details on the impact of exchange rate fluctuations see Buying Rate for converting euro into U.S. dollars on the dividend payment date. The
“Item 5. Operating and Financial Review and Prospects — Depositary is required to convert any dividend payments received from SAP as promptly
as practicable upon receipt.
Foreign Currency Exchange Rate Exposure”.
2)
Subject to approval at the Annual General Meeting of Shareholders of SAP SE currently
scheduled to be held on May 15, 2019.
3)
Translated for the convenience of the reader from euro into U.S. dollars at the Noon
Dividends Buying Rate for converting euro into U.S. dollars on February 8, 2019 of US$1.1326 per
€1.00. The dividend paid may differ due to changes in the exchange rate.

Dividend Distribution Policy

Dividends are jointly proposed by SAP SE’s Supervisory Board The amount of dividends paid on the ordinary shares depends
(Aufsichtsrat) and Executive Board (Vorstand) based on SAP on the amount of profits to be distributed by SAP SE, which
SE’s year-end stand-alone statutory financial statements, depends in part upon our financial performance. In addition, the
subject to approval by the Annual General Meeting of amount of dividends received by holders of ADRs may be
Shareholders. Dividends are officially declared for the prior year affected by fluctuations in exchange rates (see “Item 3. Key
at SAP SE’s Annual General Meeting of Shareholders. SAP SE’s Information — Exchange Rates”). The timing, declaration,
Annual General Meeting of Shareholders usually convenes during amount and payment of any future dividend will depend upon our
the second quarter of each year. Beginning with the dividends future earnings, capital needs and other relevant factors, in each
payable for the 2017 fiscal year and in accordance with a change case as proposed by the Executive Board and the Supervisory
of the German Stock Corporation Act that aims to implement Board of SAP SE and approved by the Annual General Meeting of
joint market standards in Europe for corporate actions Shareholders.
processing, dividends are remitted to the custodian bank on
behalf of the shareholders on the third business day following the
Annual General Meeting of Shareholders. Record holders of the
ADRs on the dividend record date will be entitled to receive
payment of the dividend declared in respect of the year for which
it is declared. Cash dividends payable to such holders will be paid
to the Depositary in euro and, subject to certain exceptions, will
be converted by the Depositary into U.S. dollars.
Dividends paid to holders of the ADRs may be subject to
German withholding tax. See “Item 8. Financial Information —
Other Financial Information — Dividend Policy” and “Item 10.
Additional Information — Taxation,” for further information.

14
Risk Factors – Possible tax constraints impeding business operations in certain
countries
– Changes in accounting standards and tax laws including, but not
Economic, Political, Social, and Regulatory Risks limited to, conflict and overlap among tax regimes measures as
Global Economic and Political Environment: Uncertainty in the well as the introduction of new tax concepts that harm digitized
business models
global economy, financial markets, social and political instability
caused by state-based conflicts, terrorist attacks, civil unrest, – Discriminatory, protectionist, or conflicting fiscal policies and tax
war, or international hostilities could lead to disruptions of our laws, such as certain protectionist measures included in the U.S.
Tax Reform which was enacted at the end of 2017, and the lack of
business operations or have a negative impact on our business,
financial position, profit, and cash flows. regulations at the time of the report to provide guidance on the
interpretations thereon by the U.S. tax authorities, the Internal
As a global company, we are influenced by multiple external
Revenue Services (IRS)
factors that are difficult to predict and beyond our influence and
– Workforce restrictions resulting from changing laws and
control. Any of these factors could have a significant adverse effect
regulations, from political decisions (such as Brexit, government
on the overall economy as well as on our business.
elections), or through required works council involvements, labor
The following potential events, among others, could bring risks to
union approvals, and immigration laws in different countries
SAP’s business:
– Protectionist trade policies, import and export regulations, and
– General economic, political, social, environmental, market
trade sanctions (such as in Russia), counter or even conflicting
conditions, and unrest (for example, Turkey, Venezuela, UK/
sanctions (such as in the United States and Russia), and
Brexit)
embargoes (such as in Iran) including, but not limited to,
– Continued deterioration in global economic conditions (impact
country-specific software certification requirements
on accurate forecast) or budgetary constraints of national
– Violations of country-specific sanctions (such as the UN sanction
governments
against North Korea or the United States’ sanction requirements
– Tariff conflicts, as for example between the United States and
against Iran and certain other countries)
China
– Compliance with and stringent enforcement of laws, as for
– Financial market volatility episodes, global economic crises and
example the EU General Data Protection Regulation (GDPR) or
chronic fiscal imbalances, slowing economic conditions, or
China’s Cyber Security Law, and regulations (including
disruptions in emerging markets
interpretations), implications of government elections, lack of
– Higher credit barriers for customers, reducing their ability to
reforms, data protection and privacy rules, regulatory
finance software purchases
requirements and standards (such as the Payment Card Industry
– Increased number of bankruptcies among customers, business
Data Security Standard (PCI DSS))
partners, and key suppliers
– Expenses associated with the localization of our products and
– Terrorist attacks or other acts of violence, civil unrest, natural
compliance with local regulatory requirements
disasters, or pandemic diseases impacting our business
– Difficulties enforcing intellectual property and contractual rights
in certain jurisdictions
Any of these events could limit our ability to reach our targets as
they have a negative effect on our business operations, financial
In 2017, an investigation was initiated and is ongoing with regards
position, profit, and cash flows.
to potential sanctions violations. For more information relating to
the potential sanctions violations noted above, see the Notes to the
International Laws and Regulations: Laws, regulatory
Consolidated Financial Statements, Note (G.4).
requirements and standards in Germany, the United States, and
elsewhere continue to be very stringent. Our international
As we expand into new countries and markets and/or extend our
business activities and processes expose us to numerous and
business activities in these markets, including emerging and high-
often conflicting laws and regulations, policies, standards, or
risk markets, these risks could intensify. The application of the
other requirements and sometimes even conflicting regulatory
respective local laws and regulations to our business is sometimes
requirements, and to risks that could harm our business,
unclear, subject to change over time, and often conflicting among
financial position, profit, and cash flows.
jurisdictions. Additionally, these laws and government approaches
We are a global company and currently market our products and to enforcement are continuing to change and evolve, just as our
services in more than 180 countries and territories in the Americas products and services continually evolve. Compliance with these
(Latin America and North America); Asia Pacific Japan (APJ); China, varying laws and regulations could involve significant costs or
Hong Kong, Macau, and Taiwan (Greater China); Europe, Middle require changes in products or business practices. Non-compliance
East, and Africa (EMEA); and Middle and Eastern Europe (MEE) could result in the imposition of penalties or cessation of orders due
regions. As a European company domiciled in Germany with to alleged non-compliant activity. Governmental authorities could
securities listed in Germany and the United States, we are subject to use considerable discretion in applying these statutes and any
European, German, U.S., and other governance-related regulatory imposition of sanctions against us could be material. One or more of
requirements. these factors could have an adverse effect on our operations
Our business in these countries is subject to numerous risks globally or in one or more countries or regions, which could have an
inherent to international business operations. Among others, these adverse effect on our business, financial position, profit, and cash
risks include: flows.

15
Legal and IP: Claims and lawsuits against us, such as for IP accessible under open source terms one of our products or third-
infringements, or our inability to obtain or maintain adequate party (non-SAP) software upon which we depend.
licenses for third-party technology, could have an adverse effect Any legal action we bring to enforce our proprietary rights could
on our business, financial position, profit, cash flows, and also involve enforcement against a partner or other third party,
reputation. Moreover, similar adverse effects could result if we which might have an adverse effect on our ability, and our
are unable to adequately protect or enforce our own intellectual customers’ ability, to use that partner’s or other third parties’
property. products.
We believe that we will continuously be subject to claims and The outcome of litigation and other claims or lawsuits is
lawsuits, including intellectual property infringement claims, as our intrinsically uncertain. Management’s view of the litigation might
solution portfolio grows; as we acquire companies with increased also change in the future. Actual outcomes of litigation and other
use of third-party code including open source code; as we expand claims or lawsuits could differ from the assessments made by
into new industries with our offerings, resulting in greater overlap in management in prior periods, which are the basis for our accounting
the functional scope of offerings; and as non-practicing entities that for these litigations and claims under IFRS.
do not design, manufacture, or distribute products assert
Data Protection and Privacy: Non-compliance with increasingly
intellectual property infringement claims. Moreover, protecting and complex and stringent, sometimes even conflicting, applicable
defending our intellectual property is crucial to our success. data protection and privacy laws or failure to adequately meet
The outcome of litigation and other claims or lawsuits is
the contractual requirements of SAP’s customers with respect to
intrinsically uncertain and could lead, for example, to the following our products and services could lead to civil liabilities and fines,
risks: as well as loss of customers and damage to SAP’s reputation.
– Claims and lawsuits might be brought against us, including
As a global software and service provider, SAP is required to
claims and lawsuits involving businesses we have acquired.
comply with local laws wherever SAP does business. With regard to
– We might be dependent in the aggregate on third-party
data protection requirements, in May 2016, the EU enacted a
technology, including cloud and Web services, that we embed in
“General Data Protection Regulation” (GDPR) with the aim of
our products or that we resell to our customers.
further harmonizing data protection laws across the EU. Since May
– Third parties have claimed, and might claim in the future, that we
25, 2018, GDPR is applicable law in all EU and EEA member states.
infringe their intellectual property rights or that we are overusing
Within limits, member states can supplement the GDPR with
or misusing licenses to these technologies.
additional national rules. Some member states have already
– We integrate certain open source software components from
enacted such laws.
third parties into our software. Open source licenses might
Furthermore, evolving regulations and new laws (such as the
require that the software code in those components or the
EU’s proposed e-Privacy Regulation) globally regarding data
software into which they are integrated be freely accessible
protection and privacy or other standards increasingly aimed at the
under open source terms.
use of personal information, such as for marketing purposes and the
– Despite our efforts, we might not be able to prevent third parties
tracking of individuals’ online activities, may impose additional
from obtaining, using, or selling without authorization what we
burdens for SAP due to increasing compliance standards that could
regard as our proprietary technology and information. In
restrict the use and adoption of SAP’s products and services (in
addition, proprietary rights could be challenged, invalidated, held
particular cloud services) and make it more challenging and
unenforceable, or otherwise affected. Moreover, the laws and
complex to meet customer expectations.
courts of certain countries might not offer effective means to
This could lead to increased risks for SAP, which could harm
enforce our legal or intellectual property rights. Finally, SAP may
SAP’s business and limit SAP’s growth.
not be able to collect all judgments awarded to it in legal
proceedings.
Non-compliance with applicable data protection and privacy
– Some intellectual property might be vulnerable to disclosure or
laws, in particular the EU GDPR, by SAP and/or any of the
misappropriation by employees, partners, or other third parties.
subcontractors engaged by SAP within processing of personal data
could lead, for example, to risks in the following areas:
Third parties might reverse-engineer or otherwise obtain and use
– Mandatory disclosures of breaches to affected individuals,
technology and information that we regard as proprietary.
customers, and data protection supervisory authorities
Accordingly, we might not be able to protect our proprietary rights
– Investigations and administrative measures by data protection
against unauthorized third-party copying or utilization. Adverse
supervisory authorities, such as the instruction to alter or stop
outcomes to some or all of the claims and lawsuits pending against
non-compliant data processing activities, including the
us might result in the award of significant damages or injunctive
instruction to stop using non-compliant subcontractors
relief against us or brought against us in the future that could hinder
– Fines of up to 4% of SAP’s annual Group turnover
our ability to conduct our business and could have an adverse effect
– Damage claims by customers
on our reputation, business, financial position, profit, and cash
– Harm to SAP’s reputation
flows. Third parties could require us to enter into royalty and
– Increased complexity in times of digitalization with regards to
licensing arrangements on terms that are not favorable to us, cause
legal requirements in the context of cross-border data transfer
product shipment delays, subject our products to injunctions,
require a complete or partial redesign of products, result in delays
In addition, the German Federal Office for the Protection of the
to our customers’ investment decisions, and damage our
Constitution and security industry experts have warned of risks
reputation. Third-party claims might require us to make freely

16
related to a globally growing number of cybersecurity attacks aimed – Unethical and fraudulent behavior of individual employees or
at obtaining or violating company data including personal data. We partners leading to criminal charges, fines, and claims by injured
anticipate cyberattack techniques to continue to evolve and parties
increase in sophistication, which could make it difficult to anticipate – Collusion with external third parties, for example providing
and prevent attacks and intrusions, thus leading, for example, to assistance in securing contracts
risks in the following areas, among others: – Fraud and corruption together with operational difficulties,
– A globally increasing number of hacker attacks aimed at especially in countries with a high Corruption Perceptions Index
obtaining or violating company data including personal data as and particularly in emerging markets
observed in recent prominent cases of cyberattacks where the – Increased scrutiny of public sector transactions in high-risk
use of ransomware was the preferred method of hackers territories
– Impact on business activities in highly regulated industries such
Any one or more of these events could have an adverse effect on as public sector, healthcare, banking, or insurance
our business, financial position, profit, and cash flows.
Any one or more of these events could have an adverse effect on
Corporate Governance and Compliance Risks our business, reputation, financial position, share price, profit, and
cash flows.
Unauthorized Disclosure of Information: Our controls and efforts
In 2017 and 2018, SAP encountered situations that required clear
to prevent the unauthorized disclosure of confidential
messaging and strong action on non-compliance in the context of
information might not be effective.
ethical behavior that has the potential to harm our business. In
Confidential information and internal information related to South Africa, SAP is continuing to investigate its dealings with the
topics such as our strategy, new technologies, mergers and public sector. For more information relating to the alleged anti-
acquisitions, unpublished financial results, customer data, or bribery law violations noted above, see the Notes to the
personal data, could be disclosed prematurely or inadvertently and Consolidated Financial Statements, Note (G.4).
subsequently lead to market misperception and volatility.
Such disclosure could lead to risks in the following areas, among Environment and Sustainability: Failure to meet customer,
others: partner, or other stakeholder expectations or generally accepted
– Disclosure of confidential information and intellectual property, standards on climate change, energy constraints, and our social
defective products, production downtimes, supply shortages, investment strategy could negatively impact SAP’s business,
and compromised data (including personal data) through, for results of operations, and reputation.
example, inappropriate usage of social media by employees Energy and emissions management are an integral component of
– Requirement to notify multiple regulatory agencies and comply our holistic management of social, environmental, and economic
with applicable regulatory requirements and, where appropriate, risks and opportunities.
the data owner We have identified risks in this context, including, but not limited
to, the following:
Any one or more of these events could have an adverse effect on – Failure to meet customer, partner, or other stakeholder
our market position and lead to fines and penalties. In addition, this expectations or generally accepted standards on climate change,
could have an adverse effect on our business, reputation, financial energy constraints, and our social investment strategy
position, profit, and cash flows. – Failure to achieve communicated targets for greenhouse gas
emissions
Ethical Behavior: Unethical behavior and non-compliance with
– Failure to maintain our rating in sustainable investment indexes
our integrity standards due to intentional and fraudulent
employee behavior could seriously harm our business, financial
If we do not meet stakeholder expectations in the areas
position, profit, and reputation.
identified, our rating in sustainable investment indexes might
SAP’s leadership position in the global market is founded on the decrease, which could have an adverse effect on our reputation,
long-term and sustainable trust of our stakeholders worldwide. Our profit, and share price.
overarching approach is one of corporate transparency, open U.S. Judgments: U.S. judgments may be difficult or impossible to
communication with financial markets, and adherence to enforce against us or our Board members.
recognized standards of business integrity. The SAP Code of
Business Conduct, adopted by the Executive Board on Currently, except for Bill McDermott, Robert Enslin, and Jennifer
January 29, 2003, and updated as necessary since then, codified Morgan all members of SAP SE’s Executive Board, and except for
and supplemented the already existing guidelines and expectations Diane Greene and Aicha Evans, all members of the Supervisory
for the business behavior practiced at SAP. Board, are non-residents of the United States. A substantial portion
However, we might for instance encounter the following risks of the assets of SAP and our Board members are located outside
associated with: the United States. As a result, it may not be possible to effect
– Non-compliance with our integrity standards and violation of service of process within the United States upon non-U.S. resident
compliance related rules, regulations, and legal requirements persons or SAP or to enforce against non-U.S. resident persons
including, but not limited to, anticorruption and bribery judgments obtained in U.S. courts predicated upon the civil liability
legislation in Germany, the U.S. Foreign Corrupt Practices Act, provisions of the securities laws of the United States. In addition,
the UK Bribery Act, and other local laws prohibiting corrupt awards of punitive damages in actions brought in the United States
payments by employees, vendors, distributors, or agents or elsewhere might be unenforceable in Germany.

17
Financial Risks Any one or more of these events could have an impact on the
value of our financial assets, which could have an adverse effect on
Sales and Revenue Conditions: Our sales and revenue conditions our business, financial position, profit, and cash flows.
are subject to market fluctuations and our forecasts might not
be accurate. Use of Accounting Policies and Judgment: In our accounting,
management uses policies and applies estimates. This could
Our revenue and operating results can vary and have varied in
negatively affect our business, financial position, profit, and cash
the past, sometimes substantially, from quarter to quarter. Our
flows.
revenue in general, and our software revenue in particular, is
difficult to forecast for a number of reasons, and could lead to risks To comply with IFRS, management is required to establish and
related to the following, among others: apply accounting policies as well as to apply judgment, including but
– Challenges in pipeline development and realization not limited to making and using estimates and assumptions. The
– Long sales cycles for many of our products policies and judgment affect our reported financial figures.
– Timing issues with respect to the introduction of new products This use of policies and judgment could lead to risks in the
and services or product and service enhancements by SAP or following areas, among others:
our competitors – New pronouncements by standard setters and regulators as well
– Large size, complexity, and extended settlement of individual as changes in common practice or common interpretations of
customer transactions existing standards might force us to change existing policies.
– Introduction/adaptation of licensing and deployment models Where such changes trigger significant changes to our
such as cloud subscription models processes, we might struggle to implement the changes in a
– Adoption of, and conversion to, new business models, leading timely manner.
from upfront payment models to an increase in pay-per-use or – The facts and circumstances, as well as the assumptions on
subscription-based payment models, thus the respective service which our management bases its judgment might change over
period typically ranges from one to three years, and goes up to time, requiring us to change the judgment previously applied.
five years
– Changes in customer budgets or seasonality of technology Both of the above risks could result in significant changes to our
purchases by customers reported financials, and could have an adverse effect on our
– Decreased software sales that could have an adverse effect on business, financial position, profit, and cash flows.
related maintenance and services revenue growth Currency, Interest Rate, and Share Price Fluctuation: As a
– Shortfall in anticipated revenue or delay in revenue recognition or globally operating company, SAP is subject to various financial
deployment models that require revenue to be recognized over risks related to currencies, interest rates, and share price
an extended period of time fluctuations, which could negatively impact our business,
– Inability of acquired companies to accurately predict their sales financial position, profit, and cash flows.
pipelines
Because we operate throughout the world, a significant portion
– High operating expenses or insufficient revenue generation to
of our business is conducted in foreign currencies. In 2018,
offset the significant research and development costs
approximately 72.1% of our revenue was attributable to operations
in foreign currencies. This foreign currency business therefore gets
In recent years, the trend has been towards an increased number
translated into our reporting currency, the euro.
of sales transactions, with the average deal size remaining more or
This could lead to the following risks, among others:
less constant. However, the loss or delay of one or a few large
– Period-over-period fluctuations
opportunities could have an adverse effect on our business,
– Exchange rate risks with currency appreciation or depreciation,
financial position, profit, and cash flows.
or risks related to currency devaluation (legal and/or
Liquidity: External factors could impact our liquidity and increase administrative changes to currency regimes)
the default risk associated with, and the valuation of, our – Interest rate fluctuation
financial assets. – Share price fluctuation impacting cash outflows for share-based
Macroeconomic factors such as an economic downturn could compensation payments
have an adverse effect on our future liquidity. We use a globally
centralized financial management approach to control financial risk, Any one or more of these events could have an adverse effect on
such as liquidity, exchange rate, interest rate, counterparty, and our business, financial position, profit, and cash flows.
equity price risks. The primary aim is to maintain liquidity in the SAP Insurance: Our insurance coverage might not be sufficient and
Group at a level that is adequate to meet our obligations at any time. uninsured losses may occur.
However, adverse macroeconomic factors could increase the
We maintain insurance coverage to protect us against a broad
default risk associated with the investment of our total Group
range of risks, at levels we believe are appropriate and consistent
liquidity, and could lead to the following risks, among others:
with current industry practice. Our objective is to exclude or
– Group liquidity shortages
minimize risk of financial loss at reasonable cost.
– Inability to repay financial debt
Nevertheless, we could still be subject to risks in the following
– Increased default risk of financial investments, which might lead
areas, among others:
to significant impairment charges in the future
– Limitation of operating and/or strategic financial flexibility

18
– Losses that might be beyond the limits, or outside the scope, – general and country specific economic or political conditions
of coverage of our insurance and that may limit or prevent (particularly wars, terrorist attacks, etc.); and general market
indemnification under our insurance policies conditions.
– Inability to maintain adequate insurance coverage on Many of these factors are beyond our control. In the past,
commercially reasonable terms in the future companies that have experienced volatility in the market price of
– Certain categories of risks are currently not insurable at their stock have been subject to shareholder lawsuits, including
reasonable cost securities class action litigation. Any such lawsuits against us, with
– No assurance of the financial ability of the insurance or without merit, could result in substantial costs and the diversion
companies to meet their claim payment obligations of management’s attention and resources, resulting in a decline in
our results of operations and our stock price.
Any one or more of these events could have an adverse effect on
our business, financial position, profit, and cash flows. Human Capital Risks
Venture Capital: We could incur significant losses in connection Human Workforce: If we are unable to attract, develop, retain,
with venture capital investments. and effectively manage our geographically dispersed workforce,
Through Sapphire Ventures, our consolidated venture we might not be able to run our business and operations
investment funds, we plan to continue investing in new and efficiently and successfully, or develop successful new solutions
promising technology businesses. and services.
This could lead to risks in the following areas, among others: Our success is dependent on appropriate alignment of our
– Investments could generate net losses and/or require additional planning processes for our highly skilled and specialized workforce
expenditures from their investors. and leaders, both male and female, adequate resource allocation,
– Changes to planned business operations might affect the and our location strategy with our general strategy. In certain
performance of companies in which Sapphire Ventures holds regions and specific technology and solution areas, we continue to
investments. set very high growth targets, depending on short-term and long-
– Tax deductibility of capital losses and impairment in connection term skill requirements, taking infrastructure needs as well as local
with equity securities are often restricted, and could therefore legal or tax regulations in consideration. Successful maintenance
have an adverse effect on our effective tax rate. and expansion of our highly skilled and specialized workforce in the
area of cloud is a key success factor for our transition to be the
Any one or more of these events could have an adverse effect on leading cloud company. The availability of such personnel as well as
our business, financial position, profit, and cash flows. business experts is limited and, as a result, competition in our
Market Price Volatility: The market price for our ADRs and industry is intense.
ordinary shares may be volatile. We could face risks in the following areas, among others:
– Failure to apply workforce planning processes, adequate
The market prices of our ADRs and ordinary shares have
resource allocation, and location strategy in alignment with our
experienced and may continue to experience significant volatility in
general strategy
response to various factors including, but not limited to:
– Failure to identify, attract, develop, motivate, adequately
– unauthorized or inadvertent premature disclosure of confidential
compensate, and retain well-qualified and engaged personnel to
information, including information concerning pending
scale to targeted markets
acquisition negotiations or acquisition rumors;
– Failure to successfully maintain, upskill, and expand our highly
– fines, penalties or civil liabilities as a result of potential
skilled and specialized workforce
compliance violations in the context of alleged facts in ongoing or
– Poor succession management or failure to find adequate
future investigations;
replacements
– proposed and completed acquisitions or other significant
– Loss of key personnel of acquired business
transactions by us or our competitors;
– Failure to meet short-term and long-term workforce and skill
– the announcement of new products or product enhancements by
requirements including achievements of internal gender diversity
us or our competitors;
objectives
– technological innovation by us or our competitors;
– Lack of appropriate or inadequately executed benefit and
– quarterly variations in our results or our competitors’ results of
compensation programs
operations or results that fail to meet market expectations;
– Lack of availability and scalability of business experts and
– changes in revenue and revenue growth rates on a consolidated
consultants
basis or for specific geographic areas, business units, products
– Mismatch of expenses and revenue due to changes in headcount
or product categories;
and infrastructure needs, as well as local legal or tax regulations
– changes in our externally communicated outlook and our
– Challenges with effectively managing a large distribution network
midterm ambitions;
of third-party companies
– changes in our capital structure, for example due to the potential
future issuance of additional debt instruments;
Any one or more of these events could reduce our ability to
– general market conditions specific to particular industries;
attract, develop, retain, and effectively manage our geographically
– litigation to which we are a party;
dispersed workforce, which in turn could have an adverse effect on
– cybersecurity attacks and breaches;
our business, financial position, profit, and cash flows.

19
Operational Business Risks – Failure to establish and enable a network of qualified partners
supporting our scalability needs
Sales and Services: Sales and implementation of SAP software – Failure to get the full commitment of our partners, which might
and services, including cloud, is subject to a number of reduce speed and impact in market reach
significant risks sometimes beyond our direct control. – Products or services model being less strategic and/or attractive
A core element of our business is the successful implementation compared to our competition
of software and service solutions to enable our customers to master – Partners might not renew agreements with us, or not enter into
complexity and help our customers’ businesses run at their best. new agreements on terms acceptable to us or at all, or start
The implementation of SAP software and cloud-based service competing with SAP.
deliveries is led by SAP, by partners, by customers, or by a – Failure to enable and train sufficient partner resources to
combination thereof. promote, sell, and support to scale to targeted markets
However, we might encounter risks in the following areas, among – Partners might not develop a sufficient number of new solutions
others: and content on our platforms or might not provide high-quality
– Implementation risks, if, for example, implementations take products and services to meet customer expectations.
longer than planned, or fail to generate the profit originally – Partners might not embed our solutions sufficiently enough to
expected, scope deviations, solution complexity, individual profitably drive product adoption, especially with innovations
integration and migration needs or functional requirement such as SAP S/4HANA, SAP C/4HANA, and SAP Cloud Platform.
changes, or insufficient milestone management and tracking – Partners might not adhere to applicable legal and compliance
leading to delays in timeline, maybe even exceeding maintenance regulations.
cycles of solutions in scope – Partners and their products might not meet quality requirements
– Insufficient customer expectation management, including scope, expected by our customers or SAP.
integration capabilities and aspects as well as lack in purposeful – Partners might not transform their business model in
selection, implementation, and utilization of SAP solutions accordance with the transformation of SAP’s business model in a
– Lack of customer commitments and respective engagements, timely manner.
including lack of commitment of resources leading to delays or – Partners might not be able or might not have capacity to meet
deviations from recommended best practices customer expectations in terms of service provisioning.
– Challenges to effectively implement acquired technologies – Partners might fail to abide to contract terms in embargoed or
– Protracted installation or significant third-party consulting costs high-risk countries.
– Improper calculations or estimates leading to costs exceeding
the fees agreed in fixed-price contracts If one or more of these risks materialize, this might have an
– Unrenderable services committed during the sales stage adverse effect on the demand for our products and services as well
– Delayed customer payments due to differing perception on as the partner’s loyalty and ability to deliver. As a result, we might
project outcome/results not be able to scale our business to compete successfully with other
– Inadequate contracting and consumption models based on vendors, which could have an adverse effect on our reputation,
subscription models for services, support, and application business, financial position, profit, and cash flows.
management
Cloud Operations: We may not be able to properly protect and
– Deviations from standard terms and conditions, which may lead
safeguard our critical information and assets, business
to an increased risk exposure
operations, cloud offerings, and related infrastructure against
– Statements on solution developments might be misperceived by
disruption or poor performance.
customers as commitments on future software functionalities
SAP is highly dependent on the availability of our infrastructure,
Any one or more of these events could have an adverse effect on and the software used in our cloud portfolio is inherently complex.
our business, financial position, profit, and cash flows. This could lead to risks in the following areas, among others:
– Capacity shortage and SAP’s inability to deliver and operate
Partner Ecosystem: If we are unable to scale, maintain, and cloud services in a timely and efficient manner as expected by or
enhance an effective partner ecosystem, revenue might not committed to our customers
increase as expected. – Customer concerns about the ability to scale operations for large
An open and vibrant partner ecosystem is a fundamental pillar of enterprise customers
our success and growth strategy. We have entered into partnership – Defects or disruption to data center operations or system
agreements that drive co-innovation on our platforms, profitably stability and availability
expand all our routes to market to optimize market coverage, – Interruptions in the availability of SAP’s cloud applications
optimize cloud delivery, and provide high-quality services capacity portfolio could potentially impact customer service level
in all market segments. Partners play a key role in driving market agreements
adoption of our entire solutions portfolio, by co-innovating on our – System outages or downtimes, failure of the SAP network due to
platforms, embedding our technology, and reselling and/or human or other errors, security breaches, or variability in user
implementing our software. traffic for cloud applications
These partnerships could lead to risks in the following areas, – Hardware failures or system errors resulting in data loss,
among others: corruption, or incompletion of the collected information

20
– Incomplete cloud portfolio or certification representation could – Failure to securely and successfully deliver cloud services by any
lead to customer misperception cloud service provider could have a negative impact on customer
– Loss of the right to use hardware purchased or leased from third trust in cloud solutions
parties could result in delays in our ability to provide our cloud – Increased response time for identified security issues due to
applications complexity and interdependencies could lead to security threats
– Scalability demands on infrastructure and operation could lead for SAP and customers
to cost increase and margin impacts – Customer systems or systems operated by SAP could be
– Non-adherence to our quality standards in the context of partner compromised by vulnerabilities due to hacker exploitation
co-location of data centers – Breach of security measures due to, for example but not limited
– Increased Total Cost of Ownership (TCO) for SAP to, employee error or wrongdoing, system vulnerabilities,
– Customers’ cloud service demands might not match our data malfunctions, or attempts of third parties to fraudulently induce
center capacity investments employees, users, partners, or customers to gain access to our
– Non-compliance with applicable certification requirements, such systems, data, or customers’ data
as Payment Card Industry Data Security Standard (PCI DSS) – Recovery costs as well as significant contractual and legal claims
by customers, partners, authorities (including state, federal, and
Any one or more of these events could have an adverse effect on our non-U.S.), and third-party service providers which could expose
business, financial position, profit, and cash flows. us to significant expense and liability or result in the issuance of
orders or consent decrees that could require us to modify our
Cybersecurity and Security: A cybersecurity attack or breach, or
business practices
undetected security vulnerabilities in our products,
– Significant costs to attempt to detect, prevent, and mitigate any
infrastructure, or services, or economic espionage could result in
successful attacks, including but not limited to the costs of third-
significant legal and financial exposure and have a material
party legal and security experts and consultants, insurance
adverse effect on our customers, our partners, our financial
costs, additional personnel and technologies, organizational
position, our operations, our reputation, and our business in
changes, and incentives to customers and partners to retain
general.
their business
As we continue to grow organically and through acquisitions, – Increasing sophistication and frequency of cybersecurity attacks
deliver a full portfolio of solutions via the cloud, host or manage could mean that we might not discover a security breach or a
elements of our customers’ businesses in the cloud, process large loss of information for a significant amount of time after the
amounts of data and offer more mobile solutions to users, we face a breach, or at all, and might not be able to anticipate attacks or
progressively more complex security environment. The complexity implement sufficient mitigating measures
of this security environment is amplified due to the increasingly – Our cybersecurity and security protocols might not be able to
malicious global cybersecurity threat landscape in which we keep pace with the ever-evolving and emerging threats
operate, including third-party data, products, and services that we – Customer concerns and loss of confidence in the current or
incorporate into SAP products, and the continually evolving and future security and reliability of our products and services,
increasingly advanced techniques employed by threat actors including cloud solutions
targeting IT products and businesses. Such threat actors include, – Significant damage to the SAP brand, our reputation, our
but are not limited to, highly sophisticated parties such as nation- competitive position, our stock price, and our long-term
states and organized criminal syndicates. As a leading cloud shareholder value
company and service provider to some of the largest and best-
known customers in the world, we are naturally a prominent target Any one or more of these events could have a material adverse
and experience cybersecurity attacks of varying types and degrees effect on our business, financial position, profit, and cash flows.
on a regular basis. As a result, we are subject to risks and associated
consequences in the following areas, among others: Technology and Products: Our technology and/or products may
– Undetected security defects and vulnerabilities experience undetected defects, coding or configuration errors,
– Exposure of our business operations and service delivery due to may not integrate as expected, or may not meet customer
virtual attack, disruption, damage, and/or unauthorized access, expectations.
theft, destruction, industrial and/or economic espionage, serious Our product strategy and development investment, including
and organized crime, and other illegal activities, as well as violent new product launches and enhancements, are subject to risks in the
extremism and terrorism following areas, among others:
– Abuse of data, social engineering, misuse or trespassers in our – Software products and services might not fully meet market
facilities, or systems could be rendered unusable needs or customer expectations
– State-driven economic espionage or competitor-driven industrial – We might not be as fast as expected in integrating our platforms
espionage, and criminal activities including, but not limited to, and solutions, enabling the complete product and cloud service
cyberattacks and breaches against cloud services and hosted portfolio, harmonizing our user interface design and technology,
on-premise software integrating acquired technologies and products, or bringing
– Disruptions to back-up, disaster recovery, and business packages, services, or new solutions based on the SAP HANA
continuity management processes platform as well as SAP Cloud Platform to the market.
– New products, services, and cloud offerings, including third-party
technologies, might not comply with local standards and

21
 requirements or could contain undetected or detected defects or significantly increased competition in the market with regards to
could not be mature enough from the customer’s point of view pricing and ability to integrate solutions.
for business-critical solutions after shipment despite all the due – Price pressure, cost increases, and loss of market share through
diligence SAP puts into quality. traditional, new, and especially cooperating competitors
– Inability to define and provide adequate solution packages and
scope for all customer segments Any one or more of these events could have an adverse effect on
– Inability to fulfil expectations of customers regarding time and our business, financial position, profit, and cash flows.
quality in the defect resolution process
Mergers and Acquisitions: We might not acquire and integrate
– Lack of customer references for new products and solutions
companies effectively or successfully.

Any one or more of these events could have an adverse effect on our To expand our business, we acquire businesses, products, and
business, financial position, profit, and cash flows. technologies, and we expect to continue to make acquisitions in the
future. Over time, certain of these acquisitions have increased in
Strategic Risks size and in strategic importance for SAP. Management negotiation
of potential acquisitions and the integration of acquired businesses,
Market Share and Profit: Our market share and profit could products, or technologies demands time, focus, and resources of
decline due to increased competition, market consolidation, both management and workforce, and exposes us to unpredictable
technological innovation, and new business models in the operational difficulties.
software industry. Acquiring businesses, products, and technologies may present
The market for cloud computing is increasing and shows strong risks to SAP, including risks related to the following areas, among
growth relative to the market for on-premise solutions. To maintain others:
or improve our operating results in the cloud business, it is – Incorrect information or assumptions during the due diligence
important that our customers renew their agreements with us when process for the acquisition (including information or
the initial contract term expires and purchase additional modules or assumptions related to the business environment and/or
additional capacity, as well as for us to attract new customers. business and licensing models)
Additionally, we need to bring new solutions based on the SAP – Failure to integrate acquired technologies or solutions
HANA business data platform, new technologies, as well as SAP successfully and profitably into SAP’s solution portfolio and
Cloud Platform to the market in line with demands and ahead of our strategy
competitors. In particular, innovative applications supporting the – Failure to successfully integrate acquired entities, operations,
Intelligent Enterprise such as SAP S/4HANA, SAP C/4HANA, or cultures, or languages, all within the constraints of applicable
newer technologies such as Internet of Things, machine learning, local laws
robotic process automation (RPA), which automates rule-based, – Unfulfilled needs of the acquired company’s customers or
repetitive tasks, digital assistants (including voice recognition and partners
interaction), and blockchain. – Material unidentified liabilities of acquired companies (legal, tax,
Factoring in the aforementioned, this could lead to risks in the IP)
following areas, among others: – Failure in implementing, restoring, or maintaining internal
– Potential loss of existing on-premise customers due to controls, disclosure controls and procedures, and policies within
competing cloud market trends acquired companies
– Adverse revenue effects due to increasing cloud business and – Incompatible practices or policies (compliance requirements)
conversions from on-premise licenses to cloud subscriptions – Insufficient integration of the acquired company’s accounting,
from existing SAP customers, which could have an adverse effect HR, and other administrative systems
on related maintenance and services revenue – Failure to coordinate or successfully integrate the acquired
– Insufficient solution and service adoption together with company’s research and development (R&D), sales, marketing
increased complexity, as well as failures during the execution of activities, and security and cybersecurity protocols
our intelligent enterprise strategy in the context of our portfolio – Debt incurrence or significant unexpected cash expenditures
for solution and services could lead to a loss of SAP’s position as – Non-compliance with existing SAP standards including
a leading cloud company and subsequently to reduced customer applicable product standards such as our open source product
adoption. standards
– Customers and partners might be reluctant or unwilling to – Impairment of goodwill and other intangible assets acquired in
migrate and adapt to the cloud or consider competitive cloud business combinations
offerings. – Non-compliance of the acquired company with regulatory
– Existing customers might cancel or not renew their contracts requirements, for example accounting standards, export control
(such as maintenance or cloud subscriptions), or decide not to laws, and trade sanctions, for which SAP with and by the
buy additional products and services. acquisition assumes responsibility and liability, including
– The market for cloud business might not develop further, or it potential fines and the obligation to remedy the non-compliance
might develop more slowly than anticipated.
– Strategic alliances among competitors and/or their growth- Any one or more of these events could have an adverse effect on
related efficiency gains in the cloud area could lead to our business, financial position, profit, and cash flows.

22
Innovation: We might not be able to compete effectively if we C/4HANA, and SAP Cloud Platform) supporting the intelligent
strategize our solution portfolio ineffectively or if we are unable enterprise strategy
to keep up with rapid technological and product innovations, – Uncertainties regarding new SAP solutions, technologies, and
enhancements, new business models, and changing market business models as well as delivery and consumption models
expectations. might lead customers to wait for proofs of concept or holistic
Our future success depends upon our ability to keep pace with integration scenarios through reference customers or more
technological and process innovations and new business models, as mature versions first.
well as on our ability to develop new products and services, enhance – Lower level of adoption of our new solutions, technologies,
and expand our existing products and services portfolio, and business models, and flexible consumption models, or no
integrate products and services we obtain through acquisitions. To adoption at all
be successful, we are required to adapt our products and our go-to- – Our product and technology strategy might not be successful, or
market approach to a cloud-based delivery and consumption model our customers and partners might not adopt our technology
to satisfy changing customer demand and to ensure an appropriate platforms, applications, or cloud services quickly enough or they
level of adoption, customer satisfaction, and retention. might consider other competitive solutions in the market, or our
Considering preceding dependencies, this could lead to risks in strategy might not match customers’ expectations, specifically
the following areas, among others: in the context of expanding the product portfolio into additional
– Not being able to bring new business models, solutions, solution markets.
enhancements, intelligent technologies, integrations and – Increasing competition from open source software initiatives, or
interfaces, and/or services to market before our competitors or comparable models in which competitors might provide software
at equally favorable conditions and intellectual property free and/or at terms and conditions
– Not being able to anticipate and develop technological unfavorable for SAP.
improvements or succeed in adapting SAP products, services, – Inability to drive growth of references through customer use
processes, and business models to technological change, cases and demo systems
changing regulatory requirements, emerging industry standards,
and changing requirements of our customers and partners Any one or more of these events could have an adverse effect on
(especially with innovations such as SAP S/4HANA, SAP our business, financial position, profit, and cash flows.

23
ITEM 4. INFORMATION The following table sets forth our most significant subsidiaries
based on total revenues of SAP group in 2018. All of these

ABOUT SAP subsidiaries are wholly owned by SAP SE.

Our legal corporate name is SAP SE. SAP SE is translated in Name of Subsidiary Country of
Incorporation
English to SAP European Company (Societas Europaea, or “SE”).
SAP SE is organized in the Federal Republic of Germany under Germany
German and European law, see “Item 10. Additional Information.” SAP Deutschland SE & Co. KG, Walldorf Germany
Where the context requires in the discussion below, SAP SE also
Rest of EMEA
refers to our predecessor or previous legal forms and names, as the
case may be, i.e. Systemanalyse und Programmentwicklung GbR SAP France, Levallois Perret France
(1972-1976), SAP Systeme, Anwendungen, Produkte in der SAP (UK) Limited, Feltham United Kingdom
Datenverarbeitung GmbH (1976-1988), “SAP Aktiengesellschaft
SAP (Schweiz) AG, Biel Switzerland
Systeme, Anwendungen, Produkte in der Datenverarbeitung” (1988
– 2005) and “SAP AG” (2005 – 2014). Our principal executive SAP Nederland B.V., 's-Hertogenbosch The Netherlands

offices, headquarters and registered office are located at Dietmar- SAP Italia Sistemi Applicazioni Prodotti in Data Italy
Hopp-Allee 16, 69190 Walldorf, Germany. Our telephone number is Processing S.p.A., Vimercate
+49-6227-7-47474. SAP España – Sistemas, Aplicaciones y Productos en Spain
As part of our activities to reduce the number of legal entities in la Informática, S.A., Madrid
the SAP group, in 2018 we integrated certain subsidiaries into the LLC SAP CIS, Moscow Russia
following significant SAP subsidiaries: SAP France, SAP America
United States
and SAP (Schweiz) AG.
For (i) a description of our principal capital expenditures and SAP America, Inc., Newtown Square USA
divestitures and the amount invested (including interests in other Concur Technologies, Inc., Bellevue USA
companies) since January 1, 2016 until the date of this report and
Ariba, Inc., Palo Alto USA
(ii) information concerning our principal capital expenditures and
divestitures currently in progress, including the distribution of these SuccessFactors, Inc., South San Francisco USA
investments geographically and the method of financing, see “Item SAP National Security Services, Inc., Newtown USA
4. Information About SAP – Description of Property – Capital Square
Expenditures.” SAP Industries, Inc., Newtown Square USA

Rest of Americas

SAP Canada, Inc., Toronto Canada

Japan

SAP Japan Co., Ltd., Tokyo Japan

Rest of APJ

SAP China Co., Ltd., Shanghai China

SAP Australia Pty Ltd., Sydney Australia

SAP India Private Limited, Bangalore India

24
Strategy and Business Model
Enterprises are trying to leverage data-driven insights to solve
Overview of SAP
these challenges. Winners in the digital economy are those that are
Founded in 1972, SAP is a global company headquartered in able to extract intelligence and insights from their data and act
Walldorf, Germany. Our legal corporate name is SAP SE. SAP is the
faster relative to their competition. SAP can help our customers to
market leader in enterprise application software1 and also the win in the marketplace by reimagining entire business processes
leading analytics and business intelligence company. Globally, through injecting predictive insights leveraging technologies such
more than 77% of all transaction revenue touches an SAP system.
as artificial intelligence (AI)/machine learning (ML), the Internet of
With more than 425,000 customers in more than 180 countries, Things (IoT), and analytics across an integrated value chain. With
the SAP Group has a global presence and employs more than SAP innovations, our customers can engage in real time with their
96,000 people.
users to deliver and continuously improve their experiences.
Our ordinary shares are listed on the Frankfurt Stock Exchange. SAP can deliver the intelligent enterprise by focusing on three
American Depositary Receipts (ADRs) representing SAP SE key business outcomes:
ordinary shares are listed on the New York Stock Exchange (NYSE).
– Reimagining the end-to-end customer experience from
SAP is a member of Germany’s DAX, TechDAX, the Dow Jones predicting the demand to designing the product based on the
EURO STOXX 50, the Dow Jones Sustainability Index World, and unique need of the consumer, to procuring the best supplier for
the Dow Jones Sustainability Index Europe. As at December 31,
the product to manufacturing, and to delivering the product or
2018, SAP was the most valuable company in the DAX based on service that maximizes customer satisfaction
market capitalization. SAP was ranked as the most sustainable – Delivering a step change in productivity through the next level
software company in the Dow Jones Sustainability Indices for the
of automation in business processes powered by AI/ML that will
twelfth consecutive year. be embedded in every part of the business process (across
As at December 31, 2018, SAP SE directly or indirectly financials, supply chain, manufacturing, procurement, travel,
controlled a worldwide group of 265 subsidiaries that develop,
and human resources). The key to doing this is improving cycle
distribute, and provide our products, solutions, and services. For a time of business processes and injecting speed everywhere
list of our subsidiaries, associates, and other equity investments, – Transforming the way companies engage their workforce by
see the Notes to the Consolidated Financial Statements, Note
delivering total workforce engagement across full-time and
(G.10). contingent labor and by improving the effectiveness of their
workforce by driving touchless processes and voice/chat-
Our Purpose enabled systems.
We are living in a time of global uncertainty that is caused by
massive social change and digital disruption. Some of the world’s At SAP, our commitment to our customers is to help them meet
greatest challenges can only be addressed by combining today’s challenges and to prepare for anticipated challenges of the
technology-driven innovations and corporate leadership. future. Our strategy is to deliver the intelligent enterprise for our
At SAP, our purpose is to “help the world run better and improve customers. Our vision for the intelligent enterprise is an event-
people’s lives” by empowering our customers to create a better driven, real-time business. SAP can deliver on these objectives by
economy, society, and environment for the world. With our leveraging the power of data in SAP software with technologies
innovations, we can help customers run at their best. Being the such as AI/ML to build powerful intelligent applications. With SAP
best means our customers can connect people and information to HANA and SAP Cloud Platform, we can embed intelligence into
address the world’s biggest challenges. That’s why we focus on every part of our portfolio. This enables enterprises to get step
engineering solutions to fuel innovation, foster equality, and spread change in productivity and enables higher focus on innovation,
opportunity across borders and cultures. With our broad customer customer experience, and new business models. The intelligent
base and ecosystem of around 18,800 partners, we can amplify our enterprise is how SAP sees the future of business for our
collective economic, social, and environmental impact. customers, the future of work for our customers’ employees, and
We are committed to supporting the United Nations Sustainable the future of experience for our customers’ customers.
Development Goals (UN SDGs). Technology-driven innovation
underpins how SAP, together with our customers and our Delivering the Intelligent Enterprise
ecosystem, can execute initiatives across all 17 of the UN SDGs. Our integrated end-to-end portfolio enables an intelligent
enterprise by offering business value, data-driven innovation, rich
The Intelligent Enterprise customer experience insights, and embedded intelligence. We
Most enterprises today are struggling to address three key embed intelligent technologies throughout the extensive platform
challenges: How do they deliver a next-generation customer and rich portfolio of applications we deliver. Our software,
experience to stay relevant in a world of disruption? How do they technologies, and services address the three core elements of the
drive maximum cost synergies to fund innovation? How do they intelligent enterprise for the 25 industries and 12 lines of business
better engage their employees to attract and retain top talent? (LoBs) we serve:

1)
Enterprise application software is computer software specifically developed to
support and automate business processes.

25
– An intelligent suite of LoB applications that includes next- Acquisitions
generation enterprise resource planning (ERP) in the cloud, as
We will continue to focus on investments in technology and
well as solutions for customer experience, manufacturing and
innovations that ensure sustainable growth of our solution portfolio
supply chain, network and spend management, and people
to drive our short-term, mid-term, and long-term ambitions. We will
engagement. The intelligent suite is integrated and
continue to unleash the full potential of our employees’ talent as
differentiated by industry-specific business processes for end-
well as foster strategic partnerships with our ecosystem to
to-end scenarios.
cultivate innovation. Further, we may make targeted acquisitions to
– A digital platform to help customers manage data
complement our solution offerings and improve coverage in key
orchestration across their entire application footprint. This
strategic markets.
includes real-time visibility into distributed data silos using next-
In April 2018, we acquired Callidus Software Inc., a company
generation data management solutions and an open cloud
offering a cloud-based customer relationship management (CRM)
platform as a business platform for integration and business
solution marketed under CallidusCloud, which provides SAP and
process innovation.
our customers a differentiated, cloud-based CRM solution. This
– Intelligent technologies, such as AI/ML, IoT, and advanced
helps put SAP in a leading position to compete in the CRM market.
analytics, help customers optimize their core business
SAP has consolidated the CallidusCloud offerings with SAP Hybris
processes, extract real-time insights, and reinvent their
solutions into the SAP C/4HANA suite of customer experience
business models. This intelligence is integrated across
solutions, and is reported as part of the Customer Experience
applications and helps us deliver unique outcomes to every
segment. For more information about the acquisition of Callidus
customer.
Software Inc., see the Notes to the Consolidated Financial
Statements, Note (D.1).
For more information about the products and solutions offered
In November 2018, we announced our intent to acquire
as part of our Intelligent Enterprise Framework, see the Products,
Qualtrics International, Inc., a global pioneer of the experience
Research & Development, and Services section.
management software category that enables organizations to
The innovative power of our people is key to delivering the
thrive in today’s economy. The deal was closed on January 23,
intelligent enterprise, as our people are key in helping our
2019. Experience management focuses on obtaining and tapping
customers transform. We strive to create a workplace that can
the value of outside-in customer, employee, product, and brand
attract and retain the best talent in the market. We are fully
feedback in real time. Together, SAP and Qualtrics aim to
committed to enabling our employees to grow their skills at every
accelerate the new experience management category by
stage of their career at SAP.
combining experience data and operational data to power the
Expanding to Experience Management experience economy. This creates a highly differentiated offering
for businesses to engage with their customers to deliver and
Every digital interaction is an opportunity to positively influence
continuously improve customer, employee, product, and brand
a customer. Each digital interaction is an opportunity to measure
experiences. Qualtrics will be reflected in our Customer Experience
customer satisfaction, employee engagement, partner
segment which we renamed, upon the Qualtrics acquisition in 2019,
collaboration, and brand impact. It is also an opportunity to derive
to “Customer and Experience Management.” For more information
sentiment on how end users and customers perceive a company or
about the acquisition of Qualtrics International, Inc., see the Notes
a product. By combining experience data with operational data,
to the Consolidated Financial Statements, Note (G.9).
SAP can expand from delivering the intelligent enterprise to
delivering intelligent experiences to our customers.
Sapphire Ventures
Most successful companies do not just react to problems as
In addition to our investments in organic growth and
they occur, they try to predict and mitigate those problems before
they ever happen. Experience management is the process of acquisitions, SAP also supports entrepreneurs that aspire to build
analyzing the interactions that people experience with a company industry-leading businesses, through venture capital funds
managed by Sapphire Ventures. Sapphire Ventures currently has
in real time and identifying opportunities for improvement. By
analyzing employee surveys and service center tickets and calls, over US$3.5 billion under management and has invested in more
and combining this information with organizational data, SAP can than 160 companies on five continents. This includes growth-stage
technology companies and early-stage venture capital funds.
help support a higher level of employee engagement and retention
for our customers. By capturing feedback on how consumers Sapphire Ventures pursues opportunities in which it can help fuel
experience the physical or digital product in real time, SAP can help enterprise growth by adding expertise, relationships, geographic
reach, and capital. It places a particular focus on companies in
our customers design better. By understanding the sentiment of
every customer interaction, and correlating this with operational Europe, Israel, and the United States. In addition to our venture
data on price and service delivery, SAP can help our customers investments through Sapphire Ventures, SAP also has a dedicated
SAP.iO fund, managed by Sapphire Ventures, that focuses on
drive better topline performance and create better products and
services. strategic early-stage investments in enterprise software startups.
As a part of the SAP.iO Fund, SAP has also committed to invest up
to 40% of the investable capital in under-represented groups in
technology to foster diversity and inclusion. One of these
investment examples is women in technology.

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 SAP’s Impact
Our vision is to help the world run better and improve people’s lives.
We innovate software and technology solutions that empower our customers to become
intelligent enterprises and create a better and more sustainable economy, environment, and society.

SAP’s Impact engagement, and customer loyalty. Value creation for the customer
is realized when they implement the software and services to
Our purpose comes to life through our contribution to the UN
support their business and help achieve their own visions and
Sustainable Development Goals (SDGs). We innovate software and
purposes.
technology solutions that help empower our customers to become
intelligent enterprises. It means connecting people and information Inputs
to address the world’s biggest challenges.
This value creation process does not happen in a vacuum. It is
For us, delivering the Intelligent Enterprise and helping our
enabled by external inputs, most importantly customer insights
customers thrive in the experience economy are essential for a
and broader stakeholder dialog, financial capital, employees’
better, more productive world. By unlocking the full potential of
expertise, and intellectual property, third party products and
innovation, we can transform how businesses and governments
services, as well as the IT infrastructure we rely on.
impact the economies, societies, and environments in which they
exist. In this way, we aim to fulfill our purpose of helping the world Impact
run better and improving people’s lives.
Our solutions lead to significant impact at our customers and –
Our Business Model through them – in the world. The following are some examples of
our impact in various areas.
We create value by identifying the business needs of our
customers, then developing and delivering software, services, and Economy:
support that address these business needs. The close collaboration SAP software supports the UN SDGs 8, 9, 10, and 12 by helping
with our customers and partners throughout the process helps us provide meaningful work and strengthening industries and
continuously improve our solutions, identify further business infrastructure. For example, SAP software helps as follows:
needs, and deliver enhanced value to our customers. – Companies work better to bring economic prosperity and fairly-
paid jobs to people around the world.
Results – Organizations optimize resources utilization, aspiring for a world
By developing software, providing our software and services to with zero waste
our customers, and engaging them in feedback, we immediately As such, our software supports the responsible growth practices
generate results for SAP such as growth, profitability, employee necessary to ensure the survival of future generations.

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Society: Environment:
SAP software supports the UN SDGs 1, 2, 3, 4, 5, 7, 11, and 16 by SAP software supports the UN SDGs 6, 13, 14, and 15 and helps
helping create a peaceful and just society through better protect the environment by addressing the need for water, clean
healthcare, education, and access to technology. For example: energy, and responsible development. For example:
– SAP technology is at the epicenter of complex medical issues – We are all affected by climate change. SAP technology is helping
when it comes to prevention, treatments, and cures for cancer, our customers increase their overall resource productivity and
diabetes and other diseases. We are also deeply committed to transform their businesses to reduce carbon outputs.
empowering the world’s youth, working adults, differently-abled – With the world population growing steadily, humanity will need
people, and the unemployed with the right skills to thrive in the to provide water, food, and shelter to billions of people in the
digital economy. coming years. SAP solutions help our customers reduce water
– Cities are facing growing populations and aging infrastructures. waste and support sustainable management of water and
SAP solutions for the Internet of Things can help manage and sanitation for all.
monitor resources so that cities can run more sustainably and
help citizens enjoy more enjoyable, safer lives. Furthermore, SAP knows there is power in collaboration and
engages in a wide range of partnerships to address SDG 17.

Measuring Our Success

We use the following financial and non-financial objectives to steer our company:
– Growth
– Profitability
– Customer loyalty
– Employee engagement
The table below provides an overview of the specific KPIs used to measure performance within these objectives, and compares this
performance with our goals.

Outlook and Results for 2018

2018 Outlook* 2018 Results
Strategic Objective KPI
(non-IFRS, at constant currencies) (non-IFRS, at constant currencies)

Cloud subscriptions and

€5.150 billion to €5.250 billion €5.205 billion
support revenue

Growth Cloud and software revenue €21.150 billion to €21.350 billion €21.577 billion

Total revenue €25.200 billion to €25.500 billion €25.961 billion

Profitability Operating profit €7.425 billion to €7.525 billion €7.480 billion

Customer Loyalty Customer Net Promoter Score 21 to 23 –5.0

Employee Engagement Employee Engagement Index 84% to 86% 84%

* The outlook was communicated in January 2018 and financial targets were raised in April, July, and October 2018. The 2018 outlook numbers above reflect the raised
outlook from October 2018.
Note: A reconciliation of non-IFRS results to IFRS equivalent is available in the Performance Management Section.

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Outlook for 2019
2018 Results 2019 Outlook
Strategic Objective KPI
(non-IFRS) (non-IFRS, at constant currencies)
Cloud subscriptions and €6.7 billion to
€5.03 billion
support revenue €7.0 billion
€22.4 billion to
Growth Cloud and software revenue €20.66 billion
€22.7 billion
strong increase, slightly lower rate than
Total revenue €24.74 billion
operating profit
€7.7 billion to
Profitability Operating profit €7.16 billion
€8.0 billion
Customer Loyalty Customer Net Promoter Score –5.0 +1.0

Employee Engagement Employee Engagement Index 84% 84% to 86%

Note: A reconciliation of non-IFRS results to IFRS equivalent is available in the Performance Management Section.

Ambitions for 2020 and 2023

2018 Results 2020 Ambition 2023 Ambition
Strategic Objective KPI
(non-IFRS) ( non-IFRS) (non-IFRS)
Cloud subscriptions €8.6 billion to
€5.03 billion More than triple
and support revenue €9.1 billion
Cloud and software
Growth €20.66 billion
revenue
€28.6 billion to
Total revenue €24.74 billion More than €35 billion
€29.2 billion
€8.5 billion to
Profitability Operating profit €7.16 billion 7.5% to 10% CAGR
€9.0 billion
Customer Net
Customer Loyalty –5.0 steadily increase
Promoter Score
Employee
Employee Engagement 84% 84% to 86%
Engagement Index
Note: A reconciliation of non-IFRS results to IFRS equivalent is available in the Performance Management Section.

Seasonality
Our business has historically experienced the highest revenue in
the fourth quarter of each year, due primarily to year-end capital
purchases by customers. Such factors have resulted in 2018,
2017, and 2016 first quarter revenue being lower than revenue in
the prior year’s fourth quarter. We believe that this trend will
continue in the near future and that our total revenue will
continue to peak in the fourth quarter of each year and decline
from that level in the first quarter of the following year. Unlike our
on-premise software revenues, our on-premise support revenues
and cloud subscriptions and support revenues are less subject to
seasonality.

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Products, Research & Development, and Services
applications and data, delivering the real-time and actionable
Bringing Together Machine and Human
insights that customers need.
Intelligence With our acquisition of Qualtrics International Inc. on
SAP works to deliver an intelligent enterprise that brings January 23, 2019, SAP adds experience management capabilities
together machine and human intelligence across all business to further empower the intelligent enterprise, bringing a new
functions to provide value to customers. As we make that happen, dimension in which every digital interaction is an opportunity to
we aim to help customers make best use of their data assets to influence a customer positively. A business can use each
achieve their desired outcomes faster and with less risk. interaction to measure customer satisfaction, employee
engagement, partner collaboration, brand impact, and user
Intelligent Enterprise Vision sentiment. By combining such experience data with the operational
To make good on our commitment to help customers transform data already maintained in an SAP system, an intelligent enterprise
themselves into full digital enterprises operating in real time, we can deliver intelligent experiences for customers.
have created a framework for the intelligent enterprise, as
described in the Strategy and Business Model section and Network and Spend Management
illustrated below. This framework is further strengthened with a Every business can benefit from better managing its spend. Our
portfolio of services and support offerings to help customers cloud solutions under the SAP Ariba, SAP Concur, and SAP
maximize the value of their SAP software and technology Fieldglass brands give customers the essential visibility and
implementations. capacity to control their spend. Together, the solutions comprise
the largest commerce platform in the world, with approximately
$2.9 trillion in global commerce transacted annually in more than
230 countries and territories. These solutions enable insight and
control across sourcing and supplier management, travel and
expense, and external workforce. Our network and spend
management solutions are built on an open platform of established
business networks. They give customers greater understanding of
all spend related to vendors and employees and the ability to share
master data through SAP S/4HANA to maximize intelligence-
based decisions. These solutions deliver best practices for our
customers, no matter if they decide to use our entire portfolio or a
specific solution to address their needs.

SAP Ariba
SAP Ariba solutions offer an online business-to-business
marketplace connecting more than 3.8 million sellers in more than
190 countries, with sellers realizing more than US$2.6 trillion in
goods and services every year.
By bringing continuous innovation, we not only help our New innovations in 2018 include the following:
customers succeed as they adopt increasingly more sustainable – The SAP Ariba Spend Analysis solution leverages AI and
business strategies, but we also realize our purpose of helping the machine learning to reduce the time it takes to classify invoice
world run better and improving people’s lives. data.
– The SAP Ariba Snap program provides simple, affordable, and
Intelligent Suite scalable options for fast-growing companies to implement
Whether a business needs to manage its total spend, gain a sourcing solutions and reap the benefits they provide.
deeper understanding of its customers, engage its external – The SAP Digital Manufacturing Cloud solution offers a
workforce, or transform its workplace experience, our intelligent manufacturing network that integrates with the SAP Ariba
suite enables a global enterprise to thrive in the digital economy. Sourcing solution and Ariba Network, and enables
Developed with new technologies such as artificial intelligence manufacturers and service providers to connect and collaborate
(AI)/machine learning, including chatbots and voice technology, across the entire manufacturing process.
SAP cloud applications provide businesses with insights and – SAP Ariba Strategic Sourcing Suite significantly expanded its
intelligence to anticipate and proactively respond to business industry capabilities with new retail industry capabilities for
imperatives and identify opportunities for improvement. Together, direct spend.
these solutions support the customer's journey to becoming an – The SAP Ariba Supplier Risk solution provides additional
intelligent enterprise. insights to help customers track 175 risk incident types in
Integrated with SAP S/4HANA, our digital core, and built on an partnership with Semantic Vision, Made In a Free World, World
open cloud platform to enable integration across heterogeneous Economic Forum, and other public and private data
environments, these offerings can be linked easily with third-party aggregators. These risk incident types are used to calculate a
company's supplier risk-exposure score. This score is then used

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 to analyze exposure to high-risk suppliers. The solution also suite that addresses all aspects of human resources (HR), from
provides a comprehensive risk-due-diligence process, which administration, payroll, and benefits to talent management and
helps companies meet third-party regulatory compliance collaboration across the employee journey. These solutions
requirements. integrate fully with the customer’s other business software,
– The SAP Ariba Cloud Integration Gateway solution enabled by including SAP S/4HANA. SAP SuccessFactors HCM solutions are
the SAP Cloud Platform Integration service provides with buyers used by more than 6,700 customers in over 200 countries and
a simple, reliable, and faster way to connect their SAP ERP and territories, and core HR and talent management solutions reach
SAP S/4HANA systems with SAP Ariba solutions. more than 125 million users.
New innovations in 2018 include the following:
SAP Fieldglass
– An SAP SuccessFactors digital assistant was developed to
SAP Fieldglass solutions are cloud-based applications for provide a business’ entire workforce with a personalized,
external workforce management and services procurement. The engaging experience by applying machine learning to guide and
SAP Fieldglass Vendor Management System helps organizations recommend actions based on verbal and written questions or
find, engage, and manage all types of flexible resources – including commands.
contingent workers, statement-of-work-based consultants, – SAP SuccessFactors Visa and Permits Management is the
freelancers, and more. In 2018, SAP Fieldglass solutions connected first SAP SuccessFactors solution built on SAP Cloud Platform.
customers with 5.7 million active external workers and more than It offers a single place for HR to centrally manage, automate,
131,000 suppliers in over 220 countries and territories. and gain insight into complex employee work visa and permit
New innovations in 2018 include the following: processes for international hiring.
– The Digital Partner Network for SAP Fieldglass solutions was – Several key features were also added to existing HCM solutions,
launched in 2018 as a new ecosystem network to help including functionality for the General Data Protection
customers transform how they engage and manage an external Regulation (GDPR), a set of laws that came into force on
workforce of freelancers, contingent workers, independent May 25, 2018, which affects data privacy practices throughout
contractors, and other service providers. the European Union (EU). This GDPR functionality is now
– We delivered a machine-learning powered Resume Matching embedded across the entire HCM suite, making it easier for HR
service that automatically reads and ranks candidates based on leaders to properly handle and protect sensitive employee and
role requirements, identifying best-fit candidates while candidate data. A candidate relationship management capability
increasing efficiency and speed to hire. is now available as part of the SAP SuccessFactors Recruiting
SAP Concur solution, helping recruiters to attract more relevant candidates,
engage and nurture targeted talent pools, and manage the
With close to 58 million users worldwide, SAP Concur is the
application and hiring process more efficiently.
world’s leading travel and expense management software. SAP
Concur solutions help companies of all sizes and stages go beyond Further improving usability across mobile devices, SAP and
automation to a connected spend management system that Google partnered in 2018 to redesign the SAP SuccessFactors
encompasses travel, expense, invoice, compliance, and risk. These Mobile app for Android. Employees and managers can now more
solutions help businesses gather instant, actionable insights that easily engage and complete critical people-related tasks. We also
support the intelligent enterprise. joined forces with Thrive Global to introduce Well-Being at Work, a
New innovations in 2018 include the following: new initiative that puts employee well-being at the heart of
– The ExpenseIt mobile app, an already established offering, was organizations and positions technology as a catalyst for this
fully integrated with SAP Concur solutions in 2018, providing cultural shift. SAP SuccessFactors Work-Life is the first solution to
valuable functionality that uses receipt scanning technology come from this partnership. It provides real-time insights into well-
powered by machine learning to turn receipts into expense being needs and makes recommendations to improve employee
report line items. satisfaction and engagement.
– The Budget add-on is a Web service that aggregates data in
near real time from SAP Concur solutions including Concur Digital Core
Expense and Concur Invoice, as well as purchase and travel
SAP S/4HANA
requests, for a comprehensive dashboard on spend – before
and after the spend occurs. SAP S/4HANA is our enterprise resource planning (ERP) suite
– The Concur Drive add-on is a Web service that allows for the intelligent enterprise. Approximately 10,500 customers
have chosen it to support their digital transformation. It enables a
businesses to automatically capture distance driven as an
automated alternative to self-reported mileage, reducing business to access and analyze data in real time, giving them
overspending in organizations. insights to act in the moment, providing predictive suggestions,
and connecting business functions and the people within them.
People Engagement SAP S/4HANA software spans all business functions including
finance, human resources, sales, service, procurement,
SAP SuccessFactors manufacturing, asset management, supply chain, and R&D.
SAP SuccessFactors Human Capital Management (HCM)
solutions help organizations increase the value of their workforce Flexible Deployment Options
by developing, managing, engaging, and empowering their people. Developed first for the cloud, SAP S/4HANA can be delivered as
SAP SuccessFactors solutions are delivered as a complete digital a software-as-a-service (SaaS) solution, on premise, in a private

31
cloud, or as a hybrid deployment. All consumption options are Customer Experience
compatible, so that organizations have the flexibility to implement
SAP S/4HANA to meet their exact needs. SAP S/4HANA Cloud SAP C/4HANA
provides SaaS qualities such as scalability as well as quarterly In June 2018, we launched SAP C/4HANA, a unified suite of
innovation updates. On-premise customers receive the same cloud solutions designed as the next generation of customer
updates but on an annual update cycle. relationship management. SAP C/4HANA software provides
companies with a single, holistic view of each customer across all
Real Time channels and connects demand to the fulfillment engine in one end-
Built specifically to take advantage of in-memory computing to-end value chain. To complete our portfolio of customer
with SAP HANA, SAP S/4HANA reduces both the complexity of the experience solutions, SAP acquired and integrated Gigya, Callidus
data model and the data footprint. It enables SAP S/4HANA Software, and Coresystems, and rebranded the SAP Hybris
solutions to process huge amounts of data in real time and end business area to SAP Customer Experience to reflect the depth and
users can flexibly change their perspective of the data. This not breadth of our offerings.
only saves time and costs for our customers but also delivers a new SAP C/4HANA is now a major growth driver for SAP, showing
interactive experience and new business insights. SAP S/4HANA triple-digit growth in cloud subscription revenue during 2018.
empowers business users to act in the moment, as they have New innovations in 2018 include the following:
immediate access to information at the most granular level to help – SAP Upscale Commerce is a commerce solution designed for
make better, more informed decisions. midmarket retailers, major brands, and direct-to-consumer
companies looking to deploy a fast and highly engaging
Integrated and Extendable
commerce experience. Built for today’s mobile-first consumer,
SAP S/4HANA is built with an open architecture and connects
it can be deployed in a matter of days, bringing SAP customers
to the entire SAP portfolio and beyond. The SAP S/4HANA Cloud speed to market with rich AI-powered experiences.
software development kit (SDK) allows our customers and partners – SAP Commerce Cloud on Microsoft Azure is a partnership that
to innovate quickly and easily on SAP Cloud Platform while
combines SAP’s market-leading solution for B2B and B2C
leveraging the capabilities of their digital core. scenarios with the Microsoft Azure public cloud infrastructure.
Manufacturing and Supply Chain
We also announced the Open Data Initiative, a partnership
Our SAP Digital Supply Chain portfolio offers enterprises an between SAP, Microsoft, and Adobe, the goal of which is to meet a
integrated suite of digital supply chain solutions to plan, design, core need for our customers – to unlock a single view of their
manufacture, deliver, and operate their products. With these
customers by bringing siloed data together.
solutions, customers can blend the physical and the digital world Winning in the CRM market hinges on our ability to deliver an
throughout the complete supply chain – from design, planning, and integrated lead-to-cash process that connects the front office
manufacturing to logistics and ongoing maintenance – embedding
(SAP C/4HANA) with the digital core (SAP S/4HANA) while
intelligence and ensuring their customers are central to every maintaining competitiveness in each area of the SAP Customer
phase of their business. Customers get total visibility as products Experience portfolio.
are designed, delivered, and deployed by connecting their business
processes with real-time data from assets, equipment, customers, Digital Platform
and suppliers. This visibility is used to adequately anticipate and Helping customers manage data orchestration and system
respond to real-world physical realities.
integration across their SAP installation, our digital platform
Integrated Business Planning consists of SAP Cloud Platform, the foundation on which the
The SAP Integrated Business Planning solution is powered by intelligent suite is built, and SAP HANA Data Management Suite,
SAP HANA and delivers real-time supply chain planning capabilities which manages distributed data from any source. The platform not
only caters to the runtime and data storage needs of the end-to-
for sales and operations, demand and supply planning, and
inventory optimization in the cloud. It provides the necessary end applications in the intelligent suite, but it also enriches them
information to make business decisions using embedded analytics, with intelligent technologies, such as machine learning, Internet of
Things (IoT), and analytics capabilities, all offered as cloud
simulation, prediction, and decision support. Specific SAP
Integrated Business Planning applications can be used with the services, which are easily embedded in business applications.
established SAP Fiori user experience interface or with a Microsoft
SAP Cloud Platform
Excel plug-in, allowing users to run optimization scenarios directly
in their spreadsheets. In the digital economy, companies need both standard
applications and a highly flexible platform that allows them to do
Asset Management the following:
SAP Intelligent Asset Management solutions support – Extend and customize cloud and on-premise SAP applications
manufacturers and asset operators to define, plan, and monitor the – Develop new applications for different processes
optimal service and maintenance strategy for their physical – Integrate cloud and on-premise applications
products and assets. The solutions do this by providing the SAP Cloud Platform offers an enterprise platform-as-a-service
required level of collaboration, integration, and analytical insights, (PaaS) environment where companies can build, test, run, manage,
using an asset central foundation, our digital twin for physical and expand software applications in the cloud. It is the center of
assets, as the common data set. gravity for the intelligent enterprise, as applications can run on SAP

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Cloud Platform, or run with it, by using the platform’s services while enable rapid innovation and create better outcomes for the
running on another stack. It offers comprehensive capabilities to customer. SAP Leonardo brings together the customer vision,
help business users and developers create better, more agile SAP's processes and industry knowledge, and technologies such as
applications in less time. Customers can apply, among other things, analytics, AI/machine learning, and IoT capabilities. SAP Cloud
mobile services, advanced analytic tools, state-of-the-art Platform provides the environment for applications to consume
authentication mechanisms, and social functionality. For maximum these technologies.
flexibility, portability, and agility, we use open source technologies.
Analytics
SAP Cloud Platform enables businesses to connect and integrate
best-of-breed applications to our digital core and to custom-built The SAP Analytics Cloud solution leverages the inherent
solutions. The introduction of the SAP Cloud Platform Functions intersection of business intelligence (BI), planning, and predictive
service and SAP Cloud Platform, ABAP environment, simplifies analytics to deliver new capabilities such as simulation and
deployments and brings new choices for SAP customers in the automated discovery in BI, as well as storytelling and predicted
cloud. forecasts in planning. The solution allows organizations to close the
gap between transactions, data preparation, analysis, and action. In
Giving Customers Freedom of Choice addition, the SAP Analytics Cloud solution allows customers to take
With SAP Cloud Platform, customers are free to choose from a advantage of high-speed innovation in the cloud, while using their
range of infrastructure-as-a-service (IaaS) providers, and today existing on-premise investments. To further enable a smooth
many enterprise customers are choosing more than one provider. transition to the cloud, we offer the SAP Analytics Hub solution.
SAP has partnered with Alibaba, Amazon, Google, and Microsoft, SAP Analytics Hub makes it easier for our customers to find the
so our customers can run their applications in an SAP or a third- analytics applications they need, as it delivers a single point of
party data center, or in a combination thereof. We also offer SAP access to all analytics offerings, cloud and on premise, from SAP
Cloud Platform as a private cloud deployment. and our many ecosystem partners.

SAP HANA Data Management SAP BW/4HANA

Since 2010, SAP has helped customers realize the value in their SAP BW/4HANA is a data warehouse solution built entirely on
data with SAP HANA. Today, customers have a new challenge with SAP HANA. It offers a unique real-time analytics layer, which can
distributed data. Data is no longer just in transactional systems, but directly query the database, instead of processing data at the
is distributed across products, machines, and people. This is why application layer like traditional analytical engines do. It integrates
SAP has brought together the SAP HANA business data platform data from across an organization to deliver key business
and SAP Data Hub as a complete commercial solution to address intelligence. SAP BW/4HANA provides customers with enhanced
the emerging challenges enterprises face in managing a distributed data modelling and governance, so they can manage the
data landscape. availability, integrity, and security of data. The solution can be
The SAP HANA business data platform is our flagship in- connected to various data sources, including SAP or unstructured
memory database, available both on premise and as a service in the third-party data, such as Hadoop.
cloud. It enables businesses to process and analyze live data and
make business decisions based on the most up-to-date
SAP Leonardo Internet of Things
information, a requirement in today’s digital economy. The Intelligent devices that generate contextual sensor data are
innovative architecture in SAP HANA allows both transactional becoming more commonplace in the enterprise, as older machines
processing for data capture and retrieval, and analytical processing are retrofitted with sensors and processing capabilities, while
for business intelligence and reporting. It reduces time-consuming newer machines are made intelligent by design. The data generated
database and data management tasks and underpins intelligent from these “things” can be processed with business logic, either at
applications that use advanced analytic processing. It includes source, in the cloud, or in both; it allows the intelligent enterprise to
features such as text analysis, multitenant database containers to expand into new business models. Connectivity between these
support multiple isolated databases in a single SAP HANA system, devices, aptly called the Internet of Things (IoT), has led to a surge
as well as external machine learning libraries. of investment in opportunities to optimize and increase business
The SAP Data Hub solution enables businesses to manage data outcomes by connecting things to people and processes.
from numerous sources – SAP or third party – without having to The enterprise IoT capabilities we provide are catalysts for
centralize data into one location. SAP Data Hub allows data to be digital transformation, delivering real-time and forward-looking
processed “in flow,” for example, while data is being recorded to predictive insights that our customers need for their intelligent
the data store, or being prepared for use in machine learning. It also enterprises.
provides enterprise data governance to see who changed or
accessed the data. The solution lets companies safely and
SAP Leonardo Machine Learning
effectively move and share their data to enable agile data Machine learning describes algorithms that learn from data and
operations across the enterprise. support employees to focus on higher value work, thus
empowering enterprises to scale innovative solutions and make
Intelligent Technologies their organization intelligent. SAP Leonardo Machine Learning
solutions are already integrated in our SAP portfolio, providing
SAP Leonardo intelligent capabilities in SAP S/4HANA, SAP C/4HANA,
SAP Leonardo is a methodology that combines design thinking SAP Concur, SAP Fieldglass, and SAP SuccessFactors solutions,
services with intelligent technologies for every business process, to among others. These intelligent capabilities are orchestrated

33
through the SAP Leonardo Machine Learning Foundation, which As the highest engagement level throughout the software
runs on SAP Cloud Platform, and provides a variety of functional lifecycle, this customized, on-site program orchestrates all SAP
and business services. In addition to SAP’s own software experts to work with our customers to innovate, develop ideas, and
developers, our partners and customers can easily use accelerate their digital transformation. It enables our customers to
“pretrained” or “retrainable” machine learning capabilities, train simplify and optimize their IT operations.
their own machine learning models, and build services on top of The SAP ActiveAttention program is a premium-level
this foundation. Likewise, SAP Conversational AI provides a way to engagement similar to the New SAP MaxAttention, but designed to
build bots that automate conversational interactions through support smaller businesses requiring a less intense engagement
natural language processing within SAP offerings in the SAP level.
C/4HANA suite, for example. SAP customers and partners are also
able to create their own custom bots with this service. Project Success
We standardized our services portfolio to help companies reap
SAP Digital Business Services the benefits of SAP products and solutions faster. Depending on
In addition to our powerful software and technology, SAP the needs of the customer, we offer the following services
provides an entire portfolio of service and support offerings to help separately or packaged together:
customers maximize the value of their SAP implementations. – SAP Advisory Services help customers turn their digital
These offerings enable the intelligent enterprise. Our people, business vision into executable strategies and exceptional
processes, and tools help customers to achieve digital business outcomes by offering support to reimagine business
transformation, enabling them to produce exceptional business models, design enterprise architectures, and deliver business
outcomes. In 2018, SAP continued a process that had begun the transformation to realize business value.
year before, to simplify its services portfolio, creating three – SAP Innovation Services provide a flexible, open innovation
categories – continuous success, premium success, and project approach that helps customers apply emerging technologies
success – and expanded the range of intelligent tools designed to such as AI and machine learning to bring commercial value to
underpin service and support offerings. their business, at scale. With expert guidance from SAP – from
ideation to readiness for deployment – customers can bring
Continuous Success their novel ideas to life as scaled implementations.
SAP helps accelerate the customer’s time to value from our – SAP Model Company services provide a preconfigured, ready-
technology. As the foundation for customer success plans, the to-run reference solution with business content, accelerators,
following support offerings are provided for our cloud solutions and and engineered services for multiple industries or lines of
on-premise software: business. It provides the building blocks for a solution, helping
– SAP Enterprise Support services provide proactive, predictive, customers accelerate deployment and digital transformation.
and preventive support for customers across hybrid landscapes – SAP Value Assurance service packages safeguard
to help them move to the cloud, make SAP S/4HANA their implementations led by customers and partners by giving them
digital core, and embrace breakthrough innovations through access to best practices, methodologies, tools, and deep
SAP Leonardo. technology expertise, enabling them to accelerate the
– SAP Preferred Success service offers a bundle of prescriptive deployment of SAP S/4HANA and SAP BW/4HANA.
customer success activities for accelerated cloud adoption. It – The SAP Advanced Deployment service simplifies and
focuses on effective change management, enablement, accelerates the deployment of SAP S/4HANA for SAP-led
consumption techniques, and enhanced support. As an add-on implementations. Based on the proven SAP Activate
to SAP Enterprise Support, cloud editions, SAP Preferred methodology and tailored to the enterprise’s specific transition
Success is available for SAP SuccessFactors solutions, scenario, the service streamlines the implementation or
SAP S/4HANA Cloud, SAP C/4HANA, and SAP Cloud Platform. migration to a high-performing, sustainable digital core.
– In addition to our standardized service offerings, the new
Premium Success SAP S/4HANA Movement program guides SAP ERP
The SAP MaxAttention program represents the most exclusive customers as they start to think about their transition to
and closest customer partnership with SAP. It was completely SAP S/4HANA. This is an easy-to-use adoption starter
redesigned in 2018, following close consultation with customers. engagement that helps customers structure and assess their
The New SAP MaxAttention helps customers turn ideas into value- transformation towards SAP S/4HANA.
based predictable outcomes with precise business and technical
guidance – from innovation to operation – and is composed of the Intelligent Tools
following: Complementing the skills of our people, we develop intelligent
– One service portfolio ensures coverage for all SAP solutions tools to help simplify and accelerate our customers’
and deployments – on premise, cloud, and hybrid. implementation of SAP solutions and ease the transition to an
– One team brings a holistic engagement model with clear intelligent enterprise. In 2018, we expanded our range of intelligent
accountabilities. tools. In addition to established tools such as SAP Transformation
– One commercial framework offers pay-as-you-use services Navigator, SAP Readiness Check, SAP Solution Manager, and SAP
with predictable outcomes. Innovation and Optimization Pathfinder, we introduced two new
offerings:

34
– SAP Cloud Platform Integration Advisor is a service that Investment in R&D
allows users to define, maintain, share, and deploy business-to- SAP’s strong commitment to R&D is reflected in our
business (B2B) integration content and interfaces using expenditures (see figure below).
machine-learning algorithms to significantly reduce build time
and effort.
– The SAP Cloud ALM solution is a cloud-based application € millions | change since previous
lifecycle management (ALM) tool that helps track and manage 3,624
3,352
the needs of customers that use (only or predominantly) cloud 3,044
solutions from SAP. SAP Cloud ALM starts with an 2,845
implementation portal for SAP S/4HANA Cloud. Customers 2,331
subscribing to a cloud solution from SAP automatically receive
SAP Cloud ALM.
10%
7% 8%
Ecosystem 5%
2%
Extending Our Reach Through a Broad Ecosystem
SAP’s extensive ecosystem and partner network serves as a
vital success driver, extending our reach in the marketplace. Our
vibrant ecosystem is made up of more than 18,000 partners 2014 2015 2016 2017 2018
worldwide that build, sell, service, and run SAP solutions and
technology. In 2018, our IFRS R&D ratio, reflecting R&D expenses as a
Through the power of partnership and co-innovation, our portion of total operating expenses, increased by 1.1 percentage
partner ecosystem drives the bulk of SAP’s presence among small points (pp) to 19.1% (2017: 18.0%). Our non-IFRS R&D ratio
and midsize companies, making up more than 80% of SAP increased by 1.0pp to 19.4% year over year (2017: 18.4%). At the
customers. Partners are helping SAP break into new markets with end of 2018, our total full-time equivalent (FTE) headcount in
SAP Leonardo and SAP Cloud Platform, and are also developing development work was 27,060 (2017: 24,872). Measured in FTEs,
intellectual property by creating prepackaged solutions to simplify our R&D headcount was 28% of total headcount (2017: 28%).
cloud implementations for customers. As AI/machine learning, IoT, Total R&D expense not only includes our own personnel costs
and blockchain technologies become mainstream, SAP and our but also the external cost of work and services from the providers
partners are enabling our customers to become intelligent and cooperation partners we work with to deliver and enhance our
enterprises. By taking advantage of these innovative technologies products. We also incur external costs for the following:
in end-to-end business processes, businesses can drive the next – Translating, localizing, and testing products
level of automation and drive a next-generation value economy. – Obtaining certification for products in different markets
– Patent attorney services and fees
– Consulting related to our product strategy
– Professional development of our R&D workforce

Patents
SAP actively seeks intellectual property protection for
innovations and proprietary information. Our software innovations
continue to strengthen our market position as a leader in business
solutions and services. Our investment in R&D has resulted in
numerous patents. As at December 31, 2018, SAP held a total of
more than 9,542 validated patents worldwide. Of these, 700 were
granted and validated in 2018.
While our intellectual property is important to our success, we
believe our business as a whole is not dependent on any particular
patent or a combination of patents.

35
Security, Privacy, and Data Protection
incorporating security features into our applications to minimize
Meeting Today’s Data Protection
the risk of a security breach.
Challenges Our secure software development lifecycle is at the heart of this
Every day, organizations around the world trust SAP with their strategy. It provides a comprehensive methodological approach for
data – either on their own premises, in the cloud, or when using incorporating security features and capabilities into our
mobile devices while on the move. Our customers need to know applications. Before a release decision is made, our software is
that we will keep that data safe, process it in a manner that assessed and validated by internal security experts. The
complies with local legislation, and protect it from malicious use. development team then addresses any recommendations made by
For this reason, data protection and IT security are of these security experts before we release the application.
paramount importance to us. We have implemented safeguards to We strive to align our secure software development lifecycle to
help protect the fundamental rights of everyone whose data is the recommendations of the ISO/IEC 27034 standard for
processed by SAP, whether they are our customers, prospects, application security and our ISO 9001-certified process framework
employees, or partners. In addition, we work towards compliance for developing standard software, as well as apply the methods for
with all relevant legal requirements for data protection. Our chief developing secure software.
security officer and our data protection officer report to the SAP
chief financial officer (CFO) and monitor the compliance of all
activities in these areas. Secure Operations Strategy: Running Secure
SAP has a formal security governance model in place. Relevant Operations
security topics are discussed at the Executive Board level Our secure operations strategy focuses on the security
numerous times each year, during steering committee meetings principles of “confidentiality, integrity, and availability” to support
attended by individual or multiple board members. To meet and the overall protection of our business and our customers’
ensure consistent data protection compliance, our CFO and our businesses. To help us achieve our mission to become an intelligent
data protection officer (DPO) meet at least monthly. Furthermore, enterprise, we have established a comprehensive IT operations
our compliance status related to data protection has been an security framework. This includes system and data access, and
inherent part of Supervisory Board meetings. system security configuration, through security patch
management, proactive security event management, thread
Facing Increasing Risks in IT Security hunting, and robust incident handling.
Safeguarding data is an increasingly challenging task today. Our secure operations strategy involves the implementation of
Companies are collecting and storing more data than ever before key security measures across all layers, including physical access
from more varied sources. Data now proliferates outside the four and process-integrated controls. Furthermore, our secure
walls of businesses with multiple endpoints exposed and vulnerable operations approach concentrates on the early identification of
to attack. Moreover, the sheer number of and the sophistication of deviations from the standards defined in our security framework.
attacks facing businesses are at an all-time high. We are seeing the Deviations are identified through a combination of automated and
“commercialization of hacking,” while new advanced persistent manual reviews that are performed by third parties as well as SAP
threats can bypass many traditional security protection employees.
techniques. Industry certifications are key success factors our secure
operations strategy. Many of our cloud solutions undergo Service
Establishing a Comprehensive Security Organization Control (SOC) audits, including ISAE3402, SSAE16
Vision SOC 1 Type II, and SSAE16 SOC 2 Type II. The SOC standards are
harmonized with a number of certifications from the International
For SAP and for our customers, security means more than just
Organization for Standardization (ISO), including ISO 9001, 27001,
addressing compliance demands. Companies need to be proactive
and 22301.
when securing business-critical data and core information assets.
Several of our security measures extend across all of our Secure Company Strategy: Taking a Holistic
company and thus to all of our products and services. These
Approach to the Security of Our Business
measures include, among other things, the regular training of our
At SAP, we take a holistic approach to the security of our
employees on IT security, data protection, and privacy, including
the handling of confidential information and ensuring controlled company, encompassing processes, technology, and employees.
and restrictive access to customer information. In addition, we At the heart of our secure company strategy are an information
security management system and a security governance model
have developed a three-pronged strategy focusing on the security
of our products, operations, and organization: that bring together different aspects of security. These include the
following three main areas:
Secure Product Strategy: Championing Product – Security culture: Regular mandatory training, assessments, and
Security reporting on these efforts foster awareness and compliance with
our security policy and standards.
Businesses use SAP applications to process mission-critical
– Secure environments: Industry-standard physical security
transactional data, which can be highly attractive to
measures are in place to ensure the security of our data centers
cyberattackers. Our secure product strategy focuses on

36
 and development sites so that we can protect buildings and Our global data protection and privacy policy and global data
facilities effectively. protection management system (DPMS) are designed to ensure
– Business continuity: We maintain a corporate continuity that we comply with applicable data protection laws. These include
framework aimed at having robust governance in place at all the harmonized European data protection law, the General Data
times, and review this framework on an annual basis to adapt to Protection Regulation (GDPR).
new or changed business needs. Our policy outlines a group-wide minimum standard for handling
In addition to these important measures, up-to-date security personal data in compliance with data protection and privacy laws.
mechanisms, such as authentication, authorization, and It defines requirements for all operational processes that affect the
encryption, serve as a first line of defense. To secure the SAP processing of, or access to, personal data. It also clearly allocates
software landscape, we offer a portfolio of security products, responsibilities and establishes organizational structures. We
services, and secure support as well as security consulting. These actively monitor changes to applicable laws and regulations so that
offerings help our customers build security, data protection, and we can update our standards on an ongoing basis.
privacy capabilities into their businesses. Our DPMS conforms to the targets of the globally-recognized
Our portfolio includes identity and access management tools standard for data protection management systems,
and solutions for governance, risk, and compliance. BS 10012:2017. Initially implemented at our global support
Furthermore, our SAP Cloud Trust Center site provides organization, the DPMS has been successively rolled out and is now
transparency for our customers with regard to how SAP helps to in place in all areas critical to data protection. It covers almost all
improve security, privacy, and compliance in cloud and on-premise areas and countries in which SAP has operations and will be
landscapes. introduced in all acquired companies. It is audited and certified on a
yearly basis by the British Standards Institute and this audit last
Complying with Data Protection and took place in April 2018.
Privacy Legislation We have implemented a wide range of measures to protect data
controlled by SAP and SAP customers from unauthorized access
SAP respects and protects the right to data protection and
and processing, as well as from accidental loss or destruction. Also,
privacy when processing the personal data of employees,
we are developing our products to support our customers in
applicants, customers, suppliers, and partners. While implementing
applying data protection requirements, including GDPR.
appropriate security measures, we develop and pursue our data
In 2018, SAP did not experience any significant incidents in
protection and privacy strategy in accordance with our business
processing personal data – either on our own behalf or on behalf of
strategy.
our customers – that were subject to GDPR or other applicable
data protection laws.

37
Customers to the fact that we have a more rigorous process to ensure we
receive open and direct feedback. Below you can find some of the
programs we have implemented to address pain points customers
Approaching Our Customers with share with us in their feedback.
Empathy As we implement these customer engagement programs and
SAP’s purpose is to help the world run better and improve with continued rigor in our processes, we are targeting a Customer
people’s lives. We achieve this by providing solutions that help our NPS of +1.0 in 2019 and a steady increase in 2020 and beyond.
customers tackle the challenges of today’s world to be successful. For more information about the Customer NPS, see the
We can only do this with a sharp focus on our customers’ needs. Performance Management System section.
We want our customers to see a company that listens and
responds to their needs. We want to design and develop with their Focusing on Customer Engagement
needs in mind. We want them to experience a constantly improving In addition to quantitative customer feedback such as Customer
SAP. NPS, we also utilize numerous executive, customer, and product
To achieve this, SAP has implemented extensive programs to advisory boards and councils. These committees allow SAP to
deepen our relationship with customers. Through these efforts, we listen to and engage customers for their feedback and guidance
reach out to our customers to ensure we understand what works relative to our business and technology strategies, solutions, and
well and not so well in their partnership with SAP. services. Through these efforts, SAP gains a more detailed
Measuring customer loyalty is a part of this program, and we understanding of our strategies, road maps, and potential
use the Customer Net Promoter Score (Customer NPS) as one improvements. The long-term objective for each of these efforts is
feedback mechanism to do so. This allows us to directly value generation for our customers and SAP alike.
understand what our customers are thinking and identify key pain One of the programs we have introduced to support our
points for action. Our customers are of such importance to SAP, it customer engagement is Build Customers for Life. Customers
is only logical that Customer NPS is one of our main KPIs. expect us to deliver one lifecycle experience across our portfolio, all
Specifically, Customer NPS measures the willingness of our while delivering the promise of integration across our portfolio. To
customers to recommend or promote SAP to others. It is derived turn this objective into action, the program establishes unified post-
from ongoing customer surveys that identify, on a scale of 0–10, sales process standards and supporting IT infrastructure across all
whether a customer is likely to recommend SAP to friends or cloud offerings. In this way, it enables one harmonized customer
colleagues, is neutral, or is unwilling to recommend. The responses experience across both digital and direct interaction points with
are divided into three groups as follows: SAP.
– 9 or 10: promoters Another example is our global Customer First initiative, where
– 7 or 8: passives efforts are underway to improve the way we work and care for our
– 6 or below: detractors customers by ensuring we provide a consistent, positive, end-to-
To derive the Customer NPS, we start with the percentage of end experience that helps deliver successful outcomes for them.
promoters and subtract the percentage of detractors. Passives are Some specific areas where we have received valuable feedback
ignored. Consequently, the range of achievable scores is –100 to involve:
+100, with the latter being the best achievable score for customer – Harmonizing our interactions with customers
loyalty as measured by the NPS methodology. In 2018, after – Continuing to evolve our portfolio into a seamless Intelligent
critically reviewing the process of how we contact customers to Enterprise offering
participate in the survey, we made changes. We implemented a – Further integrating customer experience for our cloud assets in
more standardized and more rigorous process to approach particular
customer contacts in a more consistent manner across the We engage in this process transparently, as we believe
company. We believe every customer, rather than only a sample, transparency leads to accountability. When feedback is honest,
should have a voice. actionable, and transparent, we can address it head on and truly
To adhere to this, we implemented measures to ultimately improve our customer experience. Further, the impact of measures
ensure all of our customers are invited to give feedback and a and improvements is clearly visible. In this way, SAP continues to
random selection of key contacts at each customer is selected to take measures to ensure customer feedback is incorporated in our
participate in the survey. This increases the quality and business.
representation of the feedback we are receiving and helps us Finally, we not only believe this customer focus is good for SAP,
engage in an open dialogue with our customers. We have further but also for our customers. Our commitment to our customer
reduced the set of criteria for which a customer can be excluded experience is clearly evidenced by our acquisition of Qualtrics. As
from the survey, designed our Customer NPS survey instrument to we integrate Qualtrics into our portfolio, we will not only be
best practice standards and with a focus on probing for critical embedding this technology into our software, but will also be
feedback. offering experience management to our customers.
68% of customers gave us a score of 7 or higher. This means
that a large majority of customers are satisfied or highly satisfied
with SAP. Because the percentage of customers who rated us 9 or
10 is slightly smaller than the percentage of customers who rated
us 6 or below our Customer NPS for 2018 is –5.0 (2017: +17.8). We
did not reach our target of +21 to +23 in 2018. This was mainly due

38
Energy and Emissions Total Net Emissions

Being a Front-Runner for a Greener Way kilotons CO2

of Working
500
SAP takes its environmental responsibilities seriously and strives 455
to be a role model for sustainable business operations. We believe
380
that by running cleaner, greener operations, we can make a
325 310
difference to our planet. In addition, we aim to enable our customers
to reduce their overall carbon footprint through our software.
Our global environmental policy promotes a more productive use
of resources by providing transparency in environmental issues,
driving efficiency, and leveraging transformational strategies. It also
outlines our environmental goals.
The SAP Executive Board sponsor for sustainability, including
climate change, is our chief financial officer (CFO). Our chief 2014 2015 2016 2017 2018
sustainability officer and our dedicated sustainability organization
coordinate our response to climate change, which includes
In addition to our long-term commitment for 2025, we have
assessing and managing climate-related risks and opportunities.
derived annual targets for our internal operational steering. In 2018,
Facilities management staff design and operate our facilities based
we overachieved our annual target to reduce our emissions to
on robust environmental standards. In addition, our IT operations
333 kilotons (kt) of CO2 by 23 kt. This result stems primarily from
personnel is committed to optimizing energy consumption in our
compensation with carbon emission offsets. Our focus on carbon
data centers. We assess our environmental performance and risks
emissions has contributed to a cumulative cost avoidance of
in quarterly management reviews.
€272.8 million in the past three years, compared to a business-as-
Designed to enable continous improvement and protect the
usual scenario based on 2007. We achieved 39% of this cost
environment, our environmental management system based on the
avoidance in 2018.
ISO 14001 standard was rolled out to seven additional SAP sites in
2018. The system now covers 55 SAP sites in 30 countries. In 2018, Total Energy Consumption
we successfully audited the Walldorf and St. Leon-Rot sites in
Germany, thus fulfilling our target for the system to cover
operations affecting about 70% of employees globally. Currently, GWh
we are also implementing the ISO 50001 energy management
system for the Walldorf and St. Leon-Rot sites. 965 950
920 920 919

Cutting Carbon Emissions

In 2017, we announced a commitment to making our operations
carbon neutral by 2025. This is the next logical step in our long-term
greenhouse gas (GHG) avoidance strategy, which also includes an
undertaking to reduce GHG emissions to levels of the year 2000 by
2020, which we achieved in 2017. The target includes all direct
emissions from running our business as well as a selected subset of
indirect emissions from supply chains and services. Furthermore, as
a member of the Science-Based Targets initiative, we were the first 2014 2015 2016 2017 2018
German company to release a science-based climate target. This
target reflects the level of decarbonization required to keep the
global temperature increase below two degrees Celsius compared Strengthening Our “Green Cloud”
to pre-industrial temperatures. At SAP, this corresponds to an 85% At SAP, we have tied our business strategy to our environmental
reduction in our 2016 emissions level by 2050, including energy strategy by creating a “green cloud” powered by 100% renewable
consumption of our products in use at our customers. electricity. As more business moves to the cloud, data centers are a
A number of initiatives harness innovative technologies to help key part of how SAP provides solutions to our customers. By using
us run our operations in a way that minimizes our impact on the our green cloud services, customers can significantly reduce their
environment. In addition, our investment in renewable electricity carbon footprint. Given the increasing data center capacity and an
certificates and carbon credits enables us to support sustainability increasing energy consumption, our data centers have become a
projects across the globe. primary focus of our carbon reduction efforts.
We have introduced initiatives to drive efficiency and innovation
with respect to our buildings, data center operations, and
infrastructure. For example, in 2018, one of our main data centers in
St. Leon-Rot, Germany, had a very efficient power usage
effectiveness (PUE) of 1.36. The PUE is a ratio that describes the

39
efficiency of a data center, with 1.0 being the ideal. In early 2019, data into reporting and steering. For example, customers can
SAP will open its new state-of-the-art data center in Walldorf, improve their real-time energy demand response for power demand
Germany. management.
SAP also works with customers to optimize their on-premise
Committing to 100% Renewable landscapes so that they consume less energy. We achieve this by
Electricity helping them decommission legacy systems, archive unused data,
consolidate business applications, and virtualize their system
Our commitment to 100% renewable electricity is crucial to
landscape.
making our operations more sustainable. While SAP produces a
small amount of renewable electricity through solar panels in some
locations, we rely primarily on the purchase of renewable energy
Driving Environmental Initiatives
certificates (RECs) to achieve our target of 100% renewable Throughout SAP
electricity. We only invest in Gold Standard RECs, which support We continuously pursue strategies to help us achieve our goal of
renewable energy projects that meet robust criteria in terms of reducing emissions at a time of ongoing growth in our business. Key
environmental integrity, stakeholder inclusivity, and reporting and initiatives for 2018 included the following:
verification. All of these RECs are 100% EKOenergy label certified,
the highest quality energy ecolabel available. EKOenergy Certification
Most of our renewable electricity is purchased on the electricity
Total Data Center Electricity
market and is not produced by SAP. As recommended by the
Greenhouse Gas Protocol and CDP, we actively look for the best
GWh available quality. Therefore, all of our purchased renewable
electricity is EKOenergy certified. EKOenergy is the international
Internal External
not-for-profit ecolabel for energy. It certifies electricity from
317
renewable energy installations that fulfil additional sustainability
265 criteria. Through the purchase of EKOenergy certified electricity, we
249 243
137 also contribute to EKOenergy's Climate Fund, used to finance solar
60 65
86 projects tackling energy poverty.
179
18
Electric Vehicles
As a result of our business expansion, the number of SAP
189 178 179 180
161 employees eligible for a company car has increased annually. We
want to ensure that the resulting growth in our car fleet does not
undo our successes in cutting emissions. To help address this, SAP
2014 2015 2016 2017 2018 aims to increase the number of electric vehicles (battery electric
vehicles and plug-in hybrid electric vehicles) in our company car
fleet from 7% at the end of 2018 to 20% by 2020.
Helping Our Customers Run Greener All electric company cars charged at SAP are powered with
Operations 100% renewable electricity. In addition, in Germany, we provide
The vast majority of our overall emissions result from the use of employees with an incentive to switch to electric alternatives by
our software. When our customers run SAP software on their offering a battery subsidy that partially offsets the higher costs of an
hardware and on their premises, the resulting carbon footprint is electric vehicle.
about 38 times the size of our own net carbon footprint. To address
this, we have developed a downstream emissions strategy to help Internal Carbon Pricing for Business Flights
our customers, hardware providers, and others run greener In addition to avoiding business flights by investing in virtual
operations. One of the most important ways we help our customers collaboration and communication technologies, we invest in carbon
reduce their energy usage and emissions is by managing their SAP emission offsets for air travel in the majority of countries we travel
systems through cloud services provided by our carbon-neutral from by charging an internal carbon price. This offset effort resulted
green cloud offerings. In addition, the solutions in our portfolio in a compensation of 170 kt of CO2 in 2018.
enable our customers to manage their resources, such as
electricity, in an efficient manner. Investment in Carbon Credits
The SAP HANA platform also plays a vital role in helping our In 2018, we continued to realize the benefits of our investment in
customers cut their carbon emissions. By combining the worlds of the Livelihoods Fund. Several years ago, we made a commitment to
analytic and transactional data into one real-time, in-memory invest €3 million covering a 20-year participation in a fund that
platform, it can help create much leaner operations, further supports social causes as well as the sustainability of agricultural
simplifying the system landscape and reducing energy and rural communities worldwide. The returns from this unique
consumption. With the new SAP Profitability and Performance investment in the Livelihoods Fund consist of high-quality carbon
Management application powered by SAP HANA, we have credits. Following the success of this scheme, we will invest in a
integrated value chain sustainability management and carbon second Livelihoods Fund in 2019, committing another €3 million
footprint management to support our customers on their path to over the next 30 years and thus increasing our commitment to
increased transparency and combine non-financial and financial sustainable initiatives. In 2018, the carbon credits we received from

40
the first fund helped us to offset our carbon footprint by 35.7 kt. approximately 70 countries worldwide, we occupy roughly
SAP has pledged to plant five million trees by 2025 in collaboration 1,870,000 square meters. The space in most locations other than
with various non-governmental organizations. In 2018, we started our principal office in Germany is leased. We also own certain real
by investing in an additional 500,000 trees as part of our carbon properties in Newtown Square and Palo Alto (United States); Ban-
offsetting initiatives. galore (India); Sao Leopoldo (Brazil); London (UK); Ra’anana (Isra-
el), Colorado Springs (United States) and a few other locations in
and outside of Germany.
Intellectual Property, The office and datacenter space we occupy includes approxi-
mately 380,000 square meters in the EMEA region, excluding Ger-
Proprietary Rights and many, approximately 430,000 square meters in the region North
and Latin America, and approximately 435,000 square meters in
Licenses the APJ Region.
The space is being utilized for various corporate functions
We rely on a combination of the protections provided by
including research and development, our data centers, customer
applicable statutory and common law rights, including trade secret, support, sales and marketing, consulting, training, administration
copyright, patent, and trademark laws, license and non-disclosure and messaging. Substantially all our facilities are being fully used or
agreements, and technical measures to establish and protect our
sublet. For a discussion on our non-current assets by geographic
proprietary rights in our products. For further details on risks region see Note (D.6) to our Consolidated Financial Statements.
related to SAP’s intellectual property rights, see “Item 3. Key Also see, “Item 6. Directors, Senior Management and Employees —
Information — Risk Factors — Operational Risks.” Employees,” which discusses the numbers of our employees, in
We may be dependent in the aggregate on technology that we FTE’s, by business area and by geographic region, which may be
license from third parties that is embedded into our products or that used to approximate the productive capacity of our workspace in
we resell to our customers. We have licensed and will continue to
each region.
license numerous third-party software products that we incorporate We believe that our facilities are in good operating condition and
into and/or distribute with our existing products. We endeavor to adequate for our present usage. We do not have any significant
protect ourselves in the respective agreements by obtaining certain
encumbrances on our properties. We do not believe we are subject
rights in case such agreements are terminated. to any environmental issues that may affect our utilization of any of
We are a party to patent cross-license agreements with several our material assets. We are currently undertaking construction
third parties.
activities in various locations to increase our capacity for future
We are named as a defendant or plaintiff in various legal expansion of our business. Our significant construction activities are
proceedings for alleged intellectual property infringements. See described below, under the heading “Principal Investments and
Note (G.4) to our Consolidated Financial Statements for a more Divestitures Currently in Progress.”
detailed discussion relating to certain of these legal proceedings.
Investments
Description of Property Principal Investments and Divestitures Currently
in Progress
Our principal office is located in Walldorf, Germany, where we
In 2018, we continued various construction projects and started
own and occupy approximately 465,000 square meters of office
new construction activities in several locations. Except for one new
and datacenter space including our facilities in neighboring St. Leon-
office building in Walldorf, which is partially financed by a
Rot. We also own and lease office space in various other locations in
promotional loan, we plan to finance all of these projects from
Germany, totaling approximately 160,000 square meters. In
operating cash flow. Our most important projects are listed below.

41
Construction Projects

€ millions

Country Location of Facility Short Description Estimated Total Costs Incurred as Estimated
Cost at 12/31/2018 Completion Date

Germany Walldorf New office building for approx. 38 27 January 2019

450 employees

Germany St. Leon-Rot New office building for approx. 38 24 April 2019
450 employees

Germany Walldorf New office building for approx. 74 66 February 2019

700 employees

Germany Walldorf New data center phase 2 52 34 July 2019

Brazil Sao Leopoldo New office building for approx. 33 2 December 2020
700 employees

Bulgaria Sofia New office building for approx. 46 0 September 2021

1.200 employees

Germany Munich New office building for approx. 100 0 December 2021
850 employees

India Bangalore New office building for approx. 97 13 December 2022

4,000 employees

For more information about planned investment expenditures,

see the Investment Goals section. There were no material
divestitures within the reporting period.

Principal Investments and Divestitures for the

Last Three Years
Our principal investments for property, plant, and equipment
(other than from business combinations) amounted to €1,302
million in 2018 (2017: €1,196 million; 2016: €933 million). Principal
investments in 2018 for property, plant, and equipment increased
compared to 2017 primarily due to replacement and purchase of IT
infrastructure (data centers, etc.) and the construction of new
buildings. The increase from 2016 to 2017 was mainly due to
replacement and purchase of IT infrastructure (data centers, etc.).
Our investments for intangible assets such as acquired
technologies and customer relationships amounted to €791 million
in 2018 compared to €227 million in 2017 (2016: €158 million). Our
investments allocated to goodwill increased to €1.609 million in
2018 from €205 million in 2017 (2016: €57 million). The increase in
2018 mainly results from the Callidus acquisition (see Note (D.1) for
additional information). The respective increases in 2017 are due to
one acquisition which added more goodwill than the several small
acquisitions in 2016. For further details on investments related to
acquisitions, see Notes (D.2) and (D.3) to our Consolidated
Financial Statements.
For further information regarding the principal markets in which
SAP conducts business, including a breakdown of total revenues by
category of activity and geographic market for each of the last
three years, see “Item 5. Operating and Financial Review and
Prospects — Operating Results (IFRS)” of this report.

42
ITEM 4A. UNRESOLVED while business investment benefitted from domestic demand,
favourable financing conditions, and improving balance sheets.

STAFF COMMENTS As for the Americas region, economic activity rebounded in the
United States in 2018 and remained resilient. However, trade
Not applicable. tensions with China escalated when both countries introduced
tariffs on each other’s exports in the second half of the year.
The Asia Pacific Japan (APJ) region in 2018 saw a rebound in

ITEM 5. OPERATING AND economic activity but the end of fiscal stimulus in Japan. As a
result, the Japanese economy even contracted during the third
FINANCIAL REVIEW AND quarter, due also to temporary factors related to natural disasters.
At the same time, economic activity in China remained strong,
PROSPECTS despite the trade tensions with the United States. According to the
ECB, robust exports, solid consumption, easing financial
Overview conditions, and a supportive government policy strengthened the
Chinese economy.
For information on our principal sources of revenue and how the
different types of revenue are classified in our income statement
refer to Note (A.1) to our Consolidated Financial Statements.
The IT Market
See “Item 4. Information about SAP — Products, Research & Digital transformation was well on its way in 2018, elaborates
Development, and Services” for a more detailed description of the the U.S.-based market research firm International Data
products and services we offer. Corporation (IDC) in its most recent publications3). This is what we
The following discussion is provided to enable a better described in our previous annual and half-year reports as well. IDC
understanding of our operating results for the periods covered, research shows that 46% of companies finished their
including: “experimentation” stage in 2018 and opted for an integrated digital
– the factors that we believe impacted our performance in 2018; strategy and architecture, not just digitally-enabled products and
– our outlook for 2018 compared to our 2018 actual performance services. Thus, in nearly every industry and in organizations of
(non-IFRS); every size, digital transformation helped create new sources of
– a discussion of our operating results for 2018 compared to 2017 revenue through higher competitiveness, with a huge impact on the
and for 2017 compared to 2016; global economy.
– the factors that we believe will impact our performance in 2019; According to IDC, the Internet of Things (IoT) was a major topic
and again in 2018, as it helped businesses run more efficiently, gain
– our financial targets and prospects. insight into business processes, and make real-time decisions.
The preceding overview should be read in conjunction with the Worldwide spending on IoT amounted to US$725.4 billion (+14.9%)
more detailed discussion and analysis of our financial condition and in 2018, US$159.5 billion (+18.8%) of which in the EMEA region,
results of operations in this Item 5, “Item 3. Key Information — Risk US$212.9 billion (+15.0%) in the Americas region, and
Factors” and “Item 18. Financial Statements.” US$353.0 billion (+13.1%) in the APJ region. The largest portion of
these spendings was in the device category, followed by application
software, platform, and ongoing services5).
Economy and the Market In 2018, reports IDC, a further shift towards public cloud
Global Economic Trends platforms took place and made these platforms primary sources
for fundamental innovation in the application and service world,
In 2018, the global economy remained resilient and continued to
such as blockchain, data management, mobile, and security2).
expand at a steady pace, but at the same time, it showed signs of
However, it was mostly the need for machine learning and
moderating momentum. That is what the European Central Bank
advanced analytics, whose workloads require the scalability and
(ECB) reported in its December 2018 Economic Bulletin1). Overall,
elasticity of cloud computing, that drove adoption of these systems
the services sector performed better in 2018 than manufacturing,
into the cloud4).
and advanced economies better than emerging markets, due to
ERP rationalization and modernization were another focus in
more accommodative financial conditions. According to the ECB,
2018, with the aim to develop new sources of revenue through data
economic activity weakened most substantially in those emerging
management monetization3). Artificial intelligence (AI) became a
markets that had been subject to financial turmoil in the summer,
part of numerous technologies and solutions and reached more
including Argentina and Turkey.
devices, apps, and services than before. IDC calculates that
In the Europe, Middle East, and Africa (EMEA) region, euro area
enterprises using this technology made 21% of their revenue with it
real GDP increased on a broad basis and remained resilient overall,
in 2018.
but on a lower level than the ECB had expected in the course of the
year. This was mostly due to a diminishing demand for goods
exports and temporary sector-specific developments (for example,
car production in Germany). Meanwhile, services exports increased
slightly, and the construction business showed robust growth. In
addition, a strong labor market supported private consumption,

43
Sources: expected a full-year 2018 effective tax rate (IFRS and non-IFRS) of
1)
European Central Bank, Economic Bulletin, Issue 8/2018, Publication Date: 27.0% to 28.0% (2017: 19.5% (IFRS) and 22.8% (non-IFRS)).
December 27, 2018
(https://www.ecb.europa.eu/pub/pdf/ecbu/eb201808.en.pdf) On April 5, 2018, SAP completed the acquisition of Callidus
2)
IDC FutureScape: Worldwide IT Industry 2019 Predictions, Doc #US44403818, Software Inc. (CallidusCloud). In light of this acquisition and our
October 2018 strong operating profit in the first quarter, we adjusted our outlook
3)
IDC FutureScape: Worldwide Digital Transformation 2019 Predictions, Doc in April 2018 for all parameters. We then expected non-IFRS cloud
#US43647118, October 2018
4)
subscriptions and support revenue to reach a range between
IDC FutureScape: Worldwide Intelligent ERP 2019 Predictions, Doc
#US43262918, October 2018 €4.95 billion and €5.15 billion at constant currencies. We also
5)
IDC Market Forecast: Worldwide Internet of Things Forecast, 2018–2022, raised our forecast for non-IFRS cloud and software revenue to a
September 2018 range of €20.85 billion to €21.25 billion at constant currencies. We
expected our non-IFRS total revenue to end between €24.8 billion
and €25.3 billion at constant currencies. We also adjusted our
Impact on SAP outlook for non-IFRS operating profit for 2018 upward to range
The velocity of the global digital transformation increased between €7.35 billion and €7.5 billion at constant currencies.
further and SAP continued to significantly benefit from this mega In July 2018, based on the strong momentum in our cloud
trend. The strong momentum across our entire portfolio and in all business, we raised our forecast for 2018 non-IFRS cloud
regions was remarkable, and the share of our more predictable subscriptions and support revenue once more, to a range of
revenue reached a new high. €5.05 billion to €5.2 billion at constant currencies. We
consequently also adjusted our outlook for the other parameters,
Performance Against Our Outlook for as follows: The forecast for non-IFRS cloud and software revenue
was increased to a range of €21.025 billion to €21.25 billion at
2018 (Non-IFRS) constant currencies, the forecast for non-IFRS total revenue was
As in previous years, our 2018 operating profit-related goals and increased to a range of €24.975 billion to €25.3 billion at constant
published outlook were based on our non-IFRS financial measures currencies, and the forecast for non-IFRS operating profit was
at constant currencies. For this reason, in the following section we increased to a range of €7.4 billion to €7.5 billion at constant
discuss performance against our outlook only in terms of non-IFRS currencies. We continued to expect a full-year 2018 effective tax
numbers derived from IFRS measures. The subsequent section rate (IFRS and non-IFRS) of 27.0% to 28.0%, but now expected to
about IFRS operating results discusses numbers only in terms of reach the upper end of these ranges.
the International Financial Reporting Standards (IFRSs), so the In October 2018, based on the continued strong momentum in
numbers in that section are not expressly identified as IFRS our cloud business, the Company raised its outlook a third time for
numbers. non-IFRS cloud subscriptions and support revenue, to range
between €5.15 billion and €5.25 billion at constant currencies. This
Outlook for 2018 (Non-IFRS) range represents a growth rate of 36.5% to 39% at constant
At the beginning of 2018, we projected that our 2018 non-IFRS currencies. Consequently, we also raised the forecast for non-IFRS
cloud subscriptions and support revenue would be between cloud and software revenue to a range of €21.15 billion to
€4.8 billion and €5.0 billion at constant currencies (2017: €21.35 billion at constant currencies. This range represents a
€3.77 billion). This range represents a growth rate of 27% to 33% growth rate of 8% to 9% at constant currencies. We expected our
at constant currencies. The Company expected full-year 2018 non- non-IFRS total revenue to end between €25.2 billion and
IFRS cloud and software revenue to be in a range of €20.7 billion to €25.5 billion at constant currencies. This range represents a
€21.1 billion at constant currencies (2017: €19.55 billion). This growth rate of 7.5% to 8.5% at constant currencies. We also
range represents a growth rate of 6% to 8% at constant currencies. adjusted our outlook for non-IFRS operating profit for 2018 upward
In addition, we aimed for non-IFRS total revenue in a range of to range between €7.425 billion and €7.525 billion at constant
€24.6 billion to €25.1 billion at constant currencies (2017: currencies. This range represents a growth rate of 9.5% to 11% at
€23.46 billion). This range represents a growth rate of 5% to 7% at constant currencies. We continued to expect a full-year 2018
constant currencies. We also projected our full-year non-IFRS effective tax rate (IFRS) at the upper end of the range of 27.0% to
operating profit for 2018 would end between €7.3 billion and 28.0%, but now expected an effective tax rate (non-IFRS) of 26.5%
€7.5 billion (2017: €6.77 billion) at constant currencies. This range to 27.5%.
represents a growth rate of 8% to 11% at constant currencies. We

44
2018 Actual Performance Compared to Outlook (Non-IFRS)
We hit or exceeded the raised outlook for all our guidance parameters we published in April, July, and October.

Comparison of Outlook and Results for 2018

Outlook for 2018 Revised Outlook Revised Outlook Revised Outlook Results
(as reported in for 2018 for 2018 for 2018 for 2018
Integrated Report (Q1 Quarterly (Q2 Quarterly (Q3 Quarterly
2017) Statement) Statement) Statement)
Cloud subscriptions and support €4.80 billion €4.95 billion €5.05 billion €5.15 billion €5.21 billion
revenue (non-IFRS, at constant to €5.00 billion to €5.15 billion to €5.20 billion to €5.25 billion
currencies)
Cloud and software revenue €20.70 billion €20.85 billion €21.025 billion €21.15 billion €21.58 billion
(non-IFRS, at constant currencies) to €21.10 billion to €21.25 billion to €21.25 billion to €21.35 billion

Total revenue €24.60 billion €24.80 billion €24.975 billion €25.20 billion €25.96 billion
(non-IFRS, at constant currencies) to €25.10 billion to €25.30 billion to €25.30 billion to €25.50 billion

Operating profit €7.3 billion €7.35 billion €7.40 billion €7.425 billion €7.48 billion
(non-IFRS, at constant currencies) to €7.50 billion to €7.50 billion to €7.50 billion to €7.525 billion

Effective tax rate (IFRS) 27.0% to 28.0% 27.0% to 28.0%* 27.0%

Effective tax rate (non-IFRS) 27.0% to 28.0% 27.0% to 28.0%* 26.5% to 27.5% 26.3%
* In the 2018 Half-Year Report, we confirmed our previous outlook, but now expected to reach the upper end of these ranges.

Despite economic and diplomatic tensions, arising particularly to 2017. The cloud subscriptions gross margin for 2018 was 63%,
from the trade conflict between China and the United States, and an increase of 0.7pp on a constant currency basis year over year.
uncertainties regarding the possible outcome and effects of the Despite continued investment in our business transformation, the
Brexit negotiations, our new and existing customers in 2018 margin improvement was primarily driven by increasing efficiency
continued to show a strong willingness to invest in our solutions of our cloud offerings.
and services. All cloud subscriptions and support gross margins on our
At constant currencies, non-IFRS cloud subscriptions and various cloud offerings developed positively in 2018:
support revenue grew from €3.77 billion in 2017 to €5.21 billion in Our cloud subscriptions gross margin (non-IFRS) in our
2018 and therefore ended in our guidance range of €5.15 billion to Business Network business increased further by 1.1pp (on a
€5.25 billion. That represents an increase of 38% on a constant constant currency basis), resulting in 78% for 2018, already close
currency basis. to our long-term ambition of 80% for 2020. This excellent result is
Our new cloud bookings, which are one of our measures for attributable to the continued positive gross margin development
cloud-related sales success and for future cloud subscriptions within the SAP Ariba and SAP Concur portfolio.
revenue, increased in 2018 to €1.81 billion (2017: €1.45 billion). This The cloud subscriptions gross margin (non-IFRS) on our
is an increase of 25% (28% on a constant currency basis). In infrastructure as a service (IaaS) cloud offering continued to
addition to this strong growth, our cloud backlog (unbilled future develop well in 2018. Our cloud subscription gross margin (non-
revenue based on existing cloud contracts) reached €10.1 billion IFRS) was 13% in 2018, which reflects an improvement of 6.5pp on
(2017: €7.5 billion). This is an increase of 35% (30% on a constant a constant currency basis.
currency basis). We expect this committed business to contribute Profitability in our software as a service/platform as a service
to our cloud subscriptions and support growth in 2019 and beyond. (SaaS/PaaS) cloud offering was 60% at constant currencies (non-
Besides the strong cloud business, our traditional on-premise IFRS) for 2018. Despite ongoing investments in the further
business again achieved a solid result on a constant currency basis development and harmonization of our various software as a
in 2018, at the same strong level as the year before. On a constant service/platform as a service offerings on a single platform, we
currency basis, non-IFRS cloud and software revenue grew from were able to increase the margin a further 2.4pp compared to our
€19.55 billion in 2017 to €21.58 billion in 2018. That represents an long-term ambition of 70%.
increase of 10% on a constant currency basis. This revenue thus We saw efficiency improvements in both our cloud and
overachieved the forecast for 2018, which was raised in April, July, traditional on-premise business, which drove continued operating
and October. profit expansion. Non-IFRS operating profit in 2018 was
Our total revenue (non-IFRS) on a constant currency basis rose €7.48 billion on a constant currency basis (2017: €6.77 billion),
11% in 2018 to €25.96 billion (2017: €23.46 billion) and therefore reflecting an increase of 10%. As a result, we were able to surpass
beat our repeatedly increased outlook. our excellent results from 2017, despite our continued investment
Operating expenses (non-IFRS) in 2018 on a constant currency in our business transformation during the reporting year. The
basis were €18.48 billion (2017: €16.69 billion), an increase of 11%. positive development of our operating profit was largely influenced
Our expense base in 2018 continued to be impacted by our by investment decisions focused on customers and products
transformation to a fast-growing cloud business. In our initial which, among other things, resulted in an increase in our overall
outlook for 2018, we expected the cloud subscriptions and support headcount by 7,955 full-time equivalents (thereof 5,912 organic),
gross margin to be at least stable or to increase slightly compared primarily in research and development, services, cloud, and sales.

45
With these additional resources, we continued to make targeted
investments in our innovation areas and growth markets. Thus, Operating Results (IFRS)
constant currency non-IFRS operating profit amounting to
This section on operating results (IFRS) discusses results only in
€7.48 billion was above the midpoint of our outlook range raised in terms of IFRS measures, so the IFRS numbers are not expressly
October (€7.425 billion to €7.525 billion). identified as such.
We achieved an effective tax rate (IFRS) of 27.0% and an
effective tax rate (non-IFRS) of 26.3%, which is at the lower end of Our 2018 Results Compared to Our 2017
the range of 27.0% to 28.0% (IFRS) and below the adjusted
outlook of 26.5% to 27.5% (non-IFRS). This mainly resulted from
Results (IFRS)
taxes for prior years.
Our constant currency non-IFRS revenues and non-IFRS results
in 2018 were driven by our positive business development as well
Revenue
as the following factors: Total Revenue
– The adoption of the new revenue recognition standard IFRS 15 Total revenue increased from €23,461 million in 2017 to
at the beginning of fiscal year 2018 took place without adjusting
€24,708 million in 2018, representing an increase of €1,247 million,
prior-year figures. Revenue was €0.16 billion higher (non-IFRS or 5%.
at constant currencies) than it would have been under the
previous revenue recognition standard, while operating
expenses (non-IFRS at constant currencies) were €0.25 billion € millions | change since previous year
lower after applying the new standard. For more information
about the adoption of IFRS 15, see the Notes to the Consolidated 24,708
23,461
Financial Statements, Note (A.5). 22,062
20,793
– Revenue and earnings from our acquisitions are reflected in our
17,560
results as of the respective acquisition date. Callidus Software
18%
Inc. (CallidusCloud), as our largest acquisition, had a positive
impact of €0.16 billion in cloud subscriptions and support
revenue (non-IFRS at constant currencies) and a positive 6% 6% 5%
4%
impact of €0.05 billion on operating profit at constant
currencies. For more information about our acquisitions in fiscal
year 2018, see the Notes to the Consolidated Financial
Statement, Note (D.1).
2014 2015 2016 2017 2018
– Besides the financial recognition of hyperinflation in Argentina
and Venezuela, our non-IFRS numbers at constant currencies
are further impacted by the hyperinflation due to the mechanics The growth in revenue resulted primarily from a €1,224 million
of our constant currency adjustments: By applying prior-year increase in cloud subscriptions and support revenue to
currency exchange rates to our current-period numbers, these €4,993 million. Cloud and software revenue represented 83% of
numbers are adjusted for currency exchange rate changes. In total revenue in 2018 (2017: 83%). Service revenue increased 4%
contrast, the 2018 constant currency numbers are not adjusted from €3,912 million in 2017 to €4,086 million in 2018, which was
for the respective change in inflation. This benefitted the non- 17% of total revenue (2017: 17%).
IFRS software revenue by €0.15 billion at constant currencies,
Revenue by Revenue Type
the non-IFRS software support revenue by €0.15 billion at
constant currencies, and our non-IFRS total revenue by
€0.46 billion at constant currencies. In contrast, the operating € millions
expenses (non-IFRS at constant currencies) experienced a
negative impact of €0.34 billion, resulting in an increase in our Cloud Subscriptions & Support 4,993
non-IFRS operating profit (non-IFRS) of €0.12 billion at constant
currencies. For more information about currency conversion Software Licenses 4,647
and hyperinflation, see the Notes to the Consolidated Financial
Statements, Note (IN.1).
Software Support 10,981

Services 4,086

For more information about our regional performance, see the

Revenue by Region section below.

46
Cloud and Software Revenue our software orders received in 2018, 29% were attributable to
Revenue from cloud subscriptions and support refers to the deals worth more than €5 million (2017: 30%), while 39% were
income earned from contracts that permit the customer to access attributable to deals worth less than €1 million (2017: 40%).
specific software solutions hosted by SAP during the term of its Our stable customer base, the continued demand for our
contract with SAP. Software revenue results from the fees earned software throughout 2018 and the previous years, and the
from selling or licensing software to customers. Support revenue continued interest in our support offerings resulted in an increase
represents fees earned from providing customers with technical in support revenue from €10,908 million in 2017 to €10,981 million
support services and unspecified software upgrades, updates, and in 2018. The SAP Enterprise Support offering was the largest
enhancements. For further information about our revenue types, contributor to our support revenue. The €73 million, or 1%, growth
see the Notes to the Consolidated Financial Statements, Note (A.1). in support revenue is primarily attributable to our SAP Product
Cloud and software revenue grew from €19,549 million in 2017 Support for Large Enterprises services and our SAP Enterprise
to €20,622 million in 2018, an increase of 5%. Support services. The acceptance rate for SAP Enterprise Support
among new customers remained very high in 2018 at 98% (2017:
Cloud and Software 99%).
Software and support revenue decreased €152 million, or 1%,
€ millions from €15,780 million in 2017 to €15,628 million in 2018
We define more predictable revenue as the sum of our cloud
20,622 subscriptions and support revenue and our software support
19,549
18,424 revenue. Compared to the previous year, our more predictable
17,214
revenue increased from €14,677 million in 2017 to €15,975 million
14,315 in 2018. This reflects a rise of 9%. More predictable revenue
accounted for 65% of our total revenue in 2018 (2017: 63%).

More Predictable Revenue

€ millions
Software Support Cloud 15,975
14,677
2014 2015 2016 2017 2018 13,564
12,379 4,993
3,769
2,993
Cloud subscriptions and support revenue increased from 9,916 2,286
€3,769 million in 2017 to €4,993 million in 2018. 1,087

Cloud Subscriptions and Support

10,093 10,571 10,908 10,981
8,829
€ millions

4,993
2014 2015 2016 2017 2018

3,769
Services Revenue
2,993
Services revenue combines revenue from professional services,
2,286 premium support services, and other services such as training
services and messaging services. Professional services primarily
1,087 relate to the implementation of our cloud subscriptions and on-
premise software products. Our premium support offering consists
of high-end support services tailored to customer requirements.
Messaging services are primarily transmission of electronic text
2014 2015 2016 2017 2018 messages from one mobile phone provider to another.
Services revenue increased €175 million, or 4%, from
Impacted by currency headwinds, our software revenue €3,912 million in 2017 to €4,086 million in 2018.
declined by €225 million from €4,872 million in 2017 to A solid market demand led to a 4% increase of €141 million in
€4,647 million in 2018. Our customer base continued to expand in consulting revenue and premium support revenue from
2018. Based on the number of contracts concluded, 15% of the €3,215 million in 2017 to €3,356 million in 2018. In 2018, consulting
orders we received for software in 2018 were from new customers and premium support revenue contributed 82% of the total service
(2017: 15%). The total value of software orders received decreased revenue (2017: 82%) and 14% of total revenue (2017: 14%).
9% year over year. The total number of contracts signed for new Revenue from other services increased €34 million, or 5%, to
software decreased 1% to 58,530 (2017: 59,147), with an average €731 million in 2018 (2017: €697 million).
order value of €82 thousand in 2018 (2017: €89 thousand). Of all

47
Revenue by Region contributed 81% (2017: 80%) of all revenue generated in the
(based on customer location) Americas region. In the remaining countries of the Americas region,
revenue decreased 4% to €1,832 million, induced by a challenging
macroeconomic situation in Latin America. Revenue in the
€ millions remaining countries of the Americas region was generated
primarily in Canada, Brazil, and Mexico. Cloud and software
APJ revenue generated in the Americas region totaled €7,973 million
3,891
(2017: €7,666 million). That was 82% of all revenue from the region
(2017: 82%).

Americas: Cloud and Software Revenue

Americas EMEA
9,713 11,104
€ millions
On Premise Cloud

7,666 7,973
7,366
6,929

2,000 2,321 2,941

5,275 1,579
EMEA Region
709
In 2018, the EMEA region generated €11,104 million in revenue
(2017: €10,415 million), which was 45% of total revenue (2017:
44%). This represents a year-over-year increase of 7%. Revenue in 4,566
5,350 5,366 5,345 5,032
Germany increased 9% to €3,658 million (2017: €3,352 million).
Germany contributed 33% (2017: 32%) of all EMEA region revenue.
The remaining revenue in the EMEA region was primarily generated
2014 2015 2016 2017 2018
in the United Kingdom, France, Switzerland, the Netherlands, and
Italy. Cloud and software revenue generated in the EMEA region
totaled €9,339 million (2017: €8,759 million). That was 84% of all Cloud subscriptions revenue in the Americas region rose 27% to
revenue from the region (2017: 84%). €2,941 million in 2018 (2017: €2,321 million). Software licenses and
software support revenue decreased to €5,032 million in 2018
(2017: €5,345 million).
EMEA: Cloud and Software Revenue
APJ Region
€ millions In 2018, 16% (2017: 16%) of our total revenue was generated in
the APJ region. Total revenue in the APJ region increased 5% to
On Premise Cloud €3,891 million. In Japan, revenue increased 9% to €963 million.
9,339 Revenue from Japan was 25% (2017: 24%) of all revenue
8,759
8,193 generated in the APJ region. In the remaining countries of the APJ
7,622 1,441
1,029 region, revenue increased 4%. Revenue in the remaining countries
6,819 703
507
277 of the APJ region was generated primarily in Australia, India, and
China. Cloud and software revenue in the APJ region totaled
€3,310 million in 2018 (2017: €3,124 million). That was 85% of all
7,489 7,730 7,898 revenue from the region (2017: 84%).
6,542 7,115

2014 2015 2016 2017 2018

Cloud subscriptions revenue in the EMEA region rose 40% to

€1,441 million in 2018 (2017: €1,029 million). Software licenses and
software support revenue rose 2% to €7,898 million in 2018 (2017:
€7,730 million).

Americas Region
In 2018, 39% of our total revenue was generated in the
Americas region (2017: 40%). Total revenue in the Americas region
increased 4% to €9,713 million; revenue generated in the United
States increased 6% to €7,880 million. The United States

48
APJ: Cloud and Software Revenue Operating Profit

€ millions € millions | change since previous year

On Premise Cloud 5,703

3,310
3,124 5,135
2,865
2,663 419 611 4,877
290
2,221 200
101 4,331 4,252 21%
17%

2,463 2,575 2,705 2,699

2,120
-3% -2%
-5%

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

Cloud subscriptions revenue in the APJ region rose 46% to Operating Margin
€611 million in 2018 (2017: €419 million). Software licenses and
software support revenue slightly decreased from €2,705 million in
2017 to €2,699 million in 2018, reflecting a year-over-year growth
of 0%. Percent | change since previous year

Operating Profit and Operating Margin

SAP posted record revenues in 2018, particularly in Cloud and 24.7
Services. Total revenue grew 5% to €24,708 million (2017: 23.3 23.1
€23,461 million), representing an increase of €1,247 million.
On the other hand, our operating expenses increased 20.5 20.8
€421 million or 2% to €19,005 million (2017: €18,584 million). The
2.8pp 2.3pp
main contributors to that increase were our continued investment -2.0pp -4.2pp -2.5pp
in research and development as well as our revenue-related cloud
subscriptions and support activities. We also continued our
investments in the Services area in line with the increased revenue.
Concurrently, the decreased share price in 2018 lead to declining
costs of share-based compensation of €830 million (2017: 2014 2015 2016 2017 2018
€1,120 million). Restructuring expenses decreased further to
€19 million (2017: €182 million). Our employee headcount
(measured in full-time equivalents, or FTEs) increased by 7,955
FTEs year over year to 96,498.
As an overall result of these effects on operating profit, our
Overall, our growth in revenue exceeded the increase in
operating margin widened 2.3pp to 23.1% in 2018 (2017: 20.8%).
expenses, leading to a 17% increase in operating profit to
Our revenues and results in 2018 were influenced by positive
€5,703 million (2017: €4,877 million).
business developments as well as the following special effects (for
the impacts on our non-IFRS results at constant currencies, see the
Performance Against Our Outlook for 2018 section):
– In 2018, the adoption of IFRS 15 had a positive effect on
software license and support revenue of €170 million. Combined
with other counter-effects, this resulted in a total effect on our
revenues of €158 million. Our operating expenses benefited by
€239 million and our operating profit was positively impacted by
€399 million. For more information about the adoption of
IFRS 15, see the Notes to the Consolidated Financial
Statements, Note (A.5).
– The acquisition of Callidus Software Inc. (CallidusCloud) had a
positive impact since the closing date of €126 million on our
cloud subscriptions and support revenue, and a negative impact
on our operating profit of €70 million. For more information
about our acquisitions in 2018, see the Notes to the
Consolidated Financial Statement, Note D.1.

49
– The financial recognition of hyperinflation in Argentina and cloud solutions, we continue to invest by expanding capacities to
Venezuela resulted in a decrease in our total revenue of meet the increased demand. As a result, cost of services rose 5%
€19 million and in a decrease in our operating profit of to €3,302 million (2017: €3,158 million). Our gross margin on
€12 million. For more information about currency conversion services, defined as services profit as a percentage of services
and hyperinflation, see the Notes to the Consolidated Financial revenue, remained for the most part stable at 19.2% (2017: 19.3%).
Statements, Note IN.1.
Research and Development Expense
Changes to the individual elements in our cost of revenue were as
follows: Our research and development (R&D) expense consists
primarily of the personnel cost of our R&D employees, costs
Cost of Cloud and Software incurred for independent contractors we retain to assist in our R&D
Cost of cloud and software consists primarily of costs for activities, and amortization of the computer hardware and software
deploying and operating cloud solutions, the cost of developing we use for our R&D activities.
custom solutions that address customers’ specific business Due to growing personnel costs driven by a 9% increase on
requirements, customer support costs, amortization expenses average for the year in our R&D headcount, our R&D expense in-
relating to intangibles, and license fees and commissions paid to creased by 8% to €3,624 million in 2018 from €3,352 million in
third parties for databases and the other complementary third- 2017. R&D expense as a percentage of total revenue thus increased
party products sublicensed by us to our customers. to 14.7% in 2018 (2017: 14.3%). For more information, see the
In 2018, the cost of cloud and software increased 7% to Products, Research & Development, and Services section.
€4,160 million (2017: €3,893 million).
Sales and Marketing Expense
The main impact on costs was an additional €408 million year
over year for delivering and operating cloud applications in Sales and marketing expense consists mainly of personnel
response to the strength of customer demand. These investments costs, direct sales costs, and the cost of marketing our products
contributed to revenue growth. Our margin on cloud subscriptions and services.
and support widened by 2.6pp from 56.0% in 2017 to 58.6% in Our sales and marketing expense decreased 2% from
2018. This improvement in margin is attributable to strong growth €6,924 million in 2017 to €6,781 million in 2018. This decrease is
in cloud subscriptions and support revenue of 32% to mainly attributable to the adoption of the new IFRS 15 accounting
€4,993 million (2017: €3,769 million) with a lower increase in standard and the resulting capitalization of sales commissions. For
corresponding costs for cloud subscriptions and support of 25% to more information, see the Notes to the Consolidated Financial
€2,068 million (2017: €1,660 million). Statements, Note (A.5). Accordingly, the ratio of sales and
A 1% decrease in software license and support revenue to marketing expense to total revenue, expressed as a percentage, fell
€15,628 million (2017: €15,780 million) and a corresponding to 27.4% in 2018 (2017: 29.5%), a decrease of 2.1pp.
decrease of 6% in the software license and support costs to General and Administration Expense
€2,092 million (2017: €2,234 million) enabled us to widen our
Our general and administration expense consists mainly of
software license and support margin by 0.8pp to 86.6% (2017:
personnel costs to support our finance and administration
85.8%).The gross margin on cloud and software, defined as cloud
functions.
and software profit as a percentage of cloud and software revenue,
General and administration expense increased 2% from
narrowed by 0.3pp in 2018 to 79.8% (2017: 80.1%). This decline
€1,075 million in 2017 to €1,098 million in 2018. This increase is
was mainly driven by the change in the cloud and software revenue
primarily the result of higher personnel costs related to job creation
mix, which now has a higher proportion of cloud subscriptions and
in administrative areas, based on the increased business volume
support revenues. Due to infrastructure costs, these revenues
related to our growth. Thanks to strong operating results, the ratio
currently deliver a lower margin simultaneously with a declining
of general and administration expense to total revenue improved by
proportion of higher-margin software and support revenues.
0.1pp year over year to 4.4% (2017: 4.6%).
Cost of Services
Cost of services consists primarily of the cost of consulting,
Segment Information
premium services and training courses and the cost of bought-in At the end of 2018, SAP had three reportable segments: the
consulting and training resources. Applications, Technology & Services segment, the SAP Business
We were able to increase our service revenue by 4% year over Network segment, and the Customer Experience segment.
year to €4,086 million in 2018 (2017: €3,912 million). As our For more information about our segment reporting, see the
service business trends away from traditional software licensing Notes to the Consolidated Financial Statements, Notes (C.1) and
and consulting revenue toward more subscription revenue from (C.2), and the Performance Management System section.

50
Applications, Technology & Services Segment
€ millions, unless otherwise stated 2018 2017 ∆ in % ∆ in %
(Non-IFRS)
Actual Constant Actual Actual Constant
Currency Currency Currency Currency Currency

Cloud subscriptions and support revenue – SaaS/PaaS1) 1,829 1,894 1,403 30 35

Cloud subscriptions and support gross margin – SaaS/PaaS1) (in %) 58 57 59 –2pp –2pp

Cloud subscriptions and support revenue – IaaS2) 488 506 328 49 54

2)
Cloud subscriptions and support gross margin – IaaS (in %) 13 14 7 6pp 7pp

Cloud subscriptions and support revenue 2,317 2,400 1,732 34 39

Cloud subscriptions and support gross margin (in %) 48 48 49 –1pp –2pp

Segment revenue 20,806 21,892 20,218 3 8

Gross margin (in %) 73 73 74 –1pp –1pp

Segment profit 8,746 9,183 8,478 3 8

Segment margin (in %) 42 42 42 0pp 0pp

1)
Software as a service/platform as a service
2)
Infrastructure as a service

The Applications, Technology & Services segment recorded a Overall, the revenue share of more predictable revenue streams in
strong increase in cloud subscriptions and support revenue in 2018. this segment increased 1.4pp from 62.4% in 2017 to 63.9% in 2018.
As a consequence of strong demand in our digital core offering and The segment's cost of revenue during the same period increased
database and data management solutions, and the growing success 7% (14% at constant currencies) to €5,625 million (2017:
of our SAP Cloud Platform in the market, SaaS/PaaS revenue €5,262 million). This increase in expenses was primarily the result
increased 30% (35% at constant currencies). We also saw of higher investment in expanding our cloud infrastructure and in
SAP S/4HANA Cloud and SAP Leonardo, our strategic offerings for providing and operating our cloud applications. This applied
the future, develop very positively and achieve strong growth rates. primarily to the SaaS/PaaS business, whose margin consequently
Our software support revenue improved slightly in 2018. It rose declined 2pp (2pp at constant currencies) compared to the year
1% (5% at constant currencies) to €10,968 million. Including before. These costs were partially offset by our IaaS business,
software licenses revenue, which remained slightly below the prior- whose increasing level of maturity achieved significant increases in
year level due to the shift toward cloud subscriptions and support efficiency. It ended the fiscal year with a margin growth of 6pp (7pp
revenue (0% at constant currencies), we achieved a total software at constant currencies).
licenses and support revenue of €15,201 million in 2018.

51
SAP Business Network Segment
€ millions, unless otherwise stated 2018 2017 ∆ in % ∆ in %
(Non-IFRS)
Actual Constant Actual Actual Constant
Currency Currency Currency Currency Currency

Cloud subscriptions and support revenue – SaaS/PaaS1) 2,178 2,265 1,840 18 23

Cloud subscriptions and support gross margin – SaaS/PaaS1) (in %) 78 78 77 1pp 1pp

Cloud subscriptions and support revenue 2,178 2,265 1,840 18 23

Cloud subscriptions and support gross margin (in %) 78 78 77 1pp 1pp

Segment revenue 2,629 2,733 2,261 16 21

Gross margin (in %) 69 69 68 1pp 1pp

Segment profit 531 545 388 37 40

Segment margin (in %) 20 20 17 3pp 3pp

1)
Software as a service/platform as a service

The SAP Business Network segment increased its cloud The segment revenue increased by 16% (21% at constant
subscriptions and support gross margin in 2018 by 1pp again, to currencies) to €2,629 million. As a result, the SAP Business
78%. The segment's cost of revenue increased 12% in 2018 (17% at Network segment achieved a segment gross margin of 69% in 2018
constant currencies) to €813 million (2017: €725 million). (2017: 68%), an increase of 1pp (1pp at constant currencies).

Customer Experience Segment

€ millions, unless otherwise stated 2018 2017 ∆ in % ∆ in %
(Non-IFRS)
Actual Constant Actual Actual Constant
Currency Currency Currency Currency Currency

Cloud subscriptions and support revenue – SaaS/PaaS1) 528 539 200 >100 >100

Cloud subscriptions and support gross margin – SaaS/PaaS1) (in %) 67 67 59 7pp 8pp

Cloud subscriptions and support revenue 528 539 200 >100 >100

Cloud subscriptions and support gross margin (in %) 67 67 59 7pp 8pp

Segment revenue 951 970 643 48 51

Gross margin (in %) 79 79 80 –1pp –1pp

Segment profit 138 139 85 62 63

Segment margin (in %) 14 14 13 1pp 1pp

1)
Software as a service/platform as a service

The new Customer Experience segment established in 2018 7pp (8pp at constant currencies) favored by Callidus contributing
recorded strong growth in total revenue of 48% (51% at constant positively with a cloud subscription and support gross margin of
currencies). This positive development was mainly influenced by the 80%. However, changes in internal allocations of cloud delivery
strong growth in our cloud subscriptions and support revenue of costs led to an increase in the cost of cloud subscription and
164% (170% at constant currencies). The acquisition of Callidus support compared to 2017. Since its acquisition in the second
Software Inc. and SAP’s cloud strategy resulted in an increasing quarter of 2018, Callidus contributed positively to the segment’s
cloud revenue share compared to software licenses and support cloud subscriptions and support revenue by €156 million and to the
revenue. Cloud subscription and support gross margin increased segment’s operating profit by €53 million.

52
Reconciliation of Cloud Subscription Revenues and Margins
€ millions, unless otherwise stated 2018 2017 ∆ in % ∆ in %
(Non-IFRS)
Actual Constant Actual Actual Constant
Currency Currency Currency Currency Currency

SAP Business Network segment 2,178 2,265 1,840 18 23

Cloud subscriptions and support revenue 3)
Other 2,361 2,434 1,604 47 52
– SaaS/PaaS1)
Total 4,539 4,700 3,443 32 36

Cloud subscriptions and support revenue 488 506 328 49 54

– IaaS2)

Cloud subscriptions and support revenue 5,027 5,205 3,771 33 38

SAP Business Network segment 78 78 77 1pp 1pp

Cloud subscriptions and support gross margin
Other3) 60 59 57 3pp 2pp
– SaaS/PaaS1) (in %)
Total 68 68 67 1pp 1pp

Cloud subscriptions and support gross margin 13 14 7 6pp 7pp

– IaaS2) (in %)

Cloud subscriptions and support gross 63 63 62 1pp 1pp

margin (in %)
1)
Software as a service/platform as a service
2)
Infrastructure as a service
3)
Other includes Applications, Technology & Services segment, Customer Experience segment, and miscellaneous. The individual revenue and margin numbers for the
Applications, Technology & Services segment and the Customer Experience segment are disclosed on the previous pages.

53
Financial Income, Net earned from selling or licensing software to customers. Support
Financial income, net, changed to –€47 million (2017: revenue represents fees earned from providing technical support
€188 million). Our finance income was €371 million (2017: services and unspecified software upgrades, updates, and
€476 million) and our finance costs were €418 million (2017: enhancements to customers.
€288 million). Cloud and software revenue grew from €18,424 million in
Finance income mainly consists of gains from disposal of 2016 to €19,549 million in 2017, an increase of 6%. This reflects
equity securities and IFRS 9-related fair value adjustments an 8% increase from changes in volumes and prices and a 1%
totaling €227 million (2017: €382 million), interest income from decrease from currency effects. Cloud subscriptions and support
loans and receivables, and other financial assets (cash, cash revenue increased from €2,993 million in 2016 to €3,769 million
equivalents, and current investments) totaling €62 million (2017: in 2017. Despite a combination of a partly challenging
€49 million), and income from derivatives totaling €77 million macroeconomic and political environment and the accelerating
(2017: €44 million). industry shift to the cloud, we achieved a €12 million increase in
Finance costs mainly consist of interest expense on financial software revenue. This increase, from €4,859 million in 2016 to
liabilities amounting to €106 million (2017: €89 million), negative €4,872 million in 2017, reflects a 3% increase from changes in
effects from derivatives amounting to €206 million (2017: volumes and prices and a 2% decrease from currency effects.
€116 million), and losses from disposal or IFRS 9-related fair Our customer base continued to expand in 2017. Based on the
value adjustments of Sapphire Ventures investments totaling number of contracts concluded, 15% of the orders we received
€44 million (2017: €27 thousands). For more information about for software in 2017 (2016: 16%) were from new customers. The
financing instruments, see the Notes to the Consolidated total value of software orders received increased 1% year over
Financial Statements, Note (E.3). year. The total number of contracts signed for new software
increased 3% to 59,147 (2016: 57,291 contracts), with an average
Income Taxes order value of €89 thousand in 2017 (2016: €91 thousand). In
The effective tax rate in 2018 was 27.0% (2017: 19.5%). The 2017, 30% (2016: 29%) of our software order entry resulted
year-over-year increase in the effective tax rate mainly resulted from deals worth more than €5 million, while 40% (2016: 38%)
from the absence of one-time tax benefits realized in 2017 resulted from deals worth less than €1 million.
relating to an intra-group transfer of intellectual property rights Our stable customer base, the continued demand for our
to SAP SE and the U.S. tax reform, and tax effects relating to software throughout 2017 and the previous years, and the
intercompany financing, which were partly compensated by continued interest in our support offerings resulted in an increase
valuation allowances on deferred tax assets, and changes in the in support revenue from €10,571 million in 2016 to €10,908
regional allocation of income. For more information about million in 2017. The SAP Enterprise Support offering was the
income taxes, see the Notes to the Consolidated Financial largest contributor to our support revenue. The €337 million, or
Statements, Note (C.5). 3%, growth in support revenue reflects a 4% increase from
changes in volumes and prices and a 1% decrease from currency
effects. This growth is primarily attributable to SAP Product
Our 2017 Results Compared to Our 2016 Support for Large Enterprises and SAP Enterprise Support. The
acceptance rate for SAP Enterprise Support among new
Results (IFRS) customers remained very high in 2017 at 99% (2016: 100%).
Total Revenue Software and support revenue rose €350 million, or 2%, from
Total revenue increased from €22,062 million in 2016 to €15,431 million in 2016 to €15,780 million in 2017. This growth
€23,461 million in 2017, representing an increase of €1,399 reflects a 4% increase from changes in volumes and prices and a
million or 6%. This increase reflects an 8% increase from 1% decrease from currency effects.
changes in volumes and prices and a 1% decrease from currency We define predictable revenue as the sum of our software
effects. The growth in revenue resulted primarily from a €776 support revenue and our cloud subscriptions and support
million increase in cloud subscriptions and support revenue. revenue. Compared to the previous year, our predictable revenue
Furthermore, software support revenue rose €337 million. This increased from €13,564 million in 2016 to €14,677 million in
growth is a result of continuously high software license revenue, 2017. This reflects a rise of 8%. Predictable revenue accounted
which increased €13 million in 2017. Cloud and software revenue for 63% of our total revenue in 2017 (2016: 61%).
climbed to €19,549 million in 2017, an increase of 6%. Cloud and Services Revenue
software revenue represented 83% of total revenue in 2017
Services revenue combines revenue from professional
(2016: 84%). Service revenue increased 8% from €3,639 million
services, premium support services, and other services such as
in 2016 to €3,912 million in 2017, which was 17% of total revenue.
training services, messaging services, and payment services.
For more information about our regional performance, see the
Professional services primarily relate to the implementation of
Revenue by Region section below.
our cloud subscriptions and on-premise software products. Our
Cloud and Software Revenue premium support offering consists of high-end support services
Revenue from cloud subscriptions and support refers to the tailored to customer requirements. Messaging services are
income earned from contracts that permit the customer to primarily transmissions of electronic text messages from one
access specific software solutions hosted by SAP during the term mobile phone provider to another. Payment services are
of its contract with SAP. Software revenue results from the fees

54
delivered in connection with our travel and expense management the remaining countries of the Americas region was generated
offerings. primarily in Canada, Brazil, and Mexico. Cloud and software
Services revenue increased €273 million, or 8%, from €3,639 revenue generated in the Americas region totaled €7,666 million
million in 2016 to €3,912 million in 2017. This increase reflects an (2016: €7,366 million). That was 82% of all revenue from the
8% increase from changes in volumes and prices and a 1% region (2016: 82%). Cloud subscriptions revenue in the Americas
decrease from currency effects. region rose 16% to €2,321 million in 2017 (2016: €2,000 million);
Solid market demand for service projects led to a 12% this includes a negative currency effect of 2%. Software licenses
increase of €332 million in consulting revenue and premium and software support revenue was €5,345 million in 2017 (2016:
support revenue from €2,883 million in 2016 to €3,215 million in €5,366 million).
2017. This growth reflects a 12% increase from changes in
APJ Region
volumes and prices and a 1% decrease from currency effects.
Consulting and premium support revenue contributed 82% of In 2017, 16% (2016: 15%) of our total revenue was generated
total service revenue (2016: 79%). Consulting and premium in the APJ region. Total revenue in the APJ region increased 10%
support revenue contributed 14% of total revenue in 2017 (2016: to €3,699 million. This growth reflects a 12% increase from
13%). changes in volumes and prices and a 2% decrease from currency
Revenue from other services decreased €59 million, or 8%, to effects. In Japan, revenue increased 7% to €885 million. Revenue
€697 million in 2017 (2016: €756 million). This reflects a 7% from Japan was 24% (2016: 24%) of all revenue generated in the
decrease from changes in volumes and prices and a 1% decrease APJ region. The revenue growth in Japan was attributable to a
from currency changes. 13% increase from changes in volumes and prices and a 6%
decrease from currency effects. In the remaining countries of the
Revenue by Region APJ region, revenue increased 10%. Revenue in the remaining
We break our operations down into three regions: the Europe, countries of the APJ region was generated primarily in Australia,
Middle East, and Africa (EMEA) region, the Americas region, and India, and China. Cloud and software revenue in the APJ region
the Asia Pacific Japan (APJ) region. We allocate revenue
totaled €3,124 million in 2017 (2016: €2,865 million). That was
amounts to each region based on where the customer is located.
84% of all revenue from the region (2016: 85%). Cloud
For more information about revenue by geographic region, see
the 2017 Annual Report on Form 20-F, Part III, Notes to the subscriptions revenue in the APJ region rose 45% to €419 million
Consolidated Financial Statement, Note (28). in 2017 (2016: €290 million). This increase reflects a 47%
increase from changes in volumes and prices and a 2% decrease
EMEA Region from currency effects. Software licenses and software support
In 2017, the EMEA region generated €10,415 million in revenue rose 5% to €2,705 million in 2017 (2016: €2,575 million).
revenue (2016: €9,755 million), which was 44% of total revenue This increase reflects an 8% increase from changes in volumes
(2016: 44%). This represents a year-over-year increase of 7%. and prices and a 3% decrease from currency effects.
Revenue in Germany increased 10% to €3,352 million in 2017
(2016: €3,034 million). Germany contributed 32% (2016: 31%) Operating Profit and Operating Margin
of all EMEA region revenue. The remaining revenue in the EMEA SAP posted record revenues in 2017, particularly in Cloud and
region was primarily generated in the United Kingdom, France, Services. Our revenue from cloud subscriptions and support
Switzerland, the Netherlands, and Italy. Cloud and software increased 26% while our services revenue improved 8%. In 2017,
revenue generated in the EMEA region totaled €8,759 million total revenue grew 6% to €23,461 million (2016: €22,062
(2016: €8,192 million). That was 84% of all revenue from the million), representing an increase of €1,399 million.
region (2016: 84%). Cloud subscriptions revenue in the EMEA On the other hand, our operating expenses increased €1,656
region rose 46% to €1,029 million in 2017 (2016: €703 million). million or 10% to €18,584 million (2016: €16,928 million). The
This increase reflects a 48% increase from changes in volumes main contributors to that increase were our continued
and prices and a 2% decrease from currency effects. Software investment in sales and research and development activities as
licenses and software support revenue rose 3% to €7,731 million well as our higher revenue-related and investment-related cloud
in 2017 (2016: €7,489 million). This growth reflects a 3% subscriptions and support costs. The higher share price in 2017
increase from changes in volumes and prices and a currency lead to increased costs of share-based compensation of €1,120
effect of 0%. million (2016: €785 million). Our employee headcount (measured
in full-time equivalents, or FTEs) increased by 4,361 FTEs year
Americas Region
over year to 88,543.
In 2017, 40% of our total revenue was generated in the
Overall, the increase in expenses exceeded our growth in
Americas region (2016: 40%). Total revenue in the Americas
revenue, leading to a 5% decrease in operating profit to €4,877
region increased 5% to €9,347 million; revenue generated in the
million (2016: €5,135 million).
United States increased 4% to €7,436 million. The revenue
We see the increased operating expenses largely as
growth in the United States reflects a 6% increase from changes
investments in the future that help to secure long-term sales
in volumes and prices and a negative currency effect of 2%. The
growth.
United States contributed 80% (2016: 80%) of all revenue
As an overall result of these effects on operating profit, our
generated in the Americas region. In the remaining countries of
operating margin narrowed 2.5pp to 20.8% in 2017 (2016:
the Americas region, revenue increased 8% to €1,911 million.
23.3%).
This increase reflects a 9% increase from changes in volumes
and prices and a 1% decrease from currency effects. Revenue in

55
 Changes to the individual elements in our cost of revenue Due to growing personnel costs driven by a 10% increase in
were as follows: our yearly average R&D headcount, our R&D expense increased
by 10% to €3,352 million in 2017 from €3,044 million in 2016.
Cost of Cloud and Software
R&D expense as a percentage of total revenue thus increased to
Cost of cloud and software consists primarily of customer 14.3% in 2017 (2016: 13.8%). For more information, see the
support costs, costs of developing custom solutions that address Products, Research & Development, and Services section of our
customers’ specific business requirements, costs for deploying 2017 Annual Report on Form 20-F.
and operating cloud solutions, amortization expenses relating to
intangibles, and license fees and commissions paid to third Sales and Marketing Expense
parties for databases and the other complementary third-party Sales and marketing expense consists mainly of personnel
products sublicensed by us to our customers. costs, direct sales costs, and the cost of marketing our products
In 2017, the cost of cloud and software increased 11% to and services.
€3,893 million (2016: €3,495 million). Our sales and marketing expense rose 11% from €6,265
Main impact on costs was an additional €347 million year over million in 2016 to €6,924 million in 2017. The increase was mainly
year for delivering and operating cloud applications in response the result of greater personnel costs as we expanded our global
to the sustained strength of customer demand. These sales force, and of increased expenditure for bonus payments
investments contributed to revenue growth. Our margin on cloud prompted by the strong revenue growth. The ratio of sales and
subscriptions and support narrowed from 56.1% in 2016 to marketing expense to total revenue, expressed as a percentage,
56.0% in 2017. This margin decline is attributable to investments increased to 29.5% year over year (2016: 28.4%), an increase of
in our cloud business, which offset the strong growth in cloud 1.1pp.
subscriptions and support revenue.
General and Administration Expense
A 2% increase in software license and support revenue led to
a corresponding 2% increase in customer support costs to Our general and administration expense consists mainly of
€2,234 million, and enabled us to keep our software license and personnel costs to support our finance and administration
support margin stable at 85.8% (2016: 85.9%). The gross margin functions.
on cloud and software, defined as cloud and software profit as a General and administration expense increased 7% from
percentage of cloud and software revenue, narrowed by 1pp in €1,005 million in 2016 to €1,075 million in 2017. This increase is
2017 to 80.1% (2016: 81.0%). This decline was mainly driven by primarily the result of higher personnel costs related to job
the change in the Cloud and Software revenue mix, which now creation in administrative areas, based on the increased business
has a higher proportion of cloud subscriptions and support volume related to our growth. Thanks to strong operating results,
revenues. Due to infrastructure costs, these revenues currently the ratio of general and administration expense to total revenue
deliver a lower margin and a declining proportion of higher- remained stable year over year at 4.6% (2016: 4.6%).
margin software and support revenues.
Segment Information
Cost of Services
The segment information below for 2017 and 2016 is
Cost of services consists primarily of the cost of consulting,
presented based on the reportable segments Applications,
premium services and training personnel and the cost of bought-
Technology & Services, SAP Business Network, and Customer
in consulting and training resources.
Experience.
Although we were able to increase our service revenue by 8%
For more information about our segment reporting, see the
year over year to €3,911 million in 2017 (2016: €3,638 million),
Notes to the Consolidated Financial Statements, Notes (C.1) and
our service business continues to be greatly affected as we trend
(C.2), and the Performance Management System section.
away from classic software licensing and consulting revenue
toward more subscription revenue from cloud solutions. In
addition, we continue to invest in our SAP ONE Service
organization and in our customer co-innovation projects. As a
result, cost of services rose 2% to €3,158 million (2016: €3,089
million). Our gross margin on services, defined as services profit
as a percentage of services revenue, increased 4.2pp to 19.3%
(2016: 15.1%).

Research and Development Expense

Our research and development (R&D) expense consists
primarily of the personnel cost of our R&D employees, costs
incurred for independent contractors we retain to assist in our
R&D activities, and amortization of the computer hardware and
software we use for our R&D activities.

56
Applications, Technology & Services Segment
€ millions, unless otherwise stated 2017 2016 ∆ in % ∆ in %
(Non-IFRS)
Actual Constant Actual Actual Constant
Currency Currency Currency Currency Currency

Cloud subscriptions and support revenue – SaaS/PaaS1) 1,403 1,423 1,074 31 33

1)
Cloud subscriptions and support gross margin – SaaS/PaaS (in %) 59 59 62 –3pp –3pp

Cloud subscriptions and support revenue – IaaS2) 328 334 206 59 62

2)
Cloud subscriptions and support gross margin – IaaS (in %) 7 8 –9 16pp 17pp

Cloud subscriptions and support revenue 1,732 1,758 1,280 35 37

Cloud subscriptions and support gross margin (in %) 49 49 51 –1pp –1pp

Segment revenue 20,218 20,465 19,211 5 7

Gross margin (in %) 74 74 74 0pp 0pp

Segment profit 8,478 8,616 8,335 2 3

Segment margin (in %) 42 42 43 –1pp –1pp

1)
Software as a service/platform as a service
2)
Infrastructure as a service

The Applications, Technology & Services segment recorded a The segment's cost of revenue during the same period
strong increase in cloud subscriptions and support revenue in increased 7% (8% at constant currencies) to €5,262 million
2017. SaaS/PaaS revenue increased 31% (33% at constant (2016: €4,926 million). This increase in expenses was primarily
currencies). We were able to increase our software support the result of higher investment in expanding our cloud
revenue again in 2017. It rose 3% (4% at constant currencies) to infrastructure and in providing and operating our cloud
€10,890 million. Including software licenses revenue, which applications. This applied primarily to the SaaS/PaaS business,
likewise increased year over year (4% at constant currencies), whose margin consequently declined 3pp (3pp at constant
we achieved a total software licenses and support revenue of currencies) compared to the year before. These costs were
€15,325 million in 2017. partially offset by our IaaS business, whose increasing level of
Overall, the revenue share of more predictable revenue maturity achieved significant increases in efficiency. It ended the
streams in this segment increased 0.9pp from 61.5% in 2016 to fiscal year with a margin growth of 16pp (17pp at constant
62.4% in 2017. currencies).

SAP Business Network Segment

€ millions, unless otherwise stated 2017 2016 ∆ in % ∆ in %
(Non-IFRS)
Actual Constant Actual Actual Constant
Currency Currency Currency Currency Currency

Cloud subscriptions and support revenue – SaaS/PaaS1) 1,840 1,870 1,595 15 17

1)
Cloud subscriptions and support gross margin – SaaS/PaaS (in %) 77 77 76 1pp 1pp

Cloud subscriptions and support revenue 1,840 1,870 1,595 15 17

Cloud subscriptions and support gross margin (in %) 77 77 76 1pp 1pp

Segment revenue 2,261 2,300 1,925 17 19

Gross margin (in %) 68 68 67 1pp 1pp

Segment profit 388 397 340 14 17

Segment margin (in %) 17 17 18 –1pp 0pp

1)
Software as a service/platform as a service

The SAP Business Network segment increased its cloud segment revenue increased by 17% (19% at constant currencies) to
subscriptions and support gross margin again in 2017, by 1pp to €2,261 million. As a result, the SAP Business Network segment
77%. The segment's cost of revenue increased 15% in 2017 (17% at achieved a segment gross profit of €1,536 million in 2017 (2016:
constant currencies) to €725 million (2016: €632 million). The €1,293 million), an increase of 19% (21% at constant currencies).

57
Customer Experience Segment
€ millions, unless otherwise stated 2017 2016 ∆ in % ∆ in %
(Non-IFRS)
Actual Constant Actual Actual Constant
Currency Currency Currency Currency Currency

Cloud subscriptions and support revenue – SaaS/PaaS1) 200 203 119 67 70

1)
Cloud subscriptions and support gross margin – SaaS/PaaS (in %) 59 60 75 –15pp –15pp

Cloud subscriptions and support revenue 200 203 119 67 70

Cloud subscriptions and support gross margin (in %) 59 60 75 –15pp –15pp

Segment revenue 643 654 637 1 3

Gross margin (in %) 80 81 87 –6pp –6pp

Segment profit 85 90 164 –48 –45

Segment margin (in %) 13 14 26 –13pp –12pp

1)
Software as a service/platform as a service

If applying the new Customer Experience segment structure increase our segment revenue by 1% (3% at constant currencies).
established in 2018 to prior years, the segment improved its growth Cost of cloud subscription and support grew disproportionally to
in the cloud to €200 million in 2017 (€119 million in 2016). This our cloud subscription and support revenue leading to a drop of
represents a cloud revenue growth of 67% (70% at constant 15pp (15pp at constant currencies) in the cloud subscription and
currencies). The positive development, however, had negative support gross margin. Accompanied by increased cost of sales and
consequences on our traditional software license revenue, which marketing this impacted negatively both our segment profit and
declined 15% (13% at constant currencies). Overall, we were able to segment margin.

Reconciliation of Cloud Subscription Revenues and Margins

€ millions, unless otherwise stated 2017 2016 ∆ in % ∆ in %
(Non-IFRS)
Actual Constant Actual Actual Constant
Currency Currency Currency Currency Currency

SAP Business Network 1,840 1,870 1,595 15 17

segment
Cloud subscriptions and support revenue
– SaaS/PaaS1) Other3) 1,604 1,627 1,194 34 36

Total 3,443 3,497 2,789 23 25

Cloud subscriptions and support revenue 328 334 206 59 62

– IaaS2)

Cloud subscriptions and support revenue 3,771 3,831 2,995 26 28

SAP Business Network 77 77 76 1pp 1pp

segment
Cloud subscriptions and support gross margin
– SaaS/PaaS1) (in %) Other3) 57 57 62 –5pp –5pp

Total 67 68 70 –2pp –2pp

Cloud subscriptions and support gross margin 7 8 –9 16pp 17pp

– IaaS2) (in %)

Cloud subscriptions and support gross 62 62 64 –2pp –2pp

margin (in %)
1)
Software as a service/platform as a service
2)
Infrastructure as a service
3)
Other includes Application, Technology & Services segment, Customer Experience segment and miscellaneous. The individual revenue and margin numbers for the
Application, Technology & Services segment and the Customer Experience segment are disclosed on the previous pages.

58
Financial Income, Net
Financial income in 2017 increased to €188 million (2016:
Liquidity and Capital
−€29 million). Our finance income was €476 million in 2017 (2016:
€230 million) and our finance costs were €288 million (2016: €259
Resources
million). Finances (IFRS)
Finance income mainly consists of gains from disposal of equity
securities totaling €382 million in 2017 (2016: €164 million). Overview
Finance costs mainly consist of interest expense on financial
liabilities amounting to €89 million in 2017 (2016: €108 million) and Global Financial Management
negative effects from derivatives amounting to €116 million (2016: We use global centralized financial management to control liquid
€114 million). The decrease in finance costs is mainly due to lower assets and monitor exposure to interest rates and currencies. The
average indebtedness. For more information about financing primary aim of our financial management is to maintain liquidity in
instruments, see the 2017 Annual Report on Form 20-F, Part III, the Group at a level that is adequate to meet our financial
Notes to the Consolidated Financial Statement, Note (17b). obligations at all times. Most SAP companies have their liquidity
managed centrally by the Group, so that liquid assets across the
Income Taxes Group can be consolidated, monitored, and invested in accordance
The effective tax rate in 2017 was 19.5% (2016: 25.5%). The with Group policy. High levels of liquid assets help keep SAP
year-over-year decrease in the effective tax rate mainly resulted flexible, sound, and independent. In addition, various credit
from one-time tax benefits relating to an intra-group transfer of facilities are currently available for additional liquidity, if required.
intellectual property rights to SAP SE and the U.S. tax reform which For more information about these facilities, see the Credit Facilities
were partly compensated by valuation allowances on deferred tax section.
assets and changes in the regional allocation of income. For more We manage credit, liquidity, interest rate, equity price, and
information about income taxes, see the 2017 Annual Report on foreign exchange rate risks on a Group-wide basis. We use selected
Form 20-F, Part III, Notes to the Consolidated Financial Statement, derivatives exclusively for this purpose and not for speculation,
Note (10). which is defined as entering into a derivative instrument for which
we do not have corresponding underlying transactions. The rules
for the use of derivatives and other rules and processes concerning
Foreign Currency Exchange the management of financial risks are documented in our treasury
guideline, which applies globally to all companies in the Group. For
Rate Exposure more information about the management of each financial risk and
about our risk exposure, see the Notes to the Consolidated
Although our reporting currency is the euro, a significant portion Financial Statements, Notes (F.1) and (F.2).
of our business is conducted in currencies other than the euro.
Since the Group’s entities usually conduct their business in their Liquidity Management
respective functional currencies, our risk of exchange rate Our primary source of cash, cash equivalents, and current
fluctuations from ongoing ordinary operations is not considered investments is funds generated from our business operations. Over
significant. However, occasionally we generate foreign-currency- the past several years, our principal use of cash has been to
denominated receivables, payables, and other monetary items by support operations and our capital expenditure requirements
transacting in a currency other than the functional currency; to resulting from our growth, to quickly repay financial debt, to
mitigate the extent of the associated foreign currency exchange acquire businesses, to pay dividends on our shares, and to buy
rate risk, the majority of these transactions are hedged as back SAP shares on the open market. On December 31, 2018, our
described in Note (F.1) to our Consolidated Financial Statements. cash, cash equivalents, and current investments were primarily
Also see Note (F.1) for additional information on foreign currencies. held in euros and U.S. dollars. We generally invest only in the
Approximately 72% of our total revenue in 2018 (2017: 72%) financial assets of issuers or funds with a minimum credit rating of
was attributable to operations in non-euro participating countries. BBB, and pursue a policy of cautious investment characterized by
We translated that revenue into euros for financial reporting wide portfolio diversification with a variety of counterparties,
purposes. Fluctuations in the exchange value of the euro had an predominantly short-term investments, and standard investment
unfavorable impact of €1,219 million on our total revenue for 2018, instruments. Investments in financial assets of issuers with a credit
an unfavorable impact of €301 million on our total revenue for 2017 rating lower than BBB were not material in 2018.
and an unfavorable impact of €164 million on our total revenue for We believe that our liquid assets combined with our undrawn
2016. credit facilities are sufficient to meet our operating financing needs
The impact of foreign currency exchange rate fluctuations in 2019 and, together with expected cash flows from operations,
discussed in the preceding paragraph is calculated by translating will support debt repayments and our currently planned capital
current period figures in local currency to euros at the monthly expenditure requirements over the near term and medium term. It
average exchange rate for the corresponding month in the prior may also be necessary to enter into financing transactions when
year. Our revenue analysis, included within the “Operating Results” additional funds are required that cannot be wholly sourced from
section of Item 5, discusses at times the effect of currency free cash flow (for example, to finance large acquisitions).
movements which are calculated in the same manner. To expand our business, we have made acquisitions of
businesses, products, and technologies. Depending on our future

59
cash position and future market conditions, we might issue We seek to maintain a capital structure that will allow us to cover
additional debt instruments to fund acquisitions, maintain financial our funding requirements through the capital markets at
flexibility, and limit repayment risk. Therefore, we continuously reasonable conditions, and in so doing, ensure a high level of
monitor funding options available in the capital markets and trends independence, confidence, and financial flexibility.
in the availability of funds, as well as the cost of such funding. In For more information about the capital structure and its
recent years, we were able to repay additional debt within a short analysis, see the Analysis of Consolidated Statement of Financial
period of time due to our persistently strong free cash flow. For Position section and the Notes to the Consolidated Financial
more information about the financial debt, see the Cash Flows and Statements, Note (E.1).
Liquidity section. The long-term credit rating for SAP SE is “A2” by Moody’s and “A”
by Standard & Poor’s, both with a stable outlook.
Capital Structure Management
Aside from our dividend policy, we might return excess liquidity
The primary objective of our capital structure management is to to our shareholders by potentially repurchasing treasury shares in
maintain a strong financial profile for investor, creditor, and future.
customer confidence, and to support the growth of our business.

Financial Debts
Financial debt is defined as the nominal volume of bank loans, private placements, and bonds.

Maturity Profile of Financial Debts

€ millions

Variable Fixed

1,415
12
1,288 1,250
1,132
1,087
1,000 1,000
796 862
38
1,403 1,094
500 1,045 500 500 1,250
600 1,087
- 1,000 1,000
759
500 500 500
194 262
- 87 - - - - -
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2030 2031

60
 Nominal volume of financial debt on December 31, 2018, outflows for acquisitions, dividend payments, capital expenditures,
included amounts in euros (€10,050 million) and U.S. dollars and repayments of borrowings.
(€1,273 million). Approximately 30% of the financial debt was held For information about the impact of cash, cash equivalents,
at variable interest rates, partially swapped from fixed into variable current investments, and our financial liabilities on our income
using interest rate swaps. statements, see the analysis of our financial income, net, in the
We intend to repay €750 million in Eurobonds in November Operating Results (IFRS) section.
2019. In addition, we might repay portions of the Qualtrics related
€2.5 billion acquisition term loan, and plan to repay the first
tranches of a €50 million promotional loan with KfW. Development of Group Liquidity

Financial Debt € millions

Group Liquidity 12/31/2017 4,785

€ millions

Operating Cash Flow 4,303

Bonds 10,262
Capital Expenditure 1,458

Private Placement 1,011 Acquisitions 2,140

Bank Loan 58 Dividends Paid 1,671

Repayments of Borrowings 1,407

For more information about our financial debt, see the Notes to Proceeds from Borrowings 6,368
the Consolidated Financial Statements, Note (E.3).
Other 59

Cash Flows and Liquidity Group Liquidity 12/31/2018 8,838

Group Liquidity
€ millions 2018 2017 ∆

Cash and cash equivalents 8,627 4,011 4,617

Current investments 211 774 –563

Group liquidity 8,838 4,785 4,053

Current financial debt –759 –1,299 540

Net liquidity 1 8,080 3,486 4,594

Non-current financial debt –10,572 –4,965 –5,607

Net liquidity 2 –2,493 –1,479 –1,013

Group liquidity consists of cash and cash equivalents (for

example, cash at banks, money market funds, and time deposits
with original maturity of three months or less) and current
investments (for example, time deposits and debt securities with
original maturities of greater than three months and remaining
maturities of less than one year included in other financial assets)
as reported in our Consolidated Financial Statements. Group
liquidity on December 31, 2018, primarily comprised amounts in
euros and U.S. dollars. For more information about our liquidity,
see the Notes to the Consolidated Financial Statements, Note
(E.3).
The increase in Group liquidity compared to 2017 was mainly
due to proceeds from borrowings for the Qualtrics acquisition and
cash inflows from our operations. They were offset by cash

61
Analysis of Consolidated Statements of Cash Flows
Years ended December 31,
∆ in % ∆ in %
€ millions 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
Net cash flows from operating activities 5,045 4,628 3,638 9 27
Net cash flows from investing activities –1,112 –1,799 –334 –38 >100
Net cash flows from financing activities –3,406 –2,705 –3,356 26 –19

Analysis of Consolidated Statements of Cash 2017. For more information about current and planned capital
Flows: 2017 compared to 2016 expenditures, see the Investment Goals section.
Net cash outflows from financing activities were €3,406 million
In 2018, cash inflows from operating activities decreased by
€743 million to €4,303 million (2017: €5,045 million). This is in 2017, compared to €2,705 million in 2016. The 2017 cash
particularly due to an increase in income tax payments, higher outflows resulted from repayments of €1,000 million in Eurobonds
and US$442.5 million in U.S. private placements when they
insurance payments related to employees’ time credits compared
to the prior year, and higher share-based payments (€1.0 billion in matured. Cash outflows in 2016 resulted from repayments of a
2018 and €0.8 billion in 2017). Our days sales outstanding (DSO) for €1,250 million bank loan that we had taken to finance the Concur
acquisition. The repayment was partly refinanced through the
receivables, defined as the average number of days from the raised
invoice to cash receipt from the customer, remained stable in 2018 issuance of a €400 million Eurobond. We also repaid a
at 70 days (2017: 70 days). US$600 million U.S. private placement in 2016.
The dividend payment of €1,499 million made in 2017 exceeded
Cash outflows from investing activities were €3,066 million in
2018 (2017: €1,112 million). We paid a total of €2,140 million for the amount of €1,378 million from the prior year, as a result of the
acquisitions, mainly Callidus, in 2018, compared to €291 million in increased dividend paid per share from €1.15 to €1.25. In 2017, we
repurchased shares in the amount of €500 million (2016: €0).
2017. Capital expenditures on purchases of intangible assets and
property, plant, and equipment increased by €183 million to
Credit Facilities
€1,458 million in 2018. For more information about current and
Other sources of capital are available to us through various credit
planned capital expenditures, see the Investment Goals section.
Net cash inflows from financing activities were €3,283 million in facilities, if required.
2018, compared to cash outflows of €3,406 million in 2017. In 2018, To retain high financial flexibility, on November 20, 2017, SAP SE
entered into a €2.5 billion syndicated revolving credit facility
we issued €6,000 million in Eurobonds financing the acquisition of
Callidus and Qualtrics, and a US$300 million USD bond. The cash agreement with an initial term of five years plus two one-year
outflows resulted from repayments of €1,150 million in Eurobonds extension options, of which one was exercised in November 2018. It
replaced the previous credit facility of €2.0 billion from 2013 and
and US$150 million in U.S. private placements when they matured.
Cash outflows in 2017 resulted from repayments of €1,000 million may be used for general corporate purposes. A possible future
in Eurobonds and US$442.5 million in U.S. private placements when utilization is not subject to any financial covenants. Borrowings
under the facility bear interest of EURIBOR or LIBOR for the
they matured.
The dividend payment of €1,671 million made in 2018 exceeded respective currency plus a margin of 0.17%. We are also required to
the amount of €1,499 million from the prior year, as a result of the pay a commitment fee of 0.0595% per annum on the unused
available credit. So far, we have not used, and do not currently
increased dividend paid per share from €1.25 to €1.40. In 2017, we
repurchased shares in the amount of €500 million (2018: foresee any need to use, this credit facility.
€0).Analysis of Consolidated Statements of Cash Flows: 2017 As at December 31, 2018, SAP SE had additional available credit
facilities totaling €424 million. Several of our subsidiaries have
Compared to 2016
In 2017, cash inflows from operating activities increased by credit facilities available that allow them to borrow funds at
€417 million to €5,045 million (2016: €4,628 million). This result is prevailing interest rates. As at December 31, 2018, approximately
€21 million was available through such arrangements. There were
due to a €145 million decrease in income tax payments compared to
the prior year and improved working capital management, which immaterial borrowings outstanding under these credit facilities from
can be shown in decreased days’ sales outstanding (DSO) for our foreign subsidiaries as at December 31, 2018.
On November 12, 2018, SAP entered into a €7.0 billion credit
receivables, defined as the average number of days from the raised
invoice to cash receipt from the customer, which went down four facility agreement to finance the intended acquisition of Qualtrics.
days in 2017 to 70 days (2016: 74 days). On December 10, 2018, we issued five tranches of Eurobonds with a
total volume of €4.5 billion and maturities between two and 12.25
Cash outflows from investment activities were €1,112 million in
2017 (2016: €1,799 million). The decrease was caused by net cash years to refinance the intended acquisition early. The funds were
inflows from sales and purchases of equity or debt instruments of used to cancel the credit facility accordingly, therefore resulting in
€2.5 billion still available to SAP on December 31, 2018. The facility
other entities, totaling €358 million in 2017 compared to a net cash
outflow €756 million in 2016. Cash outflows from the purchases of was fully drawn on January 23, 2019, and can be flexibly repaid
intangible assets and property, plant, and equipment increased by within its lifetime of three years.
€274 million to €1,275 million in 2017, while cash outflows from
business combinations increased by €185 million to €291 million in

62
Off-Balance Sheet Contractual Obligations
Arrangements The table below presents our on- and off-balance sheet contractual
obligations as of December 31, 2018:
Several SAP entities have entered into operating leases for office
space, hardware, cars and certain other equipment. These
arrangements are sometimes referred to as a form of off-balance
sheet financing. Rental expenses under these operating leases are
set forth below under “Contractual Obligations.” We do not believe
we have forms of material off-balance sheet arrangements that
would require disclosure other than those already disclosed.

Contractual Obligations Payments due by period

€ millions Total Less than 1 year 1-3 years 3-5 years More than 5 years

Financial liabilities1) 12,552 1,149 2,207 2,507 6,689

1)
Derivative financial liabilities 72 60 12 0 0
3)
Operating lease obligations 1,442 351 494 261 336

Purchase obligations3) 2,133 827 792 498 17

3)
Capital contribution commitments 187 187 0 0 0
2)
Other non-current non-financial liabilities 501 0 343 16 142

Total 16,888 2,573 3,849 3,282 7,184

1)
For more information on financial liabilities and derivative financial liabilities see Notes (E.3) and (F.1) to our Consolidated Financial Statements.
2)
For more information on other non-current non-financial liabilities see Notes (B.3), (B.5), and (G.2) to our Consolidated Financial Statements.
3)
See Notes (D.5), (D.7), and (G.3) to our Consolidated Financial Statements for additional information about capital contribution commitments, purchase obligations, and
operating lease obligations. Our expected contributions to our pension and other post-employment benefit plans are not included in the table above. For more information
on these contributions see Note (B.4) to our Consolidated Financial Statements.

63
 We expect to meet these contractual obligations with our The accounting policies that most frequently require us to
existing cash, our cash flows from operations and our financing make judgments, estimates, and assumptions, and therefore are
activities. The timing of payments for the above contractual critical to understanding our results of operations, include the
obligations is based on payment schedules for those obligations following:
where set payments exist. For other obligations with no set – revenue recognition;
payment schedules, estimates for the most likely timing of cash – valuation of trade receivables;
payments have been made. The ultimate timing of these future – accounting for share-based payments;
cash flows may differ from these estimates. – accounting for income taxes;
– accounting for business combinations;
Obligations under Indemnifications and – accounting for goodwill;
Guarantees – accounting for intangible assets (including recognition of
internally generated intangible assets from development) and
Our software license agreements and our cloud subscription
– accounting for legal contingencies.
agreements generally include certain provisions for indemnifying
Our management periodically discusses these critical
customers against liabilities if our software products infringe a
accounting policies with the Audit Committee of the Supervisory
third party’s intellectual property rights. In addition, we
Board. See Note (IN.1) to our Consolidated Financial Statements
occasionally provide function or performance guarantees in
for further discussion on our critical accounting estimates and
routine consulting contracts and development arrangements. We
critical accounting policies.
also generally provide a six to twelve month warranty on our
software. Our warranty liability is included in other provisions.
For more information on other provisions see Notes (A.4), (B.5),
and (B.6) to our Consolidated Financial Statements. For more New Accounting
information on obligations and contingent liabilities refer to
Notes (A.4), (D.5), (D.7), (G.3), and (G.4) in our Consolidated Standards not yet
Financial Statements.
Adopted
See Note (IN.1) to our Consolidated Financial Statements for
Research and our discussion on new accounting standards not yet adopted.

Development
For information on our R&D activities see “Item 4. Information Expected Developments
about SAP — Products, Research & Development, and Services.”
For information on our R&D costs see “Item 5. Operating and Future Trends in the Global Economy
Financial Review and Prospects — Operating Results (IFRS)” and The European Central Bank (ECB) expects global economic
for information related to our R&D employees see “Item 6. activity to decelerate in 2019 but remain steady through 2021,
Directors, Senior Management and Employees — Employees.” growing at rates below those before the 2007–2008 financial
crisis. That is the essence of the ECB’s December 2018
Economic Bulletin.1 Advanced economies could continue to
Critical Accounting benefit from accommodative monetary policies and supportive
financial conditions, though waning, for several more years.
Estimates Tightening financial conditions in emerging markets, however,
might more negatively affect global activity than thus far.
Our Consolidated Financial Statements are prepared based Nevertheless, the ECB expects those emerging economies
on the accounting policies described in the corresponding Note affected by the 2018 financial market turbulences to recover in
or note (IN.1) Basis for Preparation to our Consolidated Financial 2019.
Statements in this report. The application of such policies Regarding the Europe, Middle East, and Africa (EMEA) region,
requires management to make judgments, estimates and the ECB has revised its previous outlooks for GDP growth in the
assumptions that affect the application of policies and the euro area slightly downwards. Geopolitical factors, the threat of
reported amounts of assets, liabilities, revenues and expenses in protectionism, and financial market volatility might weigh on
our Consolidated Financial Statements. We base our judgments, economic activity there. However, the near-term outlook for the
estimates and assumptions on historical and forecast euro area will depend largely on the eventual modus operandi of
information, as well as regional and industry economic conditions Great Britain’s withdrawal from the European Union. In central
in which we or our customers operate, changes to which could and eastern European countries, the ECB projects a robust GDP
adversely affect our estimates. Although we believe we have growth in the near term, supported by strong investment, solid
made reasonable estimates about the ultimate resolution of the consumer spending and improvements in the labor market, but
underlying uncertainties, no assurance can be given that the final decelerating activity over the medium term. In Russia, economic
outcome of these matters will be consistent with what is recovery might continue in 2019, supported by improving
reflected in our assets, liabilities, revenues and expenses. Actual domestic demand but will strongly depend on how the oil price
results could differ from original estimates. develops.

64
 As for the Americas region, the ECB expects the United States The IT Market:
to provide a sizeable fiscal stimulus in 2019, including lower taxes
and increased expenditure, leading to a resilient economic
Outlook for 2019 and Beyond
activity that year, but slackening thereafter. In addition, The pace and volume of digital innovation will radically
intensifying trade tensions between the United States and China accelerate in the next three to five years, embracing all
are likely to affect confidence and investment negatively. technologies as well as enterprises of all sizes. That is what the
According to the ECB, economic activity in Brazil might U.S.-based market research firm International Data Corporation
accelerate in 2019 due to labor market improvements and (IDC) reports in its most recent publications.2) According to IDC,
continuing monetary accommodation. by 2022 more than 60% of global GDP could be digitized, and IT-
In the Asia Pacific Japan (APJ) region, the ECB projects related spending from 2019–2022 might amount to as much as
Japanese economic activity to rebound in the near term, US$7 trillion. Organizations will no longer digitize single aspects
benefitting from an accommodative monetary policy. However, of their business, but create “digital native” IT environments.
the pace of economic expansion in Japan is likely to decelerate IDC predicts that one of the major markets will be the
again thereafter, due to increasing capacity constraints. worldwide Internet of Things (IoT) market, growing at an average
Regarding China, the ECB emphasizes the strong impact from of 13.6% per year and reaching US$1.19 trillion in 2022, 48.2% of
trade tensions between China and the United States. which in the APJ region5). At the same time, the proportion spent
Furthermore, the Chinese housing market might slow, so that on devices will shrink and give way to spending on the IoT
over the medium term, the ECB expects the pace of expansion in platform, analytics and application software, and ongoing
China to moderate gradually, resulting in an orderly slowdown services. By 2022, software will represent the largest proportion
and rebalancing of the Chinese economy. of spend at 25.1%, projects IDC.
As for rates of growth, the International Monetary Fund (IMF) Furthermore, blockchain will be another growing technology
projects the following economic trends for the mid-term horizon over the next years, says IDC.3) It estimates that by 2021, nearly a
until the end of 2019: third of all manufacturers and retailers globally will be using
blockchain technology to build digital trust and establish
prominent in-industry value chains, thus reducing transaction
Economic Trends costs by 35%.
GDP Growth Year Over Year However, one of the most important growth markets over the
coming years will be artificial intelligence (AI) technologies and
% 2017 2018p 2019p
solutions. According to IDC, corporate investment in AI solutions
World 3.7 3.7 3.7 might grow at an average of 46.2% per year and reach more than
Advanced economies 2.3 2.4 2.1 US$52 billion by 2021. By 2020, 80% of enterprises could
already be making their data accessible to AI solutions from
Developing and emerging economies 4.7 4.7 4.7 everywhere in the business ecosystem.
Europe, Middle East, and Africa (EMEA)
Extending AI solutions further to the “edge” will strengthen
enterprises’ competitiveness and create new sources of revenue,
Euro area 2.4 2.0 1.9 says IDC. By 2022, over 40% of organizations’ cloud
Germany 2.5 1.9 1.9 infrastructure could include edge locations centered on an
“intelligent core.” AI could then reach 25% of endpoint devices
Emerging and developing Europe 6.0 3.8 2.0
and systems, such as handheld terminals, mobile phones,
Middle East, North Africa, Afghanistan, wearables, switches, drones, TVs, planes, surveillance cameras,
2.2 2.4 2.7
and Pakistan
self-driving vehicles, and smart buildings.2)
Sub-Saharan Africa 2.7 3.1 3.8

Americas Sources:
1)
European Central Bank, Economic Bulletin, Issue 8/2018, Publication Date:
United States 2.2 2.9 2.5
December 27, 2018
Canada 3.0 2.1 2.0 (https://www.ecb.europa.eu/pub/pdf/ecbu/eb201808.en.pdf)
2)
IDC FutureScape: Worldwide IT Industry 2019 Predictions, Doc
Latin America and the Caribbean 1.3 1.2 2.2 #US44403818, October 2018
3)
IDC FutureScape: Worldwide Digital Transformation 2019 Predictions, Doc
Asia-Pacific Japan (APJ)
#US43647118, October 2018
Japan 1.7 1.1 0.9 4)
IDC FutureScape: Worldwide Intelligent ERP 2019 Predictions, Doc
#US43262918, October 2018
Emerging and developing Asia 6.5 6.5 6.3 5)
IDC Market Forecast: Worldwide Internet of Things Forecast, 2018–2022,
September 2018
China 6.9 6.6 6.2

p = projection

Source: International Monetary Fund (IMF), World Economic Outlook October 2018,
Challenges to Steady Growth
(https://www.imf.org/~/media/Files/Publications/WEO/2018/October/English/main
-report/Text.ashx?la=en), p. 14

65
 As to regional rates of growth, Gartner, another U.S.-based IT Financial Targets and Prospects
market research firm, projects the following accelerations in IT
spending for the mid-term horizon until the end of 2019: Revenue and Operating Profit Targets and
Prospects (Non-IFRS)
Trends in the IT Market Outlook 2019
Accelerated IT Spending Year Over Year The Company is providing the following 2019 outlook:
Growth in % 2017e 2018p 2019p – Non-IFRS cloud subscriptions and support revenue is
at constant currencies expected to be in a range of €6.7 billion to €7.0 billion at
World
constant currencies (2018: €5.03 billion), up 33% to 39% at
constant currencies.
Total IT 3.7 3.1 3.2 – Non-IFRS cloud and software revenue is expected to be in a
Software 9.7 8.5 8.5 range of €22.4 billion to €22.7 billion at constant currencies
(2018: €20.66 billion), up 8.5% to 10% at constant
Services 4.1 4.5 4.7
currencies.
Europe, Middle East, and Africa (EMEA) – Non-IFRS operating profit is expected to be in a range of
Total IT 2.9 2.2 2.0 €7.7 billion to €8.0 billion at constant currencies (2018:
€7.16 billion), up 7.5% to 11.5% at constant currencies.
Software 9.0 7.9 7.8

Services 3.7 4.2 4.5 In addition, SAP expects total revenues to increase strongly, at a
Americas rate slightly lower than operating profit. The cloud and software
revenue guidance above assumes a mid-single-digit decline in
Total IT 3.0 2.9 3.4
software license revenue.
Software 10.1 8.4 8.4 While SAP’s full-year 2019 business outlook is at constant
currencies, actual currency reported figures are expected to be
Services 4.1 4.5 4.7
impacted by currency exchange rate fluctuations as the
Asia-Pacific Japan (APJ) Company progresses through the year. See the table below for
Total IT 5.6 4.5 4.1 the full-year 2019 expected currency impacts.
Software 10.0 10.2 10.1
In percentage points 2019
Services 4.8 5.0 5.2
Cloud subscriptions and support +1pp to +3pp
e = estimate, p = projection
Table created by SAP based on: Gartner Market Databook, 4Q18 Update, Cloud and software 0pp to +3pp
#376398, Table 2-1 "Regional End-User Spending on IT Products and
Operating profit +1pp to +3pp
Services in Constant U.S. Dollars, 2016-2022 (Millions of Dollars)".
The Gartner Reports described herein, (the “Gartner Reports”) represent
research opinion or viewpoints published, as part of a syndicated We continuously strive for profit expansion in our reportable
subscription service, by Gartner, Inc. (“Gartner”), and are not
representations of fact. Each Gartner Report speaks as of its original
segments. We expect the segment profit to increase in all our
publication date (and not as of the date of this annual report) and the reportable segments.
opinions expressed in the Gartner Reports are subject to change without The following table shows the estimates of the items that
notice.
represent the differences between our non-IFRS financial
measures and our IFRS financial measures.

Impact on SAP Non-IFRS Measures

The 2018 results again showed SAP’s impressive resilience € millions Estimated Actual
and the business momentum driven by our strategy of innovation Amounts for Amounts
2019 for 2018
and growth. Even with evolving economic and political
uncertainties, the SAP business model will ensure sustained cash Revenue adjustments 100–150 33
flows via our high share of more predictable revenue. Our growth Share-based payment expenses 1,200–1,500 830
ambition remains strong and we will further continue to invest in
Acquisition-related charges 750–900 577
strategic growth areas like the cloud, IoT, AI, machine learning,
and blockchain. Those are expected to become significant Restructuring 800–950 19
investment priorities of our customers in the upcoming years. In
addition, our focus on combining “Experience Management” In 2019, SAP will further increase focus on its key strategic
from Qualtrics with SAP’s “Operational Data Management” will growth areas. For the first time since 2015, SAP will execute a
significantly increase our total addressable market. company-wide restructuring program to further simplify
company structures and processes and to ensure that its
organizational setup, skillsets, and resource allocation all
continue to meet evolving customer demand. Restructuring
expenses are projected to be €800 million to €950 million, the

66
vast majority of which will be recognized in the first quarter of The midpoints of the 2020 total revenue and operating profit
2019. Due to the restructuring program we expect a cash outflow ranges now imply an operating margin of 30.3%. Beyond 2020,
of about €550 million to €750 million in 2019. For 2020, we SAP currently expects further increases of our operating margin.
predict a lower cash flow impact from restructuring. Excluding We expect the share of more predictable revenue (defined as
restructuring expenses, the program is expected to provide a the total of cloud subscriptions and support revenue and
minor cost benefit in 2019 and €750 million to €850 million in software support revenue) to reach 70% to 75% in 2020 (2018:
annual cost savings as of 2020 that will fuel investments in 65%).
strategic growth areas. Although we expect roughly 4,400 We expect that, by 2020, our public cloud offerings will
employees to leave SAP under the restructuring program, we contribute slightly more than half of cloud subscription and
continue to invest in key strategic growth areas. In 2019, we support revenue, followed by our business network offerings at
expect our headcount to increase at a similar pace as in 2018 to slightly less than 40%. Both offerings are expected to each
reach more than 100,000 by the end of 2019. The expected cost generate, in 2020, cloud subscriptions and support revenues
savings and reinvestment are fully reflected in SAP’s financial that are significantly higher than the cloud subscriptions and
outlook and ambitions. support revenue generated from our private cloud offerings.
The Company expects a full-year 2019 effective tax rate We expect our revenue growth trajectory through 2020 to be
(IFRS) of 26.5% to 27.5% (2018: 27.0%) and an effective tax rate driven by continued strong growth in the cloud and continued
(non-IFRS) of 26.0% to 27.0% (2018: 26.3%). growth in our software support revenue. We expect mid-single-
digit declines in software revenue. This is all expected to result in
Impact of the New Accounting Standard IFRS 16
high single-digit growth in cloud and software revenue through
“Leases”
2020.
As of January 1, 2019, SAP adopted the new IFRS standard on We also strive to significantly improve, over the next few
lease accounting (IFRS 16 “Leases”). SAP’s profit, assets, and years, the profitability of our cloud business. In 2019, we expect
liabilities, and cash flows in 2019 will be impacted by the new to see the benefits from previous efficiency-based investments,
policies. The actual impact of IFRS 16 on our profits depends not and thus an increasing cloud gross margin. We expect these
only on the lease agreements in effect at the time of adoption but profitability improvements to accelerate in the following years.
also on new lease agreements entered into or terminated in We expect that the individual gross margins of our different
2019. For more information about the adoption of IFRS 16 and an cloud operating models will increase at different rates over the
estimation of the impact on SAP’s income statement, statement next years to reach the following mid-term targets.
of financial position, and cash flow statement, see the Notes to We expect that, in 2020, the gross margin from our business
the Consolidated Financial Statements, Note (IN.1). network offerings will be higher than 80% (2018: 78%).
Proposed Dividend We expect that, in 2020, the gross margin from our public
cloud offerings will reach approximately 70% (2018: 60%), and
In 2019, we intend to pay a dividend totaling 40% or more of
to expand to about 80% over the course of the two years
the prior year’s profit after tax. This results in a dividend of €1.50
thereafter.
per share (subject to shareholder approval at the Annual General
Previously, we expected the gross margin from our private
Shareholders meeting in May 2019). For more information, see
cloud offerings to reach about 40% by 2020 (2018: 13%). We
the Financial Performance: Review and Analysis section.
now expect this gross margin to reach between 30% and 35%.
Medium-Term Prospects We continue to expect the cloud gross margin to be
In this section, all numbers are based exclusively on non-IFRS approximately 71% by 2020.
measures. We expect the 2020 gross margin for our software licenses
SAP expects to grow our more predictable revenue while and support to remain at a similar level to 2018 (2018: 87%).
steadily increasing operating profit. Our strategic objectives are In addition, we expect our 2020 services gross margin to be
focused primarily on our main financial and non-financial slightly higher than in 2018 (2018: 23%).
objectives: growth, profitability, customer loyalty, and employee As we look to increase our profitability through 2020, our cost
engagement. ratios (cost as a percentage of total revenue) are expected to
Looking beyond 2019, SAP updated its 2020 ambition last develop as follows through 2020: Research and development is
provided in July 2018. This update reflects the Company’s expected to remain at the current level. Sales and marketing as
consistent fast growth in the cloud, strong cloud and software well as general and administration are expected to decline
momentum, and operating profit expansion as well as the slightly.
Qualtrics acquisition. We also introduced a 2023 ambition. Over the next five years,
In 2020, SAP now expects: we expect to:
– €8.6 billion to €9.1 billion in non-IFRS cloud subscriptions – More than triple our non-IFRS cloud subscription and
and support revenue (previously: €8.2 billion to €8.7 billion; support revenue (2018: €5.03 billion)
2018: €5.03 billion) – Grow our non-IFRS total revenue to more than €35 billion
– €28.6 billion to €29.2 billion in non-IFRS total revenue (2018: €24.74 billion)
(previously: €28.0 billion to €29.0 billion; 2018: – Grow our non-IFRS operating profit at a compound annual
€24.74 billion) growth rate (CAGR) of 7.5% to 10% (2018: €7.16 billion)
– €8.5 billion to €9.0 billion in non-IFRS operating profit – Approach a share of more predictable revenue of 80%.
(unchanged; 2018: €7.16 billion)

67
Investment Goals repay the first tranches of a €50 million promotional loan with
Our planned investment expenditures for 2019 and 2020, KfW.
other than from business combinations, consist primarily of the
construction activities. We expect investments from construction Non-Financial Goals 2019 and
activities of approximately €359 million in 2019. The expansion Ambitions for 2020
of our data centers is an important aspect of our planned In addition to our financial goals, we also focus on two non-
investments again for 2019. In addition, we aim to extend our financial targets: customer loyalty and employee engagement.
office space to cover currently anticipated future growth. In For 2019 to 2020, we aim to reach an Employee Engagement
2020, we expect investments from construction activities of Index of between 84% and 86% (2018: 84%).
approximately €400 million. In 2019, we expect total capital We measure customer loyalty using the Customer Net
expenditures of approximately €1.5 billion. In 2020, capital Promoter Score (NPS). In 2019, we aim for a Customer NPS of
expenditures are expected to stay at a similar level as in 2019. +1.0 (2018: – 5) and expect a steady increase in 2020 and
On January 23, 2019, the acquisition of Qualtrics closed beyond.
following satisfaction of applicable regulatory and other
approvals. We acquired 100% of the Qualtrics shares for approx. Premises on Which Our Outlook and
US$35 per share, representing consideration transferred in cash
Prospects Are Based
of approximately US$7.1 billion. In addition to the cash payments,
SAP will also incur liabilities and post-closing expenses relating to In preparing our outlook and prospects, we have taken into
assumed share-based payment awards amounting to approx. account all events known to us at the time we prepared this
report that could influence SAP’s business going forward. The
US$0.9 billion. On January 23, 2019, we fully drew the Qualtrics-
related €2.5 billion acquisition credit facility to partially finance Qualtrics acquisition is reflected in our outlook and prospects.
the purchase price payment. The facility has a lifetime of three
years and can be flexibly repaid with SAP’s free cash flow or
further refinancing transactions on the capital markets.
Qualtrics will be reflected in our Customer Experience
segment, which we are renaming upon the Qualtrics acquisition
to Customer and Experience Management.
Other than that, we do not expect major acquisitions in 2019
and 2020. Our priority is to pay down debts resulting from the
Qualtrics acquisition first. Therefore, we will rather focus on
organic growth, complemented by minor tuck-in acquisitions.

Goals for Liquidity and Finance

On December 31, 2018, we had a negative net liquidity. We
believe that our liquid assets, combined with our undrawn credit
facilities, are sufficient to meet our operating financing needs in
2019 as well, and, together with expected cash flows from
operations, will support debt repayments and our currently
planned capital expenditure requirements over the near and
medium term.
In 2019, compared to 2018 we expect higher cash outflows for
restructuring (approximately additional €550 million to €750
million), share based payments (approximately additional €300
million mainly due to Qualtrics), and tax-related cash outflows
(approximately additional €300 million). In contrast, we expect
operating cash flow to benefit from the cash flow reclassification
due to IFRS 16 by an amount of €300 million to €400 million.
Considering all these effects, we expect operating cash flow in
2019 to be broadly in line with 2018. Free cash flow (as redefined
in response to IFRS 16) is expected to decrease moderately
despite an unchanged level of capital expenditure. For 2020, we
expect a significant year-over-year increase in both, operating
cash flow and free cash flow, mainly due to decreased cash
outflows for restructuring and a profitable growth of our
operating business.
We intend to repay €750 million in Eurobonds in
November 2019. In addition, we might repay portions of the
Qualtrics related €2.5 billion acquisition term loan, and plan to

68
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES
Supervisory Board
The current members of the Supervisory Board of SAP SE, each member’s principal occupation, the year in which each was first elected
and the year in which the term of each expires, respectively, are as follows:

Name Age Principal Occupation Year First Year Term

Elected Expires

Prof. Dr. h.c. mult. Hasso Plattner, 75 Chairman of the Supervisory Board 2003 2019
Chairman(1)(4)(7)(8)(11)(12)

Margret Klein-Magar, Vice 54 Employee, Vice President Head of SAP Alumni Relations 2012 2019
Chairperson(4)(7)(9)

Pekka Ala-Pietilä(1)(4)(6)(7)(8)(11) 62 Chairman of the Board of Directors, Huhtamäki Oyj 2002 2019

Panagiotis Bissiritsas(5)(6)(7)(9) 50 Employee, Support Expert, Member of Works Council SAP SE 2007 2019

Martin Duffek(5)(7)(9)(12) 43 Employee, Product Manager 2015 2019

Aicha Evans(3)(4)(7)(12) 49 Senior Vice President and Chief Strategy Officer, Intel Corporation 2017 2019

Diane Greene(3)(7) 63 Chief Executive Officer, Google Cloud, Google LLC 2018 2019

Andreas Hahn(4)(7)(9) 48 Employee, Product Expert, IoT Standards, Member of Works Council SAP 2015 2019
SE

Prof. Dr. Gesche Joost(2)(7)(12) 44 Professor for Design Research and Head of the Design Research Lab, 2015 2019
University of Arts Berlin

Lars Lamadé(4)(9)(11)(12) 47 Employee, Head of Sponsorships Europe and Asia 2002 2019

Bernard Liautaud(1)(4)(7)(8) 56 Managing Partner, Balderton Capital 2008 2019

Gerhard Oswald(3) 65 Managing Director of Oswald Consulting GmbH 2018 2019

Christine Regitz(7)(9)(12) 53 Employee, Vice President User Experience, Chief Product Expert 2015 2019

Dr. Friederike Rotsch(5)(6)(11) 46 Group General Counsel and Head of Group Legal & Compliance. Merck 2018 2019
KGaA

Dr. Erhard Schipporeit(1)(5)(6)(10)(11) 70 Independent Management Consultant 2005 2019

Robert Schuschnig-Fowler(6)(9)(12) 59 Employee, Account Manager, Senior Support Consultant 2015 2019

Dr. Sebastian Sick(4)(6)(9)(11) 46 Head of Company Law Unit, Hans Boeckler Foundation 2015 2019

Pierre Thiollet(7)(9) 57 Employee, Webmaster, Member of the SAP France Works Council, 2015 2019
Secretary of CHSCT (Hygiene, Security and Work Conditions Committee)

(1) Elected by SAP SE’s shareholders on May 21, 2014.

(2) Elected by SAP SE’s shareholders on May 12, 2016.

(3) Elected by SAP's shareholders on May 17, 2018.

(4) Member of the General and Compensation Committee.

(5) Member of the Audit Committee.

(6) Member of the Finance and Investment Committee.

(7) Member of the Technology and Strategy Committee.

(8) Member of the Nomination Committee.

(9) Appointed by the SAP SE Works Council Europe on May 6, 2015.

(10) Audit Committee financial expert.

(11) Member of the Special Committee.

(12) Member of the People and Organization Committee.

69
 For detailed information on the Supervisory Board committees corporate affairs, corporate audit and global marketing. He
and their tasks, including the Audit Committee and the General and represents SAP as a member of the European Roundtable of Chief
Compensation Committee, please refer to “Item 10 Additional Executive Officers, the U.S. Business Council and the World
Information — Corporate Governance.” Economic Forum. Prior to joining SAP, he served as a global
Pursuant to the Articles of Incorporation of SAP SE and the executive in several technology companies.
Agreement on the Involvement of Employees in SAP SE, members Robert Enslin, 56 years old, holds diplomas in data science as
of the Supervisory Board of SAP SE consist of nine representatives well as computer science and data management. He joined SAP in
of the shareholders and nine representatives of the European 1992 and became a member of the Executive Board in May 2014. He
employees. The current nine employees’ representatives were is president of Cloud Business Group and as such responsible for
appointed by the SAP SE Works Council Europe on May 6, 2015. the ‘SAP Business Network’ segment (which includes SAP Concur,
Certain current members of the Supervisory Board of SAP SE SAP Ariba, and SAP Fieldglass), for the ‘Customer and Experience
were members of supervisory boards and comparable governing Management’ segment (which includes Customer Experience and
bodies of enterprises other than SAP SE in Germany and other Qualtrics) and for the development and delivery of SAP
countries as of December 31, 2018. See Note (G.5) to our SuccessFactors solutions as part of the ‘Applications, Technology &
Consolidated Financial Statements for more detail. Apart from Services’ segment. Before joining SAP, Robert Enslin spent 11 years
pension obligations for employees, SAP SE has not entered into in various roles in the IT industry.
contracts with any member of the Supervisory Board that provide Adaire Fox-Martin, 54 years old, is a graduate of Trinity College
for benefits upon a termination of the employment or service of the in Ireland. She joined SAP in 2008 and became a member of the
member. Executive Board in 2017. Together with Jennifer Morgan she is
jointly responsible for Global Customer Operations and leads SAP’s
Executive Board customer operations in EMEA (Europe, Middle East, Africa), MEE
The current members of the Executive Board, the year in which (Middle & Eastern Europe) and Greater China. Prior to SAP, Adaire
each member was first appointed and the year in which the term of Fox-Martin served as the head of Public Sector for Asia Pacific
each expires, respectively, are as follows: Japan at Oracle Corporation.
Christian Klein, 38 years old, holds a diploma in international
Name1) Year First Year business administration from the University of Cooperative
Appointed Current Education in Mannheim, Germany. He joined SAP in 1999 and
Term became a member of the Executive Board in 2018. Christian is Chief
Expires
Operating Officer (COO) of SAP and leads the board area Intelligent
Bill McDermott, CEO 2008 2021
Enterprise Group. He is responsible for global development and
Robert Enslin 2014 2021 delivery of SAP’s core applications, global business operations, IT
services, and cloud infrastructure.
Adaire Fox-Martin 2017 2020 Michael Kleinemeier, 62 years old, holds a degree in commercial
management from the University of Paderborn, Germany. He first
Christian Klein 2018 2020
joined SAP in 1989 and became a member of the Executive Board in
Michael Kleinemeier 2015 2020 November 2015. He-leads the SAP Digital Business Services
organization including global services delivery and regional field
Jennifer Morgan 2017 2020 services.
Luka Mucic 2014 2021
Jennifer Morgan, 47 years old, is a graduate of James Madison
University in Harrisonburg, Virginia, United States. She joined SAP
Jürgen Müller 2019 2021 in 2004 and became a member of the Executive Board in 2017.
Together with Adaire Fox-Martin she is jointly responsible for Global
Stefan Ries 2016 2024
Customer Operations and leads SAP’s customer operations in the
1)
On February 20, 2019, Bernd Leukert and the Supervisory Board mutually agreed Americas and Asia Pacific Japan. Prior to SAP, Jennifer Morgan
that Bernd Leukert will depart SAP, and that his membership on the Executive served in various management roles at Siebel Systems and
Board ended effective as of that day.
Accenture.
Luka Mucic, 47 years old, holds a master’s degree in law from
A description of the management responsibilities and
the University of Heidelberg, Germany, and a joint executive MBA
backgrounds of the current members of the Executive Board are as
from ESSEC, France, and Mannheim Business School, Germany. He
follows:
joined SAP in 1996 and became Chief Financial Officer (CFO), and a
member of the Executive Board in July 2014. He is responsible for
Bill McDermott, CEO (Vorstandssprecher), 57 years old, holds a
finance and administration including investor relations, data
master’s degree in business administration from Northwestern
protection and privacy, and global security.
University-Kellogg School of Management. He joined SAP in 2002
Jürgen Müller, 36 years old, holds a PhD in business informatics
and became a member of its Executive Board on July 1, 2008. On
from the Hasso Plattner Institute (HPI) for Software Engineering,
February 7, 2010 he became Co-CEO alongside Jim Hagemann
University of Potsdam, Germany. He joined SAP in 2013 and
Snabe and when Jim Hagemann Snabe concluded his role as Co-
became a member of the Executive Board in 2019. Jürgen is Chief
CEO in May 2014, Bill McDermott became sole CEO. Besides his
Technology Officer (CTO) of SAP and leads the board area
duties as CEO, he is responsible for strategy, governance, digital
Technology and Innovation. He is responsible for the technology and
government, business development, corporate development, global

70
innovation strategy, SAP HANA, SAP Cloud Platform, SAP
Leonardo, and SAP Analytics. Before joining SAP, Jürgen was co-
representative of Hasso Plattner’s research chair at HPI.
Stefan Ries, 52 years old, holds a master’s degree in economics
from the University of Constance, Germany. He first joined SAP in
2002 and became a member of the Executive Board in April 2016.
He is Chief Human Resources Officer with global responsibility for
Human Resources including HR strategy, business transformation,
leadership development, and talent development. He also serves as
Labor Relations Director.
The members of the Executive Board of SAP SE as of December
31, 2018 that are members on other supervisory boards and
comparable governing bodies of enterprises, other than SAP, in
Germany and other countries, are set forth in Note (G.5) to our
Consolidated Financial Statements. SAP SE has not entered into
contracts with any member of the Executive Board that provide for
benefits upon a termination of the employment of service of the
member, apart from pensions, benefits payable in the event of an
early termination of service, and abstention compensation for the
postcontractual noncompete period.
To our knowledge, there are no family relationships among any of
the Supervisory Board and Executive Board members.

71
Compensation Report
fixed compensation element and the two performance-based
Compensation for Executive and elements. This target compensation is benchmarked based on
Supervisory Board Members SAP’s global strategy, market position, business performance and
future prospects of economy, and the compensation paid at
This compensation report describes the compensation system,
comparable national and international companies. The Supervisory
outlines the criteria that apply to the compensation for Executive
Board also considers the compensation systems applicable for the
Board and Supervisory Board members for the year 2018, and
rest of the Company, comparing Executive Board pay with the pay
discloses the amount of compensation.
of SAP executives and non-executive SAP employees. The
performance-based elements each correspond to a target
Compensation for Executive Board
achievement of 100% of all KPIs. The Supervisory Board reviews,
Members assesses, and if appropriate, revises these compensation targets,
in its first meeting of each fiscal year (February 21, 2018, for 2018).
Compensation System for 2018 The Supervisory Board is of the opinion that this approach ensures
The compensation for Executive Board members is intended to that the compensation is appropriate.
reflect the demanding role of Executive Board members leading a The compensation system is designed to support the growth in
global company in a quickly evolving sector. The compensation value for the Company over the long term. The long-term incentive
level is aimed to be competitive to support SAP in the worldwide element therefore has significant weighting, making up more than
market for highly skilled executives, especially in the context of the two-thirds of the CEO’s compensation target, and more than 50%
software industry. It is our goal that our Executive Board of each Executive Board member’s compensation target.
compensation provides sustainable incentive for committed, In the case of any extraordinary, unforeseeable events, the
successful work in a dynamic business environment. Supervisory Board is entitled, at its reasonable discretion, to adjust
The Supervisory Board – supported by its General and the performance-based compensation before payout upwards or
Compensation Committee – determines the compensation for downwards in the interest of SAP. No corrections to the payout
each Executive Board member based on their individual role and amounts paid in May 2018 were made.
performance in its first regular meeting of each fiscal year. As The individual elements of SAP’s Executive Board compensation
pictured below, the compensation contains performance-based are described in more detail below.
elements and non-performance-based elements:
Non-Performance-Based Compensation
Compensation Fixed Compensation
The fixed compensation is paid monthly in 12 equal installments
Non-performance-based compensation in the Executive Board member’s home currency1).

Fixed compensation Fringe Benefits

The contractually guaranteed fringe benefits mainly comprise
additional benefits such as insurance contributions, benefits in
Fringe benefits
kind, expenses for maintenance of two households, use of aircraft,
and tax gross-ups according to local conditions.
Performance-based compensation

STI
Short-term incentive

LTI
Long-term incentive

The amount of performance-based compensation depends

primarily on SAP’s performance against predefined financial target
values (Key Performance Indicators, KPIs) and on the SAP share
price, and is subject to hurdles and caps. These KPIs and their
target values as well as their weighting are set by the Supervisory
Board each plan year and are aligned to the SAP budget for that
year.
The Supervisory Board sets the individual total target 1)
Home currency is the currency of the Executive Board member’s primary place of
compensation for each Executive Board member, comprised of the residence.

72
Performance-Based Compensation (“Retention”), and to reward them for a long-term SAP share price
performance (“Performance”) as compared to its main peer group
Short-Term Incentive
(Peer Group).
The LTI 2016 plan came into effect on January 1, 2016. It is a
virtual share program with a term of four years per tranche.
Financial targets (KPIs 2018) Under the plan, a new LTI tranche is granted annually. Each

100% grant starts with determining a grant amount in euros. This grant
amount is based on the Executive Board members’ contractual LTI
target amount and the operating profit target achievement (non-
40% New cloud bookings
IFRS, at constant currency) for the previous year. Taking this target
(at constant currency)
achievement into account, the grant amount can be adjusted
35% Cloud and software revenue growth upwards or downwards in the range of 80% to 120% of the
(non-IFRS, at constant currency)
contractual LTI target amount. The 2017 operating profit target
25% Operating margin increase achievement was 95.4%. Considering this, the Supervisory Board
(non-IFRS, at constant currency) set the grant amount of the 2018 tranche at 95.4% of the
contractual LTI target amount.
This grant amount is converted into virtual shares (Share Units),
Target achievement so that Executive Board members participate in further share price
developments. The grant price is the arithmetic mean of the XETRA
0% if weighted achievement is below a 75% hurdle
closing prices of SAP stock on the 20 trading days following
0% 75% to 140% publication of SAP’s fourth-quarter results. The grant date of the
2018 tranche was February 21, 2018.
All Share Units granted in this way, comprising 60%
STI compensation Performance Share Units (PSUs) and 40% Retention Share Units
(RSUs), have a vesting period of approximately four years, during
STI target achievement (%) x STI target amount (€)
which the Executive Board member must actively contribute to the
Company’s operations. The value of the Share Units varies
The short-term, one-year performance-based compensation positively and negatively with the performance of SAP’s share
(Short-Term Incentive (STI)) is determined based on a set of price. At the end of the vesting period, the corresponding Share
financial targets (KPIs). Units are non-forfeitable.
For the STI 2018, the financial KPIs are: Constant currency new
cloud bookings in 2018, year-over-year growth in non-IFRS
constant currency cloud and software revenue in 2018, and non-
IFRS constant currency operating margin in 2018. The KPIs and
their respective target values are derived from SAP’s budget for
that year. For more information about financial KPIs, see the
Performance Management System section.
If the weighted target achievement for the financial KPIs is below
75%, there is no STI payout for the financial KPIs. In this case, the
target achievement for these KPIs is set to zero.
On February 20, 2019, the Supervisory Board assessed SAP’s
performance against the agreed targets and determined the
amount of the STI 2018 for the entire Executive Board. This
resulted in a target achievement of 93.0% (cloud and software
revenue growth of 125.8%, operating margin increase of 92.2%,
and new cloud bookings of 64.9%).
The STI compensation for 2018 will be paid out after the Annual
General Meeting of Shareholders in May 2019. It is paid in the
Executive Board member’s home currency1). All Executive Board
members are obliged to purchase SAP shares worth at least 5% of
the actual payout amount according to appropriate trading period
regulations. These shares are subject to a three-year holding
period.

Long-Term Incentive
The purpose of the long-term, multi-year performance-based
compensation (Long-Term Incentive, LTI) is to reward the annual 1)
Home currency is the currency of the Executive Board member’s primary place of
achievement of the non-IFRS constant currency operating profit, to residence.
ensure long-term retention of our Executive Board members

73
LTI Grant Process PSU Calculation

Supervisory Board determines grant amount for current

financial year, based on operating profit target achievement 60% PSUs
(non-IFRS, at constant currency) set for the previous year,
Originally granted
80% to 120%
of the target amount set in the Executive Board member’s SAP share price performance relative
contract to Peer Group Index performance
100% = same performance of SAP share price and Peer Group
Index
Grant amount is converted
into PSUs and RSUs
Peer Group Index SAP share price
resulting in
performs better performs better
than SAP share than Peer Group
price Index
60% PSUs 40%
decreased by percentage increased by percentage
Performance Share RSUs points of outperformance of points of outperformance.
Units Retention Peer Group Index If payout price is higher than
grant price, percentage
Share Units points are doubled

hurdle at 50% decrease cap at 50% increase

PSU calculation

resulting in a
Payout after four years Performance factor
Final number of PSUs and RSUs x payout price (€) 0% 50% to 150% max. 150%
Cap of payout price = 300% of grant price

The payout price used for the settlement is the simple Final number of PSUs
arithmetic mean of the XETRA closing prices of SAP stock on the Originally granted number x performance factor (%)
20 trading days following the publication of SAP’s fourth-quarter
results subsequent to the end of the vesting period. The payout
price is capped at 300% of the grant price. The LTI tranche is paid
in euros after the Annual General Shareholders’ Meeting of the
corresponding year. Any potential foreign currency exchange rate
risk is borne by the Executive Board members themselves.
The number of Share Units that will finally result in payments to
the Executive Board members can and will likely differ from the
number originally granted. The number of PSUs ultimately paid out
changes depending on the performance of the SAP share relative to
the Peer Group Index at the end of the vesting period. This places
more weight on SAP's performance within the industry. In contrast,
the final number of RSUs is fixed. However, both types of Share
Units may expire during the entire term of a tranche under certain
conditions (see the "LTI Forfeiture Rules” graphic below).

74
 SAP’s share price performance is measured by comparing the The Peer Group Index currently includes the following major
grant price against the payout price. We calculate the difference international competitors of SAP: Microsoft, IBM, Oracle,
between SAP’s share price performance and the Peer Group Index Salesforce, Adobe, VMWare, Workday, ServiceNow, Symantec, and
performance. In case of an increased SAP share price and an Tableau. The Supervisory Board has defined this group based on
outperformance against the Peer Group Index, the calculated internal and external recommendations and, if necessary, adjusts
difference is doubled to reward positive performance. The following the group, for example, in case of a competitor’s delisting. The Peer
examples of the PSU calculation illustrate possible outcomes Group Index is calculated as a price index based on weighted
assuming 1,000 PSUs granted: market capitalization. Each Peer Group competitor is applied at a
maximum of 15%. Consequently, the weight of smaller, more
SAP share price performs better than Peer Group Index volatile competitors is increased in relation to their size, resulting in
a highly ambitious index. The index is calculated daily by Deutsche
SAP share price performance +18%
Börse Group and can be tracked under ISIN DE000A2BLEB9.
Peer Group Index performance +10%
Composition and Weighting of Peer Group Index
Difference +18% – (+10%) +8%

Performance factor with doubled difference (+8% x 2) + 100% 116%

Final number of PSUs 116% x 1,000 1,160

Microsoft 15%
IBM 15%
SAP share price performs much higher than Peer Group Index;
cap is triggered Oracle 15%
SAP share price performance +30% Salesforce 15%
Peer Group Index performance –5% Adobe 14%
Difference +30% – (–5%) +35% VMWare 11%
Performance factor with doubled difference (+35% x 2) + 100% 170% Workday 6%
Capped at 150% ServiceNow 5%
Final number of PSUs 150% x 1,000 1,500 Symantec 2%
Tableau 2%
Peer Group Index performs better than SAP share price as at December 31, 2018

SAP share price performance +5%

Peer Group Index performance +10% LTI Forfeiture Rules

Difference +5% – (+10%) –5% If an Executive Board member’s service contract is terminated
before the end of the third year following the year in which the
Performance factor –5% + 100% 95%
Share Units were granted, both the PSUs and RSUs are forfeited in
Final number of PSUs 95% x 1,000 950 whole or in part, depending on the circumstances of the relevant
resignation from office or termination of the service contract. In
case PSUs and RSUs are forfeited in part, the percentage of the
Peer Group Index performs better than SAP share price;
low hurdle triggered forfeiture is proportional to the four-year vesting period of each
grant. This means that 25% of the grant is earned each year of the
SAP share price performance –10%
vesting period. Unearned grants are forfeited.
Peer Group Index performance +50%

Difference –10% – (+50%) –60%

Performance factor –60% + 100% 40%

Hurdle is 50% 0%

Final number of PSUs 0% x 1,000 0

75
 LTI Forfeiture Rules
Example Calculation1)
forfeited grants
Executive Board Executive Board member PSUs and RSUs forfeit in
Member resigns starts working for an SAP their entirety
from office competitor before the end
without cause of the vesting period 100% 100% 100% 100%

2016 2017 2018 2019

Supervisory Board terminates the Executive Board member's

service contract for cause Total four-year: 100% forfeiture

Executive Board Executive Board member PSUs and RSUs forfeit on earned grants forfeited grants
Member resigns does not start working for a pro rata temporis basis
from office an SAP competitor before 0%
25%
without cause the end of the vesting 50%
75%
period

2016 2017 2018 2019

Executive Board member’s service contract expires due to
mutual consent, resignation, retirement, or death Total four-year: 37.5% forfeiture

earned grants plus 50% forfeited grants

Change of PSUs and RSUs are paid
control2) out immediately
on a pro rata temporis 0.0% 12.5% 25.0% 37.5%
basis plus 50% which
otherwise would be
forfeited
2016 2017 2018 2019
Total four-year: 18.75% forfeiture

1)
Example calculation with four tranches (grant allocation of 100%, stable share price from grant to vest, and no consideration of performance condition);
Executive Board member’s contract terminates after year four (December 31, 2019)
2)
For the definition, see the Early End-of-Service Undertakings section

The change from the previous RSU Milestone Plan to the LTI earned grants equalization amount forfeited grants

2016 Plan required a transition rule in order to avoid unjustified

disadvantages for Executive Board members. In the event an 1,500

Executive Board member leaves the company, the disadvantage

arises from the difference in the one-year vesting period in the RSU 1,000 250 625
1,125
Milestone Plan in comparison to the four-year vesting period in the 750
LTI 2016 Plan. In order to compensate for this disadvantage related
to the vesting periods, an individual equalization amount was 375

determined for Executive Board members who participated in the

RSU Milestone Plan. 2015 2016 2017 2018 2019
RSU Milestone
The equalization amount has been subject to: LTI 2016 Plan
Plan
– A target achievement of at least 60% of the non-IFRS constant
currency operating profit target, and
– An ongoing employment relationship in 2016, 2017, and, in one
case, in 2018.
In the event an Executive Board member leaves the company
and PSUs would otherwise be forfeited on a pro rata basis, the
Executive Board member is entitled to PSUs equal to the
equalization amount. The following graphic gives an example of
how the equalization amount was derived, assuming a grant of
€1,000 for the RSU Milestone Plan, a grant of €1,500 for the LTI
2016 Plan, and a forfeiture of the grants on a pro rata temporis
basis on December 31, 2019:

76
Clawback Provisions The following graphic illustrates the relation of the fixed and
SAP has the contractual right to request that the Executive performance-based compensation elements in the Executive Board
Board member returns any payments made from STI or LTI if it members’ target compensation for 2018 based on € amounts, as
subsequently emerges that the payment was not justified in whole well as the minimum and maximum possible compensation. The
or in part because targets were not achieved at all or not achieved height of the bars is not indicative of the absolute compensation
in the scope assumed when calculating the payment amount due amount.
on account of false information having been provided. In such case, Compensation Scheme 2018
the Executive Board member is obliged to repay to SAP the amount
by which the payment actually made exceeds the payment amount
due on the basis of the targets actually achieved. Such
contractually agreed claim to repayment supplements the claim for 362%
restitution of unjustified enrichment pursuant to section 812 of the
German Civil Code (BGB). 317%

Minimum and Maximum Compensation LTI (long-term

incentive)
The minimum compensation amount reflects the fixed
STI (short-term
compensation amount and an LTI and STI payout of zero.
incentive)
The maximum compensation amount is capped at 362% (CEO)
Fixed
and 317% (Executive Board member other than CEO) of the total
compensation
target compensation. This would be achieved in the event of the
maximum possible payout amount of the STI and the LTI, as
follows:
100% 100%
– The maximum possible payout amount of the STI is reached
when the target achievement of all financial KPIs is 140%.
– The maximum possible payout amount for the LTI tranche is
468% of the contractual target amount. 12% 17%

The maximum possible payout amount of the LTI is reached if all

Min Target Max Min Target Max
of the following conditions are cumulatively met:
– The grant amount for the LTI tranche has been set at its capped Executive Board
CEO
maximum of 120% of the contractual target amount. (other than CEO)
– SAP’s share price outperforms the Peer Group Index by at least
25 percentage points (reaching the capped maximum 150% of
Overview of the Relations Between Target and Payout for
the initial PSU allocation for that year).
Performance-Based Compensation
– The SAP share price has at least tripled (corresponding to an
average annual increase of approximately 32%) compared to The total target achievements of STI reflect the relation between
the grant price (cap on share price development). the target amount and the payout amount. The STIs for the years
2014 to 2017 were already paid out.
In the event of the maximum LTI payout for the entire Executive STI Total Target Achievement
Board of €123 million in 2022, the shareholders would also benefit
through the strong increase in market capitalization, which would Percentage 2018 2017 2016 2015 2014
be at least €200 billion from 2018 to 2022. 93.0 88.2 104.4 147.5 109.5

77
 The relation between the LTI target amounts for the 2016 to Amount of Compensation for 2018
2018 tranches and the theoretical payout amounts are based on We present the Executive Board compensation disclosures in
SAP’s share price at year end. The 2014 tranche discloses the accordance with the recommendations of the German Corporate
relation between the respective target amount and the actual Governance Code (“GCGC”). Furthermore, the tables below
payout amount in May 2018. The 2015 tranche discloses the provide a reconciliation statement following the requirements of
relation between the respective target amount and the payout sections 314 and 315 of the German Commercial Code
amount scheduled for May 2019. (Handelsgesetzbuch, or “HGB”) as specified in the German
Relation Between Target Amount and Payout Amount of the LTI Accounting Standards (“GAS 17”). Pursuant to the
recommendations of the GCGC, the value of benefits granted for
Percentage LTI 2016 Plan RSU Milestone Plan the year under review as well as the benefits received, that is, the
2015
amounts disbursed for the year under review, are disclosed below
2018 2017 2016 2015 2014 based on the reference tables recommended in the GCGC. In
Tranche1) Tranche1) Tranche1) Tranche2) Tranche contrast to the disclosure rules stipulated in the German HGB and
12/31/2018 90.87 82.65 55.50 233.77 119.61 GAS 17, the GCGC includes the pension expense, that is, the service
cost according to IAS 19, in the Executive Board compensation and
12/31/2017 NA 107.76 126.97 240.73 119.61
requires the additional disclosure of the target value for the one-
1)
Consideration of theoretical payout amounts based on SAP’s share price at year variable compensation and the maximum and minimum
year end compensation amounts achievable for the variable compensation
2)
Consideration of individual adjustment factor in addition to target achievement elements.
2015 ranging between 31.62% and 37.38%

Executive Board Members’ Compensation

German Corporate Governance Code
€ thousands Bill McDermott Robert Enslin
CEO Member of the Executive Board

Benefits Granted Benefits Received Benefits Granted Benefits Received

1) 1) 1) 1) 1) 1)
2018 2018 2018 2017 2018 2017 2018 2018 2018 2017 20181) 20171)
(Min) (Max) (Min) (Max)

Fixed compensation 1,314.7 1,314.7 1,314.7 1,374.3 1,314.7 1,374.3 800.2 800.2 800.2 836.5 800.2 836.5

Fringe benefits2) 794.7 794.7 794.7 1,271.9 794.7 1,271.9 105.1 105.1 105.1 368.1 105.1 368.1

Total 2,109.4 2,109.4 2,109.4 2,646.2 2,109.4 2,646.2 905.3 905.3 905.3 1,204.6 905.3 1,204.6

One-year variable 2,193.0 0 3,070.2 2,093.7 1,846.7 2,486.9 1,327.3 0 1,858.2 1,267.2 1,117.7 1,505.2
compensation

Multi-year variable
compensation

LTI 2016 Plan 6,876.6 0 28,535.4 7,741.2 2,270.3 0 9,420.8 2,555.7

RSU Milestone 5,251.0 5,787.6 1,248.8

Plan 2015

SAP SOP 2010 10,178.3

and 2011

Total 11,179.0 2,109.4 33,715.0 12,481.1 9,207.1 21,099.0 4,502.9 905.3 12,184.3 5,027.5 3,271.8 2,709.8

Service cost 568.3 568.3 568.3 686.2 568.3 686.2 235.8 235.8 235.8 194.1 235.8 194.1
Total according to 11,747.3 2,677.7 34,283.3 13,167.3 9,775.4 21,785.2 4,738.7 1,141.1 12,420.1 5,221.6 3,507.6 2,903.9
GCGC

78
German Corporate Governance Code
€ thousands Adaire Fox-Martin Christian Klein
Member of the Executive Board Member of the Executive Board
(from 1/1/2018)

Benefits Granted Benefits Received Benefits Granted Benefits Received

2018 2018 2018 2017 2018 2017 2018 2018 2018 2017 2018 2017
(Min) (Max) (Min) (Max)

Fixed compensation 700.0 700.0 700.0 466.7 700.0 466.7 700.0 700.0 700.0 700.0
2)
Fringe benefits 54.6 54.6 54.6 82.4 54.6 82.4 13.1 13.1 13.1 13.1

Total 754.6 754.6 754.6 549.1 754.6 549.1 713.1 713.1 713.1 0 713.1 0

One-year variable 1,125.8 0 1,576.1 755.6 666.5 1,125.8 0 1,576.1

compensation

Multi-year variable
compensation

LTI 2016 Plan 2,128.8 0 8,833.7 1,680.0 1,793.2 0 7,441.2

RSU Milestone
Plan 2015

SAP SOP 2010

and 2011

Total 4,009.2 754.6 11,164.4 2,984.7 1,421.1 549.1 3,632.1 713.1 9,730.4 0 713.1 0

Service cost
Total according to 4,009.2 754.6 11,164.4 2,984.7 1,421.1 549.1 3,632.1 713.1 9,730.4 0 713.1 0
GCGC

€ thousands Michael Kleinemeier Bernd Leukert

Member of the Executive Board Member of the Executive Board

Benefits Granted Benefits Received Benefits Granted Benefits Received

2018 2018 2018 2017 2018 2017 2018 2018 2018 2017 2018 2017
(Min) (Max) (Min) (Max)

Fixed compensation 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0 700.0
2)
Fringe benefits 29.1 29.1 29.1 29.0 29.1 29.0 10.3 10.3 10.3 30.3 10.3 30.3

Total 729.1 729.1 729.1 729.0 729.1 729.0 710.3 710.3 710.3 730.3 710.3 730.3

One-year variable 1,125.8 0 1,576.1 1,125.8 992.9 1,175.3 1,125.8 0 1,576.1 1,125.8 992.9 1,175.3
compensation

Multi-year variable
compensation

LTI 2016 Plan 2,128.8 0 8,833.7 2,396.4 2,397.7 0 9,949.7 2,699.3

RSU Milestone 1,248.8

Plan 2015

SAP SOP 2010

and 2011

Total 3,983.7 729.1 11,138.9 4,251.2 1,722.0 1,904.3 4,233.8 710.3 12,236.1 4,555.4 2,952.0 1,905.6

Service cost

Total according to 3,983.7 729.1 11,138.9 4,251.2 1,722.0 1,904.3 4,233.8 710.3 12,236.1 4,555.4 2,952.0 1,905.6
GCGC

79
German Corporate Governance Code
€ thousands Jennifer Morgan Luka Mucic
Member of the Executive Board Member of the Executive Board

Benefits Granted Benefits Received Benefits Granted Benefits Received

20181) 2018 2018 20171) 20181) 20171) 2018 2018 2018 2017 2018 2017
(Min) (Max) (Min) (Max)

Fixed compensation 634.3 634.3 634.3 430.4 634.3 430.4 700.0 700.0 700.0 700.0 700.0 700.0
2)
Fringe benefits 128.4 128.4 128.4 48.4 128.4 48.4 11.8 11.8 11.8 11.0 11.8 11.0

Total 762.7 762.7 762.7 478.8 762.7 478.8 711.8 711.8 711.8 711.0 711.8 711.0

One-year variable 1,052.0 0 1,472.8 674.2 594.6 1,125.8 0 1,576.1 1,125.8 992.9 1,175.3
compensation

Multi-year variable
compensation

LTI 2016 Plan 2,128.8 0 8,833.7 1,680.0 2,128.8 0 8,833.7 2,396.4

RSU Milestone 949.5

Plan 2015

SAP SOP 2010

and 2011

Total 3,943.5 762.7 11,069.2 2,833.0 1,357.3 478.8 3,966.4 711.8 11,121.6 4,233.2 2,654.2 1,886.3

Service cost 51.4 51.4 51.4 8.9 51.4 8.9

Total according to 3,994.9 814.1 11,120.6 2,841.9 1,408.7 487.7 3,966.4 711.8 11,121.6 4,233.2 2,654.2 1,886.3
GCGC

€ thousands Stefan Ries Total Executive Board

Member of the Executive Board

Benefits Granted Benefits Received Benefits Granted Benefits Received

2018 2018 2018 2017 2018 2017 2018 2017 2018 2017
(Min) (Max)

Fixed compensation 700.0 700.0 700.0 700.0 700.0 700.0 6,949.2 5,907.9 6,949.2 5,907.9

Fringe benefits2) 21.9 21.9 21.9 22.4 21.9 22.4 1,169.0 1,863.5 1,169.0 1,863.5

Total 721.9 721.9 721.9 722.4 721.9 722.4 8,118.2 7,771.4 8,118.2 7,771.4

One-year variable 1,125.8 0 1,576.1 1,125.8 992.9 883.1 11,327.1 9,293.9 8,197.1 8,401.1
compensation

Multi-year variable
compensation

LTI 2016 Plan 1,793.2 0 7,441.2 2,018.7 23,646.2 23,167.7

RSU Milestone 8,698.1 5,787.6

Plan 2015

SAP SOP 2010 10,178.3

and 2011

Total 3,640.9 721.9 9,739.2 3,866.9 1,714.8 1,605.5 43,091.5 40,233.0 25,013.4 32,138.4

Service cost 855.5 889.2 855.5 889.2

Total according to 3,640.9 721.9 9,739.2 3,866.9 1,714.8 1,605.5 43,947.0 41,122.2 25,868.9 33,027.6
GCGC
1)
The value of the fixed and one-year variable compensation is granted in U.S. dollars. For conversion purposes from U.S. dollars into euro, for fixed compensation the
average exchange rate and for the one-year variable compensation the year-end exchange rate of the respective period applies.
2)
Insurance contributions, the private use of company cars and aircraft, benefits in kind, expenses for maintenance of two households, payments and related supplements
for relocation upon appointment to the Executive Board, reimbursement of fees for the preparation of tax returns and tax gross ups according to local conditions. The
fringe benefits of Bill McDermott mainly consist of tax gross ups according to local conditions and expenses for maintenance of two households.

80
Reconciliation Reporting of Total Compensation Pursuant to Section 314(1)(6a) HGB in Connection with
GAS 17
€ thousands Bill McDermott Robert Enslin Adaire Fox-Martin Christian Klein Michael Kleinemeier

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

Total according to GCGC 11,747.3 13,167.3 4,738.7 5,221.6 4,009.2 2,984.7 3,632.1 0 3,983.7 4,251.2

Less granted annual –2,193.0 –2,093.7 –1,327.3 –1,267.2 –1,125.8 –755.6 –1,125.8 –1,125.8 –1,125.8
variable target
compensation

Plus allocated actual 2,039.5 1,846.7 1,234.4 1,117.7 1,046.9 666.5 1,046.9 1,046.9 992.9
annual variable
compensation

Less service cost –568.3 –686.2 –235.8 –194.1

Total compensation 11,025.5 12,234.1 4,410.0 4,878.0 3,930.3 2,895.6 3,553.2 0 3,904.8 4,118.3

€ thousands Bernd Leukert Jennifer Morgan Luka Mucic Stefan Ries Total Executive Board

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

Total according to GCGC 4,233.8 4,555.4 3,994.9 2,841.9 3,966.4 4,233.2 3,640.9 3,866.9 43,947.0 41,122.2

Less granted annual –1,125.8 –1,125.8 –1,052.0 –674.2 –1,125.8 –1,125.8 –1,125.8 –1,125.8 –11,327.1 –9,293.9
variable target
compensation

Plus allocated actual 1,046.9 992.9 978.4 594.6 1,046.9 992.9 1,046.9 992.9 10,534.0 8,197.1
annual variable
compensation

Less service cost –51.4 –8.9 –855.5 –889.2

Total compensation 4,154.9 4,422.5 3,869.9 2,753.4 3,887.5 4,100.3 3,562.0 3,734.0 42,298.4 39,136.2

Vertical Pay Ratio 2017

The vertical pay ratio compares the total benefits granted to the Ratio CEO Executive Board
CEO and the Executive Board members other than CEO with the (Other Than CEO)
total benefits granted to the Executives and all employees Average Annual 11,209.2 3,880.0
collectively who were employed at year end. In order to ensure Compensation
comparability for total benefits granted, only fixed compensation, (in € thousands)
one-year and multi-year variable compensation are considered. Executives 923 12 4
The Executives comprise the first and second management levels
Employees 101 111 39
below the Executive Board that is, the Global Executive Team (GET) including
and the Senior Executive Team (SET). Executives

2018 2016
Ratio CEO Executive Board Ratio CEO Executive Board
(Other Than CEO) (Other Than CEO)
Average Annual 10,384.3 3,942.3 Average Annual 11,785.4 4,090.8
Compensation Compensation
(in € thousands) (in € thousands)
Executives 906 11 4 Executives 823 14 5
Employees 99 105 40 Employees 99 119 41
including including
Executives Executives

81
Share-Based Payment Information Relating to Long-Term Incentives
Members of the Executive Board received, hold, or held share information about the terms and details of these programs, see the
units issued to them under the LTI 2016 Plan and hold or held RSUs Notes to the Consolidated Financial Statements, Note (B.3).
issued to them under the RSU Milestone Plan 2015. For more

Grants Under the LTI 2016 Plan

Year Granted Total (RSU) (PSU) Grant Value Grant Value Total Grant
Share Units Retention Performance per RSU at per PSU at Value at Time
Share Units Share Units Time of Grant Time of Grant of Grant
(40%) (60%)

Quantity Quantity Quantity € € € thousands

Bill McDermott (CEO) 2018 85,841 34,336 51,505 79.01 80.84 6,876.6

2017 89,217 35,687 53,530 83.60 88.88 7,741.2

Robert Enslin 2018 28,340 11,336 17,004 79.01 80.84 2,270.3

2017 29,454 11,782 17,672 83.60 88.88 2,555.7

Adaire Fox-Martin 2018 26,574 10,630 15,944 79.01 80.84 2,128.8

2017 18,539 7,416 11,123 85.91 93.76 1,680.0

Christian Klein (from 1/1/2018) 2018 22,385 8,954 13,431 79.01 80.84 1,793.2

Michael Kleinemeier 2018 26,574 10,630 15,944 79.01 80.84 2,128.8

2017 27,619 11,048 16,571 83.60 88.88 2,396.4

Bernd Leukert 2018 29,931 11,972 17,959 79.01 80.84 2,397.7

2017 31,109 12,444 18,665 83.60 88.88 2,699.3

Jennifer Morgan 2018 26,574 10,630 15,944 79.01 80.84 2,128.8

2017 18,539 7,416 11,123 85.91 93.76 1,680.0

Luka Mucic 2018 26,574 10,630 15,944 79.01 80.84 2,128.8

2017 27,619 11,048 16,571 83.60 88.88 2,396.4

Stefan Ries 2018 22,385 8,954 13,431 79.01 80.84 1,793.2

2017 23,265 9,306 13,959 83.60 88.88 2,018.7

Total 2018 295,178 118,072 177,106 23,646.2

2017 265,361 106,147 159,214 23,167.7

82
Executive Board Members’ Holdings
LTI 2016 Plan
Quantity of Share Units Year Granted Holding on Granted Holding on
1/1/2018 12/31/2018
Retention Share Performance Share
Units (40%) Units (60%)

Bill McDermott (CEO) 2018 0 34,336 51,505 85,841

2017 89,217 0 0 89,217

2016 122,423 0 0 122,423

Robert Enslin 2018 0 11,336 17,004 28,340

2017 29,454 0 0 29,454

2016 40,417 0 0 40,417

Adaire Fox-Martin 2018 0 10,630 15,944 26,574

2017 18,539 0 0 18,539

Christian Klein (from 1/1/2018) 2018 0 8,954 13,431 22,385

Michael Kleinemeier 2018 0 10,630 15,944 26,574

2017 27,619 0 0 27,619

2016 37,898 0 0 37,898

Bernd Leukert 2018 0 11,972 17,959 29,931

2017 31,109 0 0 31,109

2016 42,687 0 0 42,687

Jennifer Morgan 2018 0 10,630 15,944 26,574

2017 18,539 0 0 18,539

Luka Mucic 2018 0 10,630 15,944 26,574

2017 27,619 0 0 27,619

2016 37,898 0 0 37,898

Stefan Ries 2018 0 8,954 13,431 22,385

2017 23,265 0 0 23,265

2016 23,987 0 0 23,987

Total 570,671 118,072 177,106 865,849

The Share Units granted in 2018 have a remaining term of

3.08 years, the share units granted in 2017 have a remaining
term of 2.08 years, and the share units granted in 2016 have a
remaining term of 1.08 years.

83
RSU Milestone Plan 2015
Quantity of RSUs Year Granted Holding on Exercised Holding on
1/1/2018 12/31/2018

Bill McDermott (CEO) 2015 113,667 0 113,667

2014 59,488 59,488 0

Robert Enslin 2015 39,985 0 39,985

2014 14,148 14,148 0

Michael Kleinemeier 2015 5,221 0 5,221

Bernd Leukert 2015 41,578 0 41,578

2014 14,148 14,148 0

Luka Mucic 2015 41,130 0 41,130

2014 10,757 10,757 0

Total 340,122 98,541 241,581

The table above shows the Executive Board members’ holdings pension depending on a health examination if, before reaching
issued to them under the RSU Milestone Plan 2015. The plan is a the regular retirement age, they become subject to occupational
cash-settled long-term incentive scheme with a payout subsequent disability or permanent incapacity. A surviving dependent’s
to a performance period of one year (after which the RSUs become pension is paid on the death of a former member of the
non-forfeitable) and an additional holding period of three years. The Executive Board. The disability pension is 100% of the vested
plan consists of four plan tranches to be issued with respect to the retirement pension entitlement and is payable until the
calendar years 2012 through 2015. The RSUs granted in 2015 have beneficiary’s 62nd birthday, after which it is replaced by a
a remaining term of 0.08 years. retirement pension. The surviving dependent’s pension is 60%
of the retirement pension or vested disability pension
Total Expense for Share-Based Payment entitlement at death. Entitlements are enforceable against SAP
€ thousands 2018 2017 SE. Current pension payments are reviewed annually for
adjustments and, if applicable, increased according to the
Bill McDermott (CEO) 2,155.8 7,684.4
surplus in the pension liability insurance. If service is ended
Robert Enslin 727.0 2,181.9 before the retirement age of 62, pension entitlement is reduced
Adaire Fox-Martin 796.1 309.7 in proportion as the actual length of service stands in relation to
the maximum possible length of service. The applied retirement
Christian Klein (from 1/1/2018) 442.2 –
pension plan is contributory. The contribution is 4% of
Michael Kleinemeier 914.2 1,509.8 applicable compensation up to the applicable income threshold
Bernd Leukert 775.2 2,287.4 plus 14% of applicable compensation above the applicable
income threshold. For this purpose, applicable compensation is
Jennifer Morgan 796.1 309.7
180% of annual base salary. The applicable income threshold is
Luka Mucic 675.8 2,059.0 the statutory annual income threshold for the state pension plan
Stefan Ries 772.0 1,049.3
in Germany (West), as amended from time to time.
– Bill McDermott has rights to future benefits under the portion of
Total 8,054.4 17,391.2
the pension plan for SAP America classified as “Non-Qualified
Retirement Plan” according to the U.S. Employee Retirement
Total expense for the share-based payment plans of Executive Income Security Act (ERISA). This “Non-Qualified” pension plan
Board members was recorded in accordance with IFRS 2 (Share- is a cash balance plan that provides either monthly pension
Based Payments) and consists exclusively of obligations arising payments or a lump sum on retirement. The pension becomes
from Executive Board activities. available from the beneficiary’s 65th birthday. Subject to certain
conditions, the plan also provides earlier payment or invalidity
End-of-Service Benefits benefits. The “Non-Qualified” pension plan closed with effect
from January 1, 2009. Interest continues to be accrued on the
Regular End-of-Service Undertakings earned rights to benefits within this plan. The rights were
partially earned before Bill McDermott became a member of the
Retirement Pension Plan
SAP Executive Board.
The following retirement pension agreements apply to the – SAP made contributions to a third-party pension plan for Bill
individual members of the Executive Board: McDermott, Robert Enslin, and Jennifer Morgan, as disclosed in
– Adaire Fox-Martin, Christian Klein, Michael Kleinemeier, Bernd the tables ‘German Corporate Governance Code’. SAP’s
Leukert, Luka Mucic, and Stefan Ries are entitled to receive a matching contributions are based on payments by Bill
retirement pension when they reach the retirement age of 62 McDermott, Robert Enslin, and Jennifer Morgan into this
and retire from their Executive Board seat; or a disability pension plan.

84
Total Defined Benefit Obligations (DBO) and Net Defined Benefit Liability (Asset) to Executive Board
Members
€ thousands Bill Adaire Fox- Christian Michael Bernd Luka Stefan Total
McDermott Martin1) Klein (from Kleinemeier1) Leukert1) Mucic1) Ries1)
(CEO) 1/1/2018) 1)

DBO 1/1/2017 1,459.2 – – 154.9 451.6 444.6 257.9 2,768.2

Less plan assets market – – – 181.4 389.7 347.6 116.7 1,035.4

value 1/1/2017

Net Defined Benefit Liability 1,459.2 – – –26.5 61.9 97.0 141.2 1,732.8
(Asset) 1/1/2017

DBO change in 2017 –148.7 93.5 – 117.0 132.9 141.3 86.7 422.7

Plan assets change in 2017 – 100.7 – 164.5 151.2 143.1 159.1 718.6

DBO 12/31/2017 1,310.5 93.5 – 271.9 584.5 585.9 344.6 3,190.9

Less plan assets market – 100.7 – 345.9 540.9 490.7 275.8 1,754.0
value 12/31/2017

Net Defined Benefit Liability 1,310.5 –7.2 – –74.0 43.6 95.2 68.8 1,436.9
(Asset) 12/31/2017

DBO change in 2018 106.2 89.9 112.8 66.7 –16.1 –42.1 –67.2 250.2

Plan assets change in 2018 – 156.3 141.3 161.7 153.9 145.0 143.5 901.7

DBO 12/31/2018 1,416.7 183.4 112.8 338.6 568.4 543.8 277.4 3,441.1

Less plan assets market – 257.0 141.3 507.6 694.8 635.7 419.3 2,655.7
value 12/31/2018

Net Defined Benefit Liability 1,416.7 –73.6 –28.5 –169.0 –126.4 –91.9 –141.9 785.4
(Asset) 12/31/2018
1)
The values shown here only reflect the pension entitlements that Adaire Fox-Martin, Christian Klein, Michael Kleinemeier, Bernd Leukert, Luka Mucic, and Stefan Ries will
receive from the retirement pension plan for Executive Board members.

The table below shows the annual pension entitlement earned Postcontractual Non-Compete Provisions
during the Executive Board membership of each member of the Each Executive Board member’s contract includes a 12-month
Executive Board on reaching the scheduled retirement age of 62, postcontractual non-compete agreement. During this non-compete
based on entitlements from SAP under performance-based and period, Executive Board members receive abstention payments
salary-linked plans. corresponding to 50% of their average contractual compensation
Annual Pension Entitlement as members. This average is calculated on the basis of the
preceding three years. Any other occupational income generated
€ thousands Vested on Vested on
12/31/2018 12/31/2017 by the Executive Board member is deducted from their
compensation.
Bill McDermott (CEO)1) 105.1 89.5
The following table presents the theoretical amounts for the net
Adaire Fox-Martin 7.3 2.9
present values of the postcontractual non-compete abstention
Christian Klein (from 1/1/2018) 4.1 – payments. The calculation assumes the following:
Michael Kleinemeier 14.8 9.8
– The Executive Board member leaves SAP at the end of their
respective current contract term.
Bernd Leukert 24.6 19.4 – Their final average contractual compensation prior to their
Luka Mucic 23.2 18.1 departure equals their compensation in 2018.
Actual postcontractual non-compete payments will likely differ
Stefan Ries 12.6 8.5
from these amounts depending on the time of departure and the
1)
The rights shown here for Bill McDermott refer solely to rights under the compensation levels and target achievements at the time of
pension plan for SAP America.
departure.

These are vested entitlements. To the extent that members

continue to serve on the Executive Board and that therefore more
contributions are made for them in the future, pensions actually
payable at the scheduled retirement age will be higher than the
amounts shown in the table.

85
Net Present Values of the Postcontractual Non- – SAP SE merges with another company and becomes the
Compete Abstention Payments subsumed entity;
€ thousands Contract Term Net Present Value – A control or profit transfer agreement is concluded with SAP SE
Expires of Postcontractual as the dependent company.
Non-Compete An Executive Board member’s contract can also be terminated
Abstention
Payment1) before full term if their appointment as an Executive Board member
of SAP SE is revoked in connection with a change of control.
Bill McDermott (CEO) 3/31/2021 5,493

Robert Enslin 3/31/2021 2,197 Postcontractual Non-Compete Provisions

Abstention compensation for the postcontractual non-compete
Adaire Fox-Martin 4/30/2020 1,964
period as described above is also payable on early contract
Christian Klein (from 1/1/2018) 12/31/2020 1,772 termination.
Michael Kleinemeier 12/31/2019 1,952
Permanent Disability
Bernd Leukert 3/31/2021 2,070 In case of permanent disability, the contract will end at the end
Jennifer Morgan 4/30/2020 1,934 of the quarter in which the permanent inability to work was
determined. The Executive Board member receives, in addition to a
Luka Mucic 3/31/2021 1,937
potential disability pension under the retirement plan described
Stefan Ries 3/31/2024 1,716 above, the monthly basic salary (fixed compensation) for a further
Total 21,035 12 months starting from the date the permanent disability is
1)
determined.
For the purpose of this calculation, the following discount rates have been
applied: Bill McDermott 0.16% (2017: 0.16%); Robert Enslin 0.16% (2017:
0.16%); Adaire Fox.Martin 0.04% (2017: 0.01%); Christian Klein 0.13%; Michael Payments to Former Executive Board Members
Kleinemeier 0.03% (2017: –0.01%); Bernd Leukert 0.16% (2017: 0.16%);
Jennifer Morgan 0.04% (2017: 0.01%); Luka Mucic 0.16% (2017: 0.16%); Stefan In 2018, we paid pension benefits of €2,054,300 to Executive
Ries 0.71% (2017: –0.09%). Board members who had retired before January 1, 2018 (2017:
€1,997,000). At the end of the year, the DBO for former Executive
Board members was €38,373,500 (2017: €39,993,100). Plan
assets of €31,615,100 are available to meet these obligations (2017:
Early End-of-Service Undertakings €31,944,100).
Severance Payments
Executive Board: Other Information
The standard contract for all Executive Board members
We did not grant any compensation advance or credit to, or
provides that on termination before full term (for example, by the
enter into any commitment for the benefit of, any member of our
Company without cause where the member’s appointment is
Executive Board in 2018 or the previous year.
revoked, where the member becomes occupationally disabled, or in
As far as the law permits, SAP SE and its affiliated companies in
connection with a change of control), SAP SE will pay to the
Germany and elsewhere indemnify and hold harmless their
member the outstanding part of the compensation target for the
respective directors and officers against and from the claims of
entire remainder of the term, appropriately discounted for early
third parties. To this end, we maintain directors’ and officers’
payment. Starting 2018, in accordance with the German Corporate
(D&O) group liability insurance. The policy is annual and is renewed
Governance Code (GCGC), section 4.2.3, payments made to an
from year to year. The insurance covers the personal liability of the
Executive Board member due to early termination must not exceed
insured group for financial loss caused by its managerial acts and
twice the annual total compensation, or 150% of the severance
omissions. The current D&O policy includes an individual
payment cap in case of change of control. Members are not entitled
deductible for Executive Board members of SAP SE as required by
to that severance payment if they have not served SAP as a
section 93 (2) of the German Stock Corporation Act.
member of the Executive Board for at least one year or if they leave
SAP SE for reasons for which they are responsible. Upon the
Compensation for Supervisory Board
appointment of Christian Klein to the Executive Board, the
Supervisory Board abstained from the waiting period of one year in Members
consideration of his long-term successful tenure with SAP.
If an Executive Board member’s appointment to the Executive
Compensation System
Board expires or ceases to exist because of, or as a consequence Supervisory Board members’ compensation is governed by our
of, change or restructuring, or due to a change of control, SAP SE Articles of Incorporation, section 16.
and each Executive Board member has the right to terminate the Each member of the Supervisory Board receives, in addition to
employment contract within eight weeks of the occurrence by the reimbursement of their expenses, an annual basic
giving six months’ notice. A change of control is deemed to occur compensation of €165,000. The chairperson receives €275,000
when: and the deputy chairperson €220,000 annually. In addition, we
– A third party is required to make a mandatory takeover offer to reimburse members of the Supervisory Board for the value-added
the shareholders of SAP SE under the German Securities tax payable on their compensation.
Acquisition and Takeover Act; For membership of the Audit Committee, Supervisory Board
members receive an additional fixed annual compensation of

86
€16,500, and for membership of any other Supervisory Board Any members of the Supervisory Board who have served for
committee €11,000, provided that the committee concerned has less than the entire year receive one-twelfth of the annual
met in the year. The chairperson of the Audit Committee receives remuneration for each month of service commenced. This also
€27,500, and the chairpersons of the other committees receive applies to the increased compensation of the chairperson and the
€22,000. The fixed remuneration is payable after the end of the deputy chairperson(s) and to the remuneration for the chairperson
year. and the members of a committee.

Supervisory Board Members' Compensation in 2018

€ thousands 2018 2017

Fixed Compensation Total Fixed Compensation Total

Compensation for Committee Compensation for Committee
Work Work

Prof. Dr. h.c. mult. Hasso Plattner (chairperson) 275.0 88.0 363.0 275.0 88.0 363.0

Margret Klein-Magar (deputy chairperson) 220.0 22.0 242.0 220.0 27.5 247.5

Pekka Ala-Pietilä 165.0 40,3 205.3 165.0 33.0 198.0

Panagiotis Bissiritsas 165.0 38.5 203.5 165.0 38.5 203.5

Martin Duffek 165.0 38.5 203.5 165.0 33.0 198.0

Aicha Evans (from 7/1/2017) 165.0 29.3 194.3 82.5 11.0 93.5

Prof. Anja Feldmann (until 12/31/2018) 165.0 19.3 184.3 165.0 22.0 187.0

Diane Greene (from 5/17/2018) 110.0 2.8 112.8 NA NA NA

Prof. Dr. Wilhelm Haarmann (until 5/17/2018) 68.5 13.8 82.3 165.0 44.0 209.0

Andreas Hahn 165.0 22.0 187.0 165.0 22.0 187.0

Prof. Dr. Gesche Joost 165.0 22.0 187.0 165.0 22.0 187.0

Lars Lamadé 165.0 22.0 187.0 165.0 22.0 187.0

Bernard Liautaud 165.0 33.0 198.0 165.0 33.0 198.0

Christine Regitz 165.0 22.0 187.0 165.0 22.0 187.0

Dr. Friederike Rotsch (from 5/17/2018) 110.0 18.3 128.3 NA NA NA

Dr. Erhard Schipporeit 165.0 46.8 211.8 165.0 33.0 198.0

Robert Schuschnig-Fowler 165.0 22.0 187.0 165.0 16.5 181.5

Dr. Sebastian Sick 165.0 22.0 187.0 165.0 22.0 187.0

Jim Hagemann Snabe (until 6/30/2017) NA NA NA 82.5 11.0 93.5

Pierre Thiollet 165.0 11.0 176.0 165.0 11.0 176.0

Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer (until 68.5 6.9 75.4 165.0 16.5 181.5
5/17/2018)

Total 3,162.0 540.4 3,702.4 3,135.0 528.0 3,663.0

In 2018, we received services from members of the Supervisory their position as SAP employees and not to their work on the
Board (including services from employee representatives on the Supervisory Board.
Supervisory Board in their capacity as employees of SAP) in the
Supervisory Board: Other Information
amount of €1,206,500 (2017: €1,269,700). This amount includes
fees paid in 2018 to Linklaters LLP in Frankfurt am Main, Germany We did not grant any compensation advance or credit to, or
(of which Wilhelm Haarmann, who was a Supervisory Board enter into any commitment for the benefit of, any member of our
member until May 17, 2018, is a partner), of €0 (2017: €106,900). Supervisory Board in 2018 or the previous year.
Hasso Plattner, the chairperson of the Supervisory Board,
Long-Term Incentives for the Supervisory Board entered into a consulting contract with SAP after joining the
We do not offer members of the Supervisory Board share-based Supervisory Board in May 2003. The contract does not provide for
payment for their Supervisory Board work. Any share-based any compensation. The only cost we incurred under the contract
payment awards received by employee-elected members relate to was the reimbursement of expenses.
As far as the law permits, we indemnify Supervisory Board
members against, and hold them harmless from, claims brought by

87
third parties. To this end, we maintain directors’ and officers’ percentage. Students, individuals employed by SAP who are
(D&O) group liability insurance. In accordance with section 3.8 of currently not working for reasons such as maternity leave, and
the GCGC, each member of the Supervisory Board will bear a temporary employees on limited contracts of less than six months
deductible of at least 10% of any loss. The deductible is capped at are excluded from our figures. The number of temporary
1.5 times a member’s fixed annual compensation. employees is not material.
Our personnel expense for each employee decreased to
approximately €124,000 in 2018 (2017: approximately €134,000).
Employee This decrease is primarily attributable to a decline of share-based
payment expenses as well as lowered average salary expenses in
2018 compared to the previous year. The personnel expense for
Headcount and Personnel Expense
each employee is defined as the overall personnel expense divided
As at December 31, 2018, we had 96,498 full-time equivalent by the average number of employees.
(FTE) employees worldwide (December 31, 2017: 88,543). This For more information about the number of employees and
represents an increase in headcount of 7,955 FTEs in comparison
employee compensation, see the Notes to the Consolidated
to 2017. The average number of employees in 2018 was 93,709 Financial Statements, Note (B.2).
(2017: 86,999).
We define headcount in FTE as the number of people on
permanent employment contracts considering their staffing

Employee Headcount by Region and Function

Full-time 12/31/2018 12/31/2017 12/31/2016
equivalents
EMEA Ame- APJ Total EMEA Ame- APJ Total EMEA Ame- APJ Total
ricas ricas ricas
Cloud and software 6,341 4,268 5,374 15,983 5,869 3,895 4,719 14,482 6,406 4,184 5,412 16,002
Services 8,120 5,736 5,620 19,476 7,536 4,878 4,965 17,379 6,535 4,119 3,967 14,621

Research and 12,478 5,651 8,930 27,060 11,349 5,250 8,273 24,872 10,525 4,860 7,977 23,363
development

Sales and 9,843 9,452 4,918 24,213 9,196 9,169 4,854 23,219 8,542 8,999 4,435 21,977
marketing

General and 2,906 1,970 1,147 6,024 2,676 1,781 1,047 5,504 2,629 1,746 1,018 5,393
administration

Infrastructure 2,160 951 631 3,742 1,732 855 501 3,087 1,584 788 454 2,827

SAP Group (12/31) 41,848 28,029 26,620 96,498 38,357 25,827 24,359 88,543 36,222 24,696 23,265 84,183

Thereof 657 952 434 2,043 149 133 7 289 37 172 0 209
acquisitions

SAP Group 40,496 27,454 25,759 93,709 37,512 25,459 24,029 86,999 34,932 23,532 22,145 80,609
(months' end
average)

Due to reorganizations in our SAP Digital Business Services in 2017, some employees were reallocated from cloud and software to
services. Numbers for 2017 are therefore not fully comparable to prior year.

Employee and Labor Relations Germany), the representatives of severely disabled persons in all
On a worldwide basis, we believe that our employee and labor entities and on a group level (Germany) and the spokespersons
relations are excellent. committee as the representation of the executives.
On a corporate level, employees of SAP in the European Employees of each of SAP France, SAP France Holding and SAP
Economic Area are represented by the SAP SE Works Council Labs France SAS are subject to a separate collective bargaining
(WoC) (Europe). By law and agreement with SAP the SAP SE WoC agreement. Each of SAP France, SAP France Holding, SAP Labs
(Europe) is entitled to receive information on transnational matters France SAS and Concur (France) SAS are represented by a French
and to consult with the Executive Board or a representative thereof. works council. The represented unions negotiate agreements with
On the legal entity level, the SAP SE works council (Germany) each of SAP France and SAP Labs France SAS.
represents the employees of SAP SE. The employees of SAP In addition, the employees of various other SAP entities,
Deutschland SE & Co. KG (SAP Germany), Concur (Germany) including SAP España – Sistemas, Aplicaciones y Productos en la
GmbH, as well as the employees of SAP Business Compliance Informática, S.A., SAP Belgium NV/SA., SAP Israel, SAP Nederland
Services GmbH are represented by a separate works council. Other B.V., SAP Italia Sistemi Applicazioni Prodotti in Data Processing
employee representatives include the group works council S.p.A., SAP China Beijing, all entities in the Czech (Republic (SAP
(composed of members of the works councils of SAP SE and SAP ČR, spol. s r.o., SAP Services s.r.o., Ariba Czech s.r.o. and Concur

88
Czech (s.r.o.)),SAP Brasil Ltda, SAP sistemi, aplikacije in produkti za
obdelavo podatkov d.o.o.(Slovenia), SAP Romania SRL, SAP ITEM 7. MAJOR
Argentina S.A., SAP Svenska Aktiebolag (Sweden), SAP UK Ltd. and
SAP Ireland Ltd. are represented by works councils, worker
SHAREHOLDERS AND
representatives, employee consultation forums and/or unions. In
addition, some of these employees are subject to a collective
RELATED-PARTY
bargaining agreement. TRANSACTIONS
Major Shareholders
Share Ownership The share capital of SAP SE consists of ordinary shares, which
are issued only in bearer form. Accordingly, SAP SE generally
Beneficial Ownership of Shares cannot determine the identity of its shareholders or how many
The ordinary shares beneficially owned by the persons listed in shares a particular shareholder owns. SAP’s ordinary shares are
“Item 6. Directors, Senior Management and Employees — traded in the United States by means of ADRs. Each ADR currently
Compensation Report” are disclosed in “Item 7. Major Shareholders represents one SAP SE ordinary share. On February 8, 2019, based
and Related-Party Transactions — Major Shareholders.” on information provided by the Depositary there were 60,474,033
ADRs held of record by 816 registered holders. The ordinary shares
underlying such ADRs represented 4.92% of the then-outstanding

Share-Based Compensation ordinary shares (including treasury stock). Because SAP’s ordinary
shares are issued in bearer form only, we are unable to determine
Plans the number of ordinary shares directly held by persons with U.S.
addresses.
The following table sets forth certain information regarding the
Share-Based Compensation
beneficial ownership of the ordinary shares to the extent known to
We maintain certain share-based compensation plans. The
SAP as of February 8, 2019 of: (i) each person or group known by
share-based compensation from these plans result from cash- SAP SE to own beneficially 5% or more of the outstanding ordinary
settled and equity-settled awards issued to employees. For more shares; and (ii) the beneficial ownership of all individuals who are
information on our share-based compensation plans refer to “Item
currently members of the Supervisory Board and all members of the
6. Directors, Senior Management and Employees — Compensation Executive Board, individually and as a group, in each case as
Report” and Note (B.3) to our Consolidated Financial Statements. reported to SAP SE by such persons. There was, as far as we are
able to tell given the nature of our shares, no significant change in
the percentage ownership held by any major shareholder during the
past three years. None of the major shareholders have special
voting rights.

Major Shareholders
Ordinary Shares
Beneficially Owned

Number % of Outstanding
(1)
Dietmar Hopp, collectively 67,864,34 5.7

Hasso Plattner, Chairperson Supervisory Board, collectively (2) 77,226,053 6.286

Executive Board Members as a group (9 persons) 60,214 0.005

Supervisory Board Members as a group (18 persons) 77,242,795 6.288

(3)
Executive Board Members and Supervisory Board Members as a group (27 persons) 77,303,009 6.293

Options and convertible bonds that are vested and exercisable within 60 days of February 8, 2019, 0 NA
held by Executive Board Members and Supervisory Board Members, collectively

BlackRock, Inc.(4) 73,937,685 6.0

(1)
The foregoing information is based on a Schedule 13G filed by Dietmar Hopp and other affiliated persons and companies on February 13, 2019.
(2)
Includes HP Endowment GmbH & Co. KG and Hasso Plattner Single Asset KG in which Hasso Plattner exercises sole voting and dispositive power.
(3)
We believe that, other than Hasso Plattner, each of the members of the Supervisory Board and the Executive Board beneficially owns less than 1% of SAP SE’s ordinary shares as of
February 8, 2019.
(4)
As required under German law, BlackRock, Inc. informed SAP that they own more than 5% of SAP's outstanding ordinary shares. BlackRock, Inc. is not required to provide SAP with
the number of shares owned as of February 8, 2019, and has not provided such information. The foregoing information is based on a Schedule 13G filed by BlackRock, Inc. on February 6,
2019.

89
 Currently we are not aware of any arrangements, the operation
of which may, at a subsequent date, result in a change in control of ITEM 10. ADDITIONAL
the company.
INFORMATION
Related-Party Transactions
Articles of Incorporation
For information on related-party transactions see Note (G.7) to
our Consolidated Financial Statements. Organization and Register
SAP SE is a European Company (Societas Europaea, or “SE”)

ITEM 8. FINANCIAL
organized in the Federal Republic of Germany under German and
European law, including Council Regulation (EC) No. 2157/2001 on

INFORMATION the Statute for a European Company (the “SE Regulation”), the
German Act on the Implementation of Council Regulation No.
2157/2001 of October 8, 2001 on the Statute for a European
Consolidated Financial Statements and Company (Gesetz zur Ausführung der Verordnung (EG) Nr.
Financial Statement Schedule 2157/2001 des Rates vom 8. Oktober 2001 über das Statut der
See “Item 18. Financial Statements” and pages F-1 through F-81. Europäischen Gesellschaft (SE) – SE-Ausführungsgesetz; “SE-AG”)
of December 22, 2004, and the German Stock Corporation Act
Other Financial Information (Aktiengesetz). SAP SE is registered in the Commercial Register
(Handelsregister) at the Lower Court of Mannheim, Germany, under
Legal Proceedings the entry number “HRB 719915.” SAP SE publishes its official
We are subject to a variety of legal proceedings and claims, notices in the Federal Gazette (www.bundesanzeiger.de).
either asserted or unasserted, which arise in the ordinary course of
business, including claims and lawsuits involving businesses we
Objects and Purposes
have acquired. SAP’s Articles of Incorporation state that our objects involve,
Refer to Note (G.4) to our Consolidated Financial Statements for directly or indirectly, the development, production and marketing of
a detailed discussion of our material legal proceedings. products and the provision of services in the field of information
technology, including:
Dividend Policy – developing and marketing integrated product and service
For more information on dividend policy see the disclosure in solutions for e-commerce;
“Item 3. Key Information — Dividends”. – developing software for information technology and the licensing
of its use to others;
Significant Changes – organization and deployment consulting, as well as user training,
for e-commerce and other software solutions;
Executive Board Changes – selling, leasing, renting and arranging the procurement and
Effective January 1, 2019, Juergen Mueller was appointed to the provision of all other forms of use of information technology
Executive Board. systems and related equipment; and
On February 20, 2019, Bernd Leukert and the Supervisory Board – making capital investments in enterprises active in the field of
mutually agreed that Bernd Leukert will depart SAP, and that his information technology to promote the opening and
membership on the Executive Board ended effective as of that day. advancement of international markets in the field of information
technology.
Restructuring SAP is authorized to act in all the business areas listed above and
See Note G.9 to our Consolidated Financial Statements for to delegate such activities to affiliated entities within the meaning of
information on the conclusion of Qualtrics and the restructuring the German Stock Corporation Act; in particular SAP is authorized
program SAP initiated in 2019. to delegate its business in whole or in part to such entities. SAP SE
is authorized to establish branch offices in Germany and other
countries, as well as to form, acquire or invest in other companies of

ITEM 9. THE OFFER AND the same or related kind and to enter into collaboration and joint
venture agreements. SAP is further authorized to invest in
LISTING enterprises of all kinds principally for investment purposes. SAP is
authorized to dispose of investments, to consolidate the
Our ordinary shares are officially listed on the Frankfurt Stock management of enterprises in which it participates, to enter into
Exchange, the Berlin Stock Exchange and the Stuttgart Stock affiliation agreements with such entities, or to limit its activities to
Exchange. The principal trading market for the ordinary shares is manage its shareholdings.
Xetra, the electronic dealing platform of Deutsche Boerse AG.
ADRs representing SAP SE ordinary shares are listed on the New
York Stock Exchange (NYSE) under the symbol “SAP,” and
currently each ADR represents one ordinary share.

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Corporate Governance women on the shareholder representatives’ side of the Supervisory
Board and two women on the employee representatives’ side from
Introduction the beginning of 2018 until May 17, 2018, and five women on the
SAP SE, as a European Company with a two-tier board system, is shareholder representatives’ side and two women on the employee
governed by three separate bodies: the Supervisory Board, the representatives’ side from May 17, 2018, until December 31, 2018.
Executive Board and the Annual General Meeting of Shareholders. Thus the percentage of women on the Supervisory Board reached
Their rules are defined by European and German law, by the the minimum quota of 30% throughout 2018, and even exceeded it
Agreement on the Involvement of Employees in SAP SE (“Employee during the period from May 17, 2018, until December 31, 2018. The
Involvement Agreement”), by the German Corporate Governance term of office of all eighteen members will end upon the conclusion
Code and by SAP’s Articles of Incorporation (Satzung) and are of the Annual General Meeting of Shareholders in 2019.
summarized below. See “Item 16G. Differences in Corporate The procedure for the appointment of the employee
Governance Practices” for additional information on our corporate representatives on the Supervisory Board of SAP SE is governed by
governance practices. the EIA. In accordance with the EIA, the nine seats on the first
Supervisory Board reserved for employees’ representatives were
The Supervisory Board allocated as follows: the first six seats were allocated to Germany,
The Supervisory Board appoints and removes the members of the seventh seat was allocated to France, the eighth seat was also
the Executive Board and oversees and advises the management of allocated to Germany, and the ninth seat was allocated to a
the corporation. At regular intervals it meets to discuss current European country not represented by the first eight seats, as
business as well as business development and planning. The SAP determined by the SAP SE Works Council Europe. The employees’
Executive Board must consult with the Supervisory Board representatives for the first six seats allocated to Germany were
concerning the corporate strategy, which is developed by the determined by direct vote by all SAP employees with their principal
Executive Board. Types of transactions for which the Executive place of employment in Germany. According to the EIA, the
Board requires the Supervisory Board’s consent are listed in the employees’ representative for the seventh seat allocated to France
Articles of Incorporation; in addition, the Supervisory Board has is generally determined according to the applicable provisions of
specified further types of transactions that require its consent. French law on the election or appointment of employees’
Accordingly, the Supervisory Board must also approve the annual representatives on a supervisory board. With regard to the eighth
budget of SAP upon submission by the Executive Board and certain and ninth seat, members of the SAP SE Works Council Europe from
subsequent deviations from the approved budget. The Supervisory Germany and Slovakia were appointed by the SE Works Council as
Board is also responsible for representing SAP SE in transactions employees’ representatives.
between SAP SE and Executive Board members. Any Supervisory Board member elected by the shareholders at
The Supervisory Board, based on a recommendation by its Audit the Annual General Meeting of Shareholders may be removed by
Committee, provides its proposal for the election of the external three-quarters of the votes cast at the Annual General Meeting of
independent auditor to the Annual General Meeting of Shareholders. Shareholders. Any Supervisory Board member appointed in
The Supervisory Board is also responsible for monitoring the accordance with the EIA may be removed by the SAP SE Works
auditor’s independence, a task it has delegated to its audit Council Europe upon application by the body that nominated the
committee. respective employees’ representative for appointment by the SE
Pursuant to Article 40 (3) sentence 1 of the SE Regulation, the Works Council or, in case the employees’ representative was
number of members of the supervisory board and the rules for directly elected, the majority of the employees entitled to vote.
determining this number are to be laid down in the articles of The Supervisory Board elects a chairperson and one or two
incorporation. Furthermore, pursuant to Section 17 (1) SE-AG, the deputy chairperson(s) among its members by a majority of the
size of supervisory boards of companies which, like SAP SE, have a votes cast. Only a shareholders’ representative may be elected as
capital stock exceeding € 10,000,000, is limited to 21 members. In chairperson of the Supervisory Board. When electing the
line with these provisions as well as the EIA, the Articles of chairperson of the Supervisory Board, the oldest member in terms
Incorporation of SAP SE provide that the Supervisory Board shall be of age of the shareholders’ representatives on the Supervisory
composed of 18 members. Furthermore, it is provided in the EIA Board will chair the meeting and, in the event of a tied vote, will have
that the shareholders of SAP SE have the possibility to reduce the the casting vote.
size of the Supervisory Board in the future (i.e. at the earliest in the Unless otherwise mandatorily prescribed by law or the Articles of
Annual General Meeting of Shareholders in 2019, with effect from Incorporation, resolutions of the Supervisory Board are adopted by
the Annual General Meeting of Shareholders in 2020) to 12 simple majority of the votes cast. In the event of a tie, the vote of the
members. chairperson and, in the event that the chairperson does not
The current Supervisory Board of SAP SE consists of eighteen participate in passing the resolution, the vote of the deputy
members, nine of whom are elected by the Annual General Meeting chairperson, provided that he or she is a shareholders’
of Shareholders as shareholders’ representatives and the remaining representative, will be decisive (casting vote).
nine are appointed as employees’ representatives by the SAP SE The members of the Supervisory Board cannot be elected or
Works Council Europe in accordance with the EIA (see below for appointed, as the case may be, for a term longer than six years.
details). Pursuant to Section 17(2) SE-AG, the Supervisory Board of Other than for the employees’ representatives on the first
SAP SE must have a minimum of 30% men and 30% women. This Supervisory Board of SAP SE, the term expires at the close of the
quota for the Supervisory Board must be observed for any new Annual General Meeting of Shareholders giving its formal approval
appointment to the Supervisory Board. In 2018, there were three of the acts of the Supervisory Board for the fourth fiscal year

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following the year in which the term of office of the Supervisory The Audit Committee has established procedures regarding the
Board members commenced. Re-election is possible. Our prior approval of all audit and non-audit services provided by our
Supervisory Board normally meets four times a year. The external independent auditor. See “Item 16C. Principal Accountant
compensation of the members of the Supervisory Board is set in the Fees and Services” for details.
Articles of Incorporation. The Audit Committee also does preparatory work for the full
As stipulated in the German Corporate Governance Code Supervisory Board’s deliberations and resolutions on the adoption
(GCGC), an adequate number of our Supervisory Board members of the annual financial statements, the approval of the consolidated
are independent. To be considered for appointment to the annual financial statements and the Integrated Report, and on the
Supervisory Board and for as long as they serve, members must dividend proposal. Furthermore, the Audit Committee and the
comply with certain criteria concerning independence, conflicts of Finance and Investment Committee jointly prepare the full
interest and multiple memberships of management, supervisory Supervisory Board’s resolution to approve the group annual plan.
and other governing bodies. They must be loyal to SAP in their The Supervisory Board has determined Erhard Schipporeit, the
conduct and must not accept any position in companies that are in Audit Committee’s chairperson, to be an audit committee financial
competition with SAP. Members are subject to insider trading expert as defined by the regulations of the SEC issued under
prohibitions and the respective directors’ dealing rules of the Section 407 of the Sarbanes-Oxley Act as well as an independent
European Regulation (EU) No 596/2014 of the European Parliament financial expert as defined by the German Stock Corporation Act.
and the Council of 16 April 2014 on market abuse and the German See “Item 16A. Audit Committee Financial Expert” for details.
Securities Trading Act. A member of the Supervisory Board may not
vote on matters relating to certain contractual agreements between The General and Compensation Committee
such member and SAP SE. Further, as the compensation of the The General and Compensation Committee (Präsidial- und
Supervisory Board members is set in the Articles of Incorporation, Personalausschuss) coordinates the work of the Supervisory Board,
Supervisory Board members are unable to vote on their own prepares its meetings and deals with corporate governance issues.
compensation, with the exception that they are able to exercise In addition, it carries out the preparatory work necessary for the
voting rights in a General Meeting of Shareholders in connection personnel decisions made by the Supervisory Board, notably those
with a resolution amending the Articles of Incorporation. concerning compensation for the Executive Board members and the
The Supervisory Board may appoint committees from among its conclusion, amendment and termination of the Executive Board
members and may, to the extent permitted by law, entrust such members’ contracts of appointment.
committees with the authority to make decisions on behalf of the The German Stock Corporation Act prohibits the Compensation
Supervisory Board. Currently the Supervisory Board maintains the Committee from deciding on the compensation of the Executive
following committees: Board members on behalf of the Supervisory Board and requires
that such decision is made by the entire Supervisory Board. This Act
The Audit Committee also provides the General Meeting of Shareholders with the right to
The focus of the Audit Committee (Prüfungsausschuss) is the vote on the system for the compensation of Executive Board
oversight of SAP’s external financial reporting as well as SAP’s risk members, such vote, however, not being legally binding for the
management, internal controls (including internal controls over the Supervisory Board.
effectiveness of the financial reporting process), corporate audit,
cybersecurity matters and compliance matters. According to The Finance and Investment Committee
German Law SAP’s Audit Committee includes at least one The Finance and Investment Committee (Finanz- und
independent member with expertise in the fields of financial Investitionsausschuss) addresses general financing issues.
reporting or auditing. Among the tasks of the Audit Committee are Furthermore, it regularly discusses acquisitions of intellectual
the discussion of SAP’s quarterly and year-end financial reporting property and companies, venture capital investments and other
prepared under German and U.S. regulations, including this report. investments with the Executive Board and reports to the
The Audit Committee recommends to the Supervisory Board the Supervisory Board on such investments. It is also responsible for
appointment of the external independent auditor, determines focus the approval of such investments if the individual investment
audit areas, discusses critical accounting policies and estimates amount exceeds certain specified limits, as well as – together with
with and reviews the audit reports issued and audit issues identified the Audit Committee – for the preparation of the full Supervisory
by the auditor. The audit committee also negotiates the audit fees Board’s resolution to approve the group annual plan.
with the auditor and monitors the auditor’s independence and
quality. SAP’s Corporate Audit Office, SAP’s Legal Compliance and The Technology and Strategy Committee
Integrity Office, SAP’s Global Security Office and SAP’s Risk The Technology and Strategy Committee (Technologie-und
Management Office report regularly to the Audit Committee, as well Strategieausschuss) monitors technology transactions and
as upon request or the occurrence of certain findings, but in any provides the Supervisory Board with in-depth technical advice.
case at least (i) quarterly (the Legal Compliance and Integrity Office
and the Risk Management Office), (ii) twice a year (Corporate The Nomination Committee
Audit), and (iii) once a year (the Global Security Office). In addition The Nomination Committee (Nominierungsausschuss) is
to making regular reports to the CFO and the Audit Committee, the exclusively composed of shareholder representatives and is
Legal Compliance and Integrity Office reports to the Executive responsible for identifying suitable candidates for membership of
Board annually. the Supervisory Board for recommendation to the Annual General
Meeting of Shareholders.

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The Special Committee members is set by the Supervisory Board, Executive Board
The Special Committee (Sonderausschuss) deliberates on members are unable to vote on their own compensation, with the
matters arising out of substantial exceptional risks, such as major exception that they are able to exercise voting rights in a General
litigations. Meeting of Shareholders resolving a non-binding vote on the system
for the compensation of Executive Board members.
The People and Organization Committee Under German law SAP SE’s Supervisory Board members and
The People and Organization Committee (Ausschuss für Executive Board members have a duty of loyalty and care towards
Mitarbeiter- und Organisationsangelegenheiten) deliberates and SAP SE. They must exercise the standard of care of a prudent and
advises the Executive and Supervisory Board on key personnel diligent businessman and bear the burden of proving they did so if
matters and major organizational changes at the management level their actions are contested. Both bodies must consider the interest
below the Executive Board. It also advises on equal opportunities for of SAP SE shareholders and our employees and, to some extent, the
women at SAP. common good. Those who violate their duties may be held jointly
The duties and procedures of the Supervisory Board and its and severally liable for any resulting damages, unless they acted
committees are specified in their respective rules of procedure, if pursuant to a lawful resolution of the Annual General Meeting of
any, which reflect the requirements of European and German law, Shareholders.
including the SE Regulation and the German Stock Corporation Act, SAP has implemented a Code of Business Conduct for
the Articles of Incorporation and the recommendations of the employees (see “Item 16B. Code of Ethics” for details). The
GCGC. employee code is equally applicable to managers and members of
According to the provisions of the Sarbanes-Oxley Act, SAP does the Executive Board. Its rules are observed as well by members of
not grant loans to the members of the Executive Board or the the Supervisory board as applicable.
Supervisory Board. Under German law the Executive Board of SAP SE has to assess
all major risks for the SAP Group. In addition, all measures taken by
The Executive Board management to reduce and handle the risks have to be
The Executive Board manages the Company’s business, is documented. Therefore, SAP’s management has adopted suitable
responsible for preparing its strategy and represents it in dealings measures such as implementing an enterprise-wide risk monitoring
with third parties. The Executive Board reports regularly to the system to ensure that adverse developments endangering the
Supervisory Board about SAP operations and business strategies corporate standing are recognized at a reasonably early point in
and prepares special reports upon request. A person may not serve time.
on the Executive Board and on the Supervisory Board at the same The Office of Legal Compliance and Integrity was created by the
time. SAP Executive Board in 2006 to oversee and coordinate legal and
The Executive Board and the Supervisory Board cooperate regulatory policy compliance at SAP. The Chief Global Compliance
closely for the benefit of the Company. The Executive Board is Officer heading the Office of Legal Compliance and Integrity directly
required to provide the Supervisory Board regular, prompt and reports to the CFO of SAP SE and also has direct communication
comprehensive information about all of the essential issues channels and reporting obligations to the Audit Committee of the
affecting the SAP Group’s business progress and its potential Supervisory Board. The Office of Legal Compliance and Integrity
business risks. Furthermore, the Executive Board must maintain manages a network of more than 100 local subsidiary Compliance
regular contact with the chairperson of the Supervisory Board and Officers who act as the point of contact for local questions or issues
vice versa. The Executive Board must inform the chairperson of the under the SAP Code of Business Conduct for employees. The Office
Supervisory Board promptly about exceptional events that are of of Legal Compliance and Integrity provides training and
significance to SAP’s business. The Supervisory Board chairperson communication to SAP employees to raise awareness and
must inform the Supervisory Board accordingly and shall, if understanding of legal and regulatory compliance policies.
required, convene an extraordinary meeting of the Supervisory Employee help lines are also supported in each region where
Board. questions can be raised or questionable conduct can be reported
Pursuant to the Articles of Incorporation, the Executive Board without fear of retaliation.
must consist of at least two members. SAP SE’s Executive Board is
currently comprised of ten members. Any two members of the
The Annual General Meeting of Shareholders
Executive Board jointly or one member of the Executive Board and Shareholders of the Company exercise their voting rights at
the holder of a special power of attorney (Prokurist) jointly may shareholders’ meetings. The Executive Board calls the Annual
legally represent SAP SE. The Supervisory Board appoints each General Meeting of Shareholders, which must take place within the
member of the Executive Board for a maximum term of five years, first six months of each fiscal year. The Supervisory Board or the
with the possibility of re-appointment. Under certain circumstances, Executive Board may call an extraordinary meeting of the
a member of the Executive Board may be removed by the shareholders if the interests of the stock corporation so require.
Supervisory Board prior to the expiration of that member’s term. A Additionally, shareholders of SAP SE holding in the aggregate a
member of the Executive Board may not vote on matters relating to minimum of 5% of SAP SE’s issued share capital may call an
certain contractual agreements between such member and SAP SE, extraordinary meeting of the shareholders. Shareholders as of the
and may be liable to SAP SE if such member has a material interest record date are entitled to attend and participate in shareholders’
in any contractual agreement between SAP and a third party which meetings if they have provided timely notice of their intention to
was not previously disclosed to and approved by the Supervisory attend the meeting.
Board. Further, as the compensation of the Executive Board

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 At the Annual General Meeting of Shareholders, the shareholders the Articles of Incorporation (opt-in). SAP SE has not made use of
are asked, among other things, to formally approve the actions this option.
taken by the Executive Board and the Supervisory Board in the
preceding fiscal year, to approve the appropriation of the Change in Share Capital
corporation’s distributable profits and to appoint an external Under German law, the capital stock may be increased in
independent auditor. Shareholder representatives of the consideration of contributions in cash or in kind, or by establishing
Supervisory Board are generally elected at the Annual General authorized capital or contingent capital or by an increase of the
Meeting of Shareholders for a term of approximately five years. company’s capital reserves. Authorized capital provides the
Shareholders may also be asked to grant authorization to Executive Board with the flexibility to issue new shares for a period
repurchase treasury shares, to resolve on measures to raise or of up to five years. The Executive Board must obtain the approval of
reduce the capital of the Company or to ratify amendments of our the Supervisory Board before issuing new shares with regard to the
Articles of Incorporation. The Annual General Meeting of authorized capital. Contingent capital allows the issuance of new
Shareholders can make management decisions only if requested to shares for specified purposes, including stock option plans for
do so by the Executive Board. Executive Board members or employees and the issuance of shares
upon conversion of convertible bonds and exercise of stock options.
Change in Control By law, the Executive Board may only issue new shares with regard
There are no provisions in the Articles of Incorporation of SAP SE to the contingent capital for the specified purposes. Capital
that would have the effect of delaying, deferring or preventing a increases require an approval by at least 75% of the valid votes cast
change in control of SAP SE and that would only operate with at the General Meeting of Shareholders in which the increase is
respect to a merger, acquisition or corporate restructuring involving proposed, and requires an amendment to the Articles of
it or any of its subsidiaries. Incorporation.
According to the German Securities Acquisition and Takeover The share capital may be reduced by an amendment to the
Act (Wertpapiererwerbs- und Übernahmegesetz) a bidder seeking Articles of Incorporation approved by at least 75% of the valid votes
control of a company with its corporate seat in Germany or another cast at the General Meeting of Shareholders. In addition, the
state of the European Economic Area (EEA) and its shares being Executive Board of SAP SE is allowed to authorize a reduction of the
traded on an EEA stock exchange must publish an advance notice of company’s capital stock by canceling a defined number of
its decision to make a tender offer, submit an offer statement to the repurchased treasury shares if this repurchasing and the
Federal Financial Supervisory Authority (Bundesanstalt für subsequent reduction have already been approved by the General
Finanzdienstleistungsaufsicht) for review, and obtain certification Meeting of Shareholders.
from a qualified financial institution that adequate financing is in The Articles of Incorporation do not contain conditions regarding
place to complete the offer. The offer statement must be published changes in the share capital that are more stringent than those
upon approval by the Federal Financial Supervisory Authority or provided by applicable European and German law.
expiry of a certain time period without such publication being
prohibited by the Federal Financial Supervisory Authority. Once a Rights Accompanying our Shares
shareholder has acquired shares representing at least 30% of the There are no limitations imposed by German law or the Articles
voting rights in an EEA-listed company, it must make an offer for all of Incorporation of SAP SE on the rights to own securities, including
remaining shares. The Securities Acquisition and Takeover Act the rights of non-residents or foreign holders to hold the ADRs or
requires the executive board of the target company to refrain from ordinary shares, to exercise voting rights or to receive dividends or
taking any measures that may frustrate the success of the takeover other payments on such shares.
offer. However, the target executive board is permitted to take any According to the German stock corporation law, the rights of
action that a prudent and diligent management of a company that is shareholders cannot be amended without shareholders’ consent.
not the target of a takeover bid would also take. Moreover, the The Articles of Incorporation do not provide more stringent
target executive board may search for other bidders and, with the conditions regarding changes of the rights of shareholders than
prior approval of the supervisory board, may take other defensive those provided by applicable European and German law.
measures, provided that both boards act within the parameters of
their general authority under the German Stock Corporation Act. An Voting Rights
executive board may also adopt specific defensive measures if such Each ordinary SAP SE share represents one vote. Cumulative
measures have been approved by the supervisory board and were voting is not permitted under applicable European and German law.
specifically authorized by the general shareholders’ meeting no A corporation’s articles of incorporation may stipulate a majority
earlier than 18 months in advance of such measures by a resolution necessary to pass a shareholders’ resolution differing from the
of at least 75% of the shares represented. majority provided by law, unless the law mandatorily requires a
Under the European Takeover Directive of 2004 member states certain majority. Section 21 (1) of SAP SE’s Articles of Incorporation
had to choose whether EU restrictions on defensive measures apply provides that resolutions may be passed at the General Meeting of
to companies that are registered in their territory. Germany decided Shareholders with a majority of valid votes cast, unless a larger
to opt out and to retain its current restrictions on a board majority is prescribed by law or the Articles of Incorporation. SAP
implementing defensive measures (as described above). As SE’s Articles of Incorporation as well as applicable European and
required by the Directive if a country decides to opt out the German German law require that the following matters, among others, be
Securities Acquisition and Takeover Act grants companies the approved by at least 75% of the valid votes cast at the General
option of voluntarily applying the European standard by a change of Meeting of Shareholders in which the matter is proposed:

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– changing the corporate purpose of the company set out in the holder of a financial instrument which merely de facto enables its
Articles of Incorporation; holder or a third party to acquire shares in SAP SE, subject to the
– capital increases and capital decreases; thresholds mentioned in the preceding sentence. In connection with
– excluding preemptive rights of shareholders to subscribe for new this notification, obligation positions in voting rights and other
shares or for treasury shares; financial instruments have to be aggregated.
– dissolution;
– a merger into, or a consolidation with, another company; Exchange Controls and Other Limitations
– a transfer of all or virtually all of the assets; Affecting Security Holders
– a change of corporate form, including re-conversion into a The euro is a fully convertible currency. At the present time,
German stock corporation; Germany does not restrict the export or import of capital, except for
– a transfer of the registered seat to another EU member state; investments in certain areas in accordance with applicable
and resolutions adopted by the United Nations and the European Union.
– any other amendment to the Articles of Incorporation (pursuant However, for statistical purposes only, every individual or
to section 21 (2) sentence 1 of the Articles of Incorporation). For corporation residing in Germany (“Resident”) must report to the
any amendments of the Articles of Incorporation which require a German Central Bank (Deutsche Bundesbank), subject only to
simple majority for stock corporations established under certain immaterial exceptions, any payment received from or made
German law, however, section 21 (2) sentence 2 of SAP SE’s to an individual or a corporation residing outside of Germany (“Non-
Articles of Incorporation provides that the simple majority of the Resident”) if such payment exceeds €12,500 (or the equivalent in a
valid votes cast is sufficient if at least half of the subscribed foreign currency). In addition, German Residents (except for
capital is represented or, in the absence of such quorum, the individuals and certain financial institutions) must report any
majority prescribed by law (i.e. two thirds of the votes cast, accounts payable to or receivable from Non-Residents if such
pursuant to sec. 59 of the SE Regulation) is sufficient. payables or receivables, in the aggregate, exceed €5 million (or the
equivalent in a foreign currency) at the end of any calendar month.
Dividend Rights Furthermore, companies resident in Germany with accounts
See “Item 3. Key Information — Dividends.” payable to or receivable from Non-Residents in excess of €500
million have to report any payables or receivables to/from Non-
Preemptive Rights Residents arising from derivative instruments at the end of each
Shareholders have preemptive rights to subscribe (Bezugsrecht) calendar quarter. Residents are also required to report annually to
for any issue of additional shares in proportion to their the German Central Bank any shares or voting rights of 10% or
shareholdings in the issued capital. The preemptive rights may be more which they hold directly or indirectly in non-resident
excluded under certain circumstances by a shareholders’ resolution corporations with total assets of more than €3 million. Corporations
(approved by at least 75% of the valid votes cast at the General residing in Germany with assets in excess of €3 million must report
Meeting of Shareholders) or by the Executive Board authorized by annually to the German Central Bank any shares or voting rights of
such shareholders’ resolutions and subject to the consent of the 10% or more held directly or indirectly by a Non-Resident.
Supervisory Board.
Taxation
Liquidation
If SAP SE were to be liquidated, any liquidation proceeds General
remaining after all of our liabilities were paid would be distributed to The following discussion is a summary of certain material
our shareholders in proportion to their shareholdings. German tax and U.S. federal income tax consequences of the
acquisition, ownership and disposition of our ADRs or ordinary
Disclosure of Shareholdings shares to a U.S. Holder. In general, a U.S. Holder (as hereinafter
SAP SE’s Articles of Incorporation do not require shareholders to defined) is any beneficial owner of our ADRs or ordinary shares that
disclose their shareholdings. The German Securities Trading Act (i) is a citizen or resident of the U.S. or a corporation organized
(Wertpapierhandelsgesetz), however, requires holders of voting under the laws of the U.S. or any political subdivision thereof, an
securities of SAP SE to notify SAP SE and the Federal Financial estate whose income is subject to U.S. federal income tax
Supervisory Authority of the number of shares they hold if that regardless of its source or a trust, if a U.S. court can exercise
number reaches, exceeds or falls below specified thresholds. These primary supervision over its administration and one or more U.S.
thresholds are 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% persons are authorized to control all substantial decisions of the
of the corporation’s outstanding voting rights. In respect of trust; (ii) is not a resident of Germany for purposes of the income
certificates representing shares, the notification requirement shall tax treaty between the U.S. and Germany (Convention between the
apply exclusively to the holder of the certificates. In addition, the Federal Republic of Germany and the United States of America for
German Securities Trading Act also obliges anyone who holds, the Avoidance of Double Taxation and the Prevention of Fiscal
directly or indirectly, financial instruments that convey an Evasion with respect to Taxes on Income and Capital and to certain
unconditional entitlement to acquire under a legally binding other Taxes, as amended by the Protocol of June 1, 2006 and as
agreement, shares in SAP SE, to notify SAP SE and the Federal published in the German Federal Law Gazette 2008 vol. II pp.
Financial Supervisory Authority if the thresholds mentioned above 611/851; the “Treaty”); (iii) owns the ADRs or ordinary shares as
have been reached, exceeded or fallen below, with the exception of capital assets; (iv) does not hold the ADRs or ordinary shares as
the 3% threshold. This notification obligation also exists for the part of the business property of a permanent establishment or a

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fixed base in Germany; and (v) is fully entitled to the benefits under obtained from the German Federal Tax Office. For details, such non-
the Treaty with respect to income and gain derived in connection resident shareholders are urged to consult their own tax advisors.
with the ADRs or ordinary shares. Special rules which are not Special rules apply for the refund to U.S. Holders (we refer to the
discussed in the following summary apply to pension funds and below section “Refund Procedures for U.S. Holders”).
certain other tax‑exempt investors.
THE FOLLOWING IS NOT A COMPREHENSIVE DISCUSSION OF
Refund Procedures for U.S. Holders
ALL GERMAN TAX AND U.S. FEDERAL INCOME TAX Under the Treaty, a partial refund of the 25% withholding tax
CONSEQUENCES THAT MAY BE RELEVANT FOR U.S. HOLDERS OF equal to 10% of the gross amount of the dividend and a full refund of
OUR ADRs OR ORDINARY SHARES. THEREFORE, U.S. HOLDERS the solidarity surtax can be obtained by a U.S. Holder. Thus, for each
ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS US$100 of gross dividends paid by SAP SE to a U.S. Holder, the
REGARDING THE OVERALL GERMAN TAX AND U.S. FEDERAL dividends (which are dependent on the euro/U.S. dollar exchange
INCOME TAX CONSEQUENCES OF THE ACQUISITION, rate at the time of payment) will be initially subject to a German
OWNERSHIP AND DISPOSITION OF OUR ADRs OR ORDINARY withholding tax of US$26.375, of which US$11.375 may be refunded
SHARES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, under the Treaty. As a result, a U.S. Holder effectively would receive
INCLUDING THE EFFECT OF ANY STATE, LOCAL OR OTHER a total dividend of US$85 (provided the euro/U.S. dollar exchange
FOREIGN OR DOMESTIC LAWS. rate at the time of payment of the dividend is the same as at the
time of refund, otherwise the effective dividend may be higher or
German Taxation lower). Further relief of German withholding tax under the Treaty
The summary set out below is based on German tax laws, may be available for corporate U.S. Holders owning at least 10% of
interpretations thereof and applicable tax treaties to which Germany the voting stock of SAP or U.S. Holders qualifying as pension fund
is a party and that are in force at the date of this report; it is subject within the meaning of the Treaty, subject to further requirements
to any changes in such authority occurring after that date, being met.
potentially with retroactive effect, that could result in German tax To claim the refund of amounts withheld in excess of the Treaty
consequences different from those discussed below. This rate, a U.S. Holder must submit (either directly or, as described
discussion is also based, in part, on representations of the below, through the Data Medium Procedure participant) a claim for
Depositary and assumes that each obligation of the Deposit refund to the German tax authorities, with, in the case of a direct
Agreement and any related agreements will be performed in claim, the original bank voucher (or certified copy thereof) issued by
accordance with its terms. For additional information on the the paying entity documenting the tax withheld, within four years
Depository and the fees associated with SAP’s ADR program see from the end of the calendar year in which the dividend is received.
“Item 12. Description of Securities Other Than Equity Securities — Claims for refund are made on a special German claim for refund
American Depository Shares.” form (Form E-USA), which must be filed with the German Federal
For purposes of applying German tax law and the applicable tax Tax Office (Bundeszentralamt für Steuern, D-53221 Bonn,
treaties to which Germany is a party, a holder of ADRs will generally Germany). The German claim for refund form may be obtained from
be treated as owning the ordinary shares represented thereby. the German tax authorities at the same address where applications
are filed or can be downloaded from the homepage of the German
German Taxation of Dividends Federal Tax Office (http://www.bzst.de).
Under German income tax law, the full amount of dividends U.S. Holders must also submit to the German tax authorities a
distributed by an incorporated company is generally subject to certification of their U.S. residency status (IRS Form 6166). This
German withholding tax at a domestic rate of 25% plus a solidarity certification can be obtained from the Internal Revenue Service by
surtax of 5.5% thereon (effectively 1.375% of dividends before filing a request for certification (generally on an IRS Form 8802,
withholding tax), resulting in an aggregate withholding tax rate from which will not be processed unless a user fee is paid) with the
dividends of 26.375%. From January 1, 2017 onwards, taxes are Internal Revenue Service, P.O. Box 71052, Philadelphia, PA 19176-
incurred on the third bank working day after the annual general 6052. U.S. Holders should consult their own tax advisors regarding
meeting, or at a later date as may be stipulated by SAP’s articles of how to obtain an IRS Form 6166.
incorporation or by the annual general meeting’s decision on An IT-supported quick-refund procedure is available for
dividends. Non-resident corporate shareholders will generally be dividends received (the “Data Medium Procedure — DMP”). If the
entitled to a refund in the amount of two-fifths of the withholding tax U.S. Holder’s bank or broker elects to participate in the DMP, it will
(including solidarity surtax thereon). This does not preclude a perform administrative functions necessary to claim the Treaty
further reduction or refund of withholding tax, if any, available under refund for the beneficiaries. The refund beneficiaries must confirm
a relevant tax treaty. to the DMP participant that they meet the conditions of the Treaty
Generally, for many non-resident shareholders the withholding provisions and that they authorize the DMP participant to file
tax rate is currently reduced under applicable income tax treaties. applications and receive notices and payments on their behalf.
Rates and refund procedures may vary according to the applicable Further each refund beneficiary must confirm that (i) it is the
treaty. To reduce the withholding tax to the applicable treaty tax beneficial owner of the dividends received; (ii) it is resident in the
rate a non-resident shareholder must apply for a refund of U.S. in the meaning of the Treaty; (iii) it does not have its domicile,
withholding taxes paid. Claims for refund, if any, are made on a residence or place of management in Germany; (iv) the dividends
special German claim for refund form, which must be filed with the received do not form part of a permanent establishment or fixed
German Federal Tax Office (Bundeszentralamt für Steuern, D-53221 base in Germany; and (v) it commits, due to its participation in the
Bonn, Germany; http://www.bzst.de). The relevant forms can be DMP, not to claim separately for refund.

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 The beneficiaries also must provide an IRS Form 6166 or other transferee was not domiciled in Germany for purposes of
certification with the DMP participant. The DMP participant is the Estate Tax Treaty at the time the gift was made, or at the time of
required to keep these documents in its files and prepare and file a the decedent’s death, and the ADRs or ordinary shares were not
combined claim for refund with the German tax authorities by held in connection with a permanent establishment or a fixed base
electronic media. The combined claim provides evidence of a U.S. in Germany. In general, the Estate Tax Treaty provides a credit
Holder’s personal data including its U.S. Tax Identification Number. against the U.S. federal gift or estate tax liability for the amount of
The German tax authorities reserve the right to audit the gift or inheritance tax paid in Germany, subject to certain
entitlement to tax refunds for several years following their payment limitations, in a case where the ADRs or ordinary shares are subject
pursuant to the Treaty in individual cases. The DMP participant to German gift or inheritance tax and U.S. federal gift or estate tax.
must assist with the audit by providing the necessary details or by
Other German Taxes
forwarding the queries to the respective refund beneficiaries.
The German tax authorities will issue refunds denominated in There are currently no German net worth, transfer, stamp or
euros. In the case of shares held through banks or brokers other similar taxes that would apply to a U.S. Holder on the
participating in the Depository, the refunds will be issued to the acquisition, ownership, sale or other disposition of our ADRs or
Depository, which will convert the refunds to U.S. dollar. The ordinary shares.
resulting amounts will be paid to banks or brokers for the account of
the U.S. Holders.
U.S. Taxation
The following discussion applies to U.S. Holders only if the ADRs
German Taxation of Capital Gains and ordinary shares are held as capital assets for tax purposes. It
Under German income tax law, a capital gain derived from the does not address tax considerations applicable to U.S. Holders that
sale or other disposition of ADRs or ordinary shares by a non- may be subject to special tax rules, such as dealers or traders in
resident shareholder is subject to income tax in Germany only if securities, financial institutions, insurance companies, tax-exempt
such non-resident shareholder has held, directly or indirectly, ADRs entities, regulated investment companies, U.S. Holders that hold
or ordinary shares representing 1% or more of the registered share ordinary shares or ADRs as a part of a straddle, conversion
capital of a company at any time during the five-year period transaction or other arrangement involving more than one position,
immediately preceding the sale or other disposition. U.S. Holders that own (or are deemed for U.S. tax purposes to own)
However, a U.S. Holder of ADRs or ordinary shares that qualifies 10% or more (by vote or value) of the stock of SAP SE, U.S. Holders
for benefits under the Treaty is not subject to German income or subject to special tax accounting rules as a result of any item of
corporate income tax on the capital gain derived from the sale or gross income with respect to the ADRs or shares being taken into
other disposition of ADRs or ordinary shares. account in the applicable financial statement, U.S. Holders that have
a principal place of business or “tax home” outside the United
German Gift and Inheritance Tax
States or U.S. Holders whose “functional currency” is not the U.S.
Generally, a transfer of ADRs or ordinary shares by a shareholder dollar and U.S. Holders that hold ADRs or ordinary shares through
at death or by way of gift will be subject to German gift or partnerships or other pass-through entities.
inheritance tax, respectively, if (i) the decedent or donor, or the heir, The summary set out below is based upon the U.S. Internal
donee or other transferee is resident in Germany at the time of the Revenue Code of 1986, as amended (the “Code”), the Treaty and
transfer, or with respect to German citizens who are not resident in regulations, rulings and judicial decisions thereunder at the date of
Germany, if the decedent or donor, or the heir, donee or other this report. Any such authority may be repealed, revoked or
transferee has not been continuously outside of Germany for a modified, potentially with retroactive effect, so as to result in U.S.
period of more than five years; (ii) the ADRs or ordinary shares are federal income tax consequences different from those discussed
part of the business property of a permanent establishment or a below. No assurance can be given that the conclusions set out
fixed base in Germany; or (iii) the ADRs or ordinary shares subject below would be sustained by a court if challenged by the IRS. The
to such transfer form part of a portfolio that represents 10% or discussion below is based, in part, on representations of the
more of the registered share capital of the Company and has been Depositary, and assumes that each obligation in the Deposit
held, directly or indirectly, by the decedent or donor, respectively, at Agreement and any related agreements will be performed in
the time of the transfer, actually or constructively together with accordance with its terms.
related parties. For U.S. federal income tax purposes, a U.S. Holder of ADRs will
However, the right of the German government to impose gift or be considered to own the ordinary shares represented thereby.
inheritance tax on a non-resident shareholder may be limited by an Accordingly, unless the context otherwise requires, all references in
applicable estate tax treaty. In the case of a U.S. Holder, a transfer this section to ordinary shares are deemed to refer likewise to ADRs
of ADRs or ordinary shares by a U.S. Holder at death or by way of representing an ownership interest in ordinary shares.
gift generally will not be subject to German gift or inheritance tax by
reason of the estate tax treaty between the U.S. and Germany U.S. Taxation of Dividends
(Convention between the Federal Republic of Germany and the Subject to the discussion below under “Passive Foreign
United States of America for the Avoidance of Double Taxation with Investment Company Considerations”, distributions made by SAP
respect to Estate, Gift and Inheritance Taxes, German Federal Law SE with respect to ordinary shares (other than distributions in
Gazette 1982 vol. II page 846, as amended by the Protocol of liquidation and certain distributions in redemption of stock),
December 14, 1998 and as published on December 21, 2000, including the amount of German tax deemed to have been withheld
German Federal Law Gazette 2001 vol. II, page 65; the “Estate Tax in respect of such distributions, will generally be taxed to U.S.
Treaty”) so long as (i) the decedent or donor, and (ii) the heir, donee Holders as ordinary dividend income.

97
 As discussed above, a U.S. Holder may obtain a refund of difference between the amount realized on the sale or exchange and
German withholding tax under the Treaty to the extent that the the U.S. Holder’s adjusted tax basis in the ordinary shares. Such
German withholding tax exceeds 15% of the dividend distributed. gain or loss will be a capital gain or loss and will be considered a
Thus, for each US$100 of gross dividends paid by SAP SE to a U.S. long-term capital gain (taxable at a reduced rate for individuals) if
Holder, the dividends (which are dependent on the euro/U.S. dollar the ordinary shares were held for more than one year. Capital gains
exchange rate at the time of payment) will be initially subject to may also be subject to the Medicare tax at a rate of 3.8%. The
German withholding tax of US$25 plus US$1.375 solidarity surtax, deductibility of capital losses is subject to significant limitations.
and the U.S. Holder will receive US$73.625. A U.S. Holder who Upon a sale of ordinary shares to SAP SE, a U.S. Holder may
obtains the Treaty refund will receive from the German tax recognize a capital gain or loss or, alternatively, may be considered
authorities an additional amount in euro that would be equal to to have received a distribution with respect to the ordinary shares,
US$11.375. For U.S. tax purposes, such U.S. Holder will be in each case depending upon the application to such sale of the
considered to have received a total distribution of US$100, which rules of Section 302 of the Code.
will be deemed to have been subject to German withholding tax of Deposit and withdrawal of ordinary shares in exchange for ADRs
US$15 (15% of US$100) resulting in the net receipt of US$85 by a U.S. Holder will not result in its realization of gain or loss for
(provided the euro/U.S. dollar exchange rate at the time of payment U.S. federal income tax purposes.
of the dividend is the same as at the time of refund, otherwise the
U.S. Information Reporting and Backup
effective dividend may be higher or lower).
In the case of a distribution in euro, the amount of the
Withholding
distribution generally will equal the U.S. dollar value of the euro Dividend payments made to holders and proceeds paid from the
distributed (determined by reference to the spot currency exchange sale of shares or ADRs are subject to information reporting to the
rate on the date of receipt of the distribution, or receipt by the Internal Revenue Service and will be subject to backup withholding
Depositary in the case of a distribution on ADRs), regardless of taxes (currently imposed at a 24% rate for 2018-2025) unless the
whether the holder in fact converts the euro into U.S. dollar, and the holder (i) is a corporation or other exempt recipient or (ii) provides a
U.S. Holder will not realize any separate foreign currency gain or taxpayer identification number on a properly completed IRS Form
loss (except to the extent that such gain or loss arises on the actual W-9 and certifies that no loss of exemption from backup withholding
disposition of foreign currency received). However, a U.S. Holder has occurred. Holders that are not U.S. persons are not subject to
may be required to recognize foreign currency gain or loss on the information reporting or backup withholding. However, such a
receipt of a refund in respect of German withholding tax to the holder may be required to provide a certification of its non-U.S.
extent the U.S. dollar value of the refund differs from the U.S. dollar status in connection with payments received within the United
equivalent of that amount on the date of receipt of the underlying States or through a U.S.-related financial intermediary.
dividend. Backup withholding is not an additional tax and any amounts
Dividends paid by SAP SE generally will constitute “portfolio withheld as backup withholding may be credited against a holder’s
income” for purposes of the limitations on the use of passive activity U.S. federal income tax liability. A holder may obtain a refund of any
losses (and, therefore, generally may not be offset by passive excess amounts withheld under the backup withholding rules by
activity losses) and as “investment income” for purposes of the timely filing the appropriate claim for refund with the Internal
limitation on the deduction of investment interest expense. Revenue Service and furnishing any required information.
Dividends paid by SAP SE will not be eligible for the dividends Shareholders may be subject to other U.S. information reporting
received deduction generally allowed to U.S. corporations under requirements and should consult their own tax advisors for
Section 243 of the Code. Dividends paid by SAP SE to an individual application of these reporting requirements to their own facts and
are treated as “qualified dividends” subject to capital gains rates, i.e. circumstances.
at a maximum rate of 20%, if SAP SE was not in the prior year and, U.S. Foreign Tax Credit
is not in the year in which the dividend is paid, a passive foreign
In general, in computing its U.S. federal income tax liability, a
investment company (“PFIC”). Based on our audited financial
U.S. Holder may elect for each taxable year to claim a deduction or,
statements and relevant market and shareholder data, we believe
subject to the limitations on foreign tax credits generally, a credit for
that we were not treated as a PFIC for U.S. federal income taxes
foreign income taxes paid or accrued by it. For U.S. foreign tax
with respect to our 2018 tax year. In addition, based on our audited
credit purposes, subject to the applicable limitations under the
financial statements and our current expectations regarding the
foreign tax credit rules, German tax withheld from dividends paid to
value and nature of our assets, the sources and nature of our
a U.S. Holder, up to the 15% provided under the Treaty (and also
income, and relevant market and shareholder data, we do not
dependent on the euro/U.S. dollar exchange rate at the time of
anticipate becoming a PFIC for the 2019 tax year. Certain US
payment of the dividend and the time of refund of the German tax
holders who are individuals, trusts, or estates, must pay a Medicare
withheld), will be eligible for credit against the U.S. Holder’s federal
tax at a rate of 3.8% on the lesser of (i) net investment income such
income tax liability or, if the U.S. Holder has elected to deduct such
as dividends and (ii) the excess of modified adjusted gross income
taxes, may be deducted in computing taxable income.
over the statutory thresholds.
For U.S. foreign tax credit purposes, dividends paid by SAP SE
U.S. Taxation of Capital Gains generally will be treated as foreign-source income and as “passive
In general, assuming that SAP SE at no time is a PFIC, upon a category income”. Gains or losses realized by a U.S. Holder on the
sale or exchange of ordinary shares to a person other than SAP SE, sale or exchange of ordinary shares generally will be treated as U.S.-
a U.S. Holder will recognize gain or loss in an amount equal to the source gain or loss.

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Passive Foreign Investment Company
Considerations ITEM 11. QUANTITATIVE
Special and adverse U.S. tax rules apply to a U.S. Holder that
holds an interest in a passive foreign investment company (PFIC).
AND QUALITATIVE
Based on current projections concerning the composition of SAP DISCLOSURES ABOUT
SE’s income and assets, SAP SE does not believe that it will be
treated as a PFIC for its current or future taxable years. However, MARKET RISK
because this conclusion is based on our current projections and
expectations as to its future business activity, SAP SE can provide We are exposed to various financial risks, such as market risks,
including changes in foreign currency exchange rates, interest rates
no assurance that it will not be treated as a PFIC in respect of its
current or any future taxable years. and equity prices, as well as credit risk and liquidity risk. We manage
these risks on a Group-wide basis. Selected derivatives are
Material Contracts exclusively used for this purpose and not for speculation, which is
defined as entering into derivative instruments without a
Callidus Software Inc.
corresponding underlying transaction. Financial risk management is
Pursuant to an Agreement and Plan of Merger dated January 29,
done centrally. See Note (F.1) to our Consolidated Financial
2018 by and among Callidus Software Inc. (Callidus), SAP America,
Statements for our quantitative and qualitative disclosures about
Inc., and Emerson One Acquisition Corp., a wholly owned subsidiary
market risk.
of SAP America, Inc., Emerson One Acquisition Corp. commenced a
cash tender offer for all of the outstanding shares of Callidus
common stock at US$36.00 per share, representing an enterprise
value of approximately US$2.4 billion. The transaction closed in the ITEM 12. DESCRIPTION OF
second quarter of 2018.
The preceding description is a summary of the Agreement and
SECURITIES OTHER THAN
Plan of Merger and is qualified in its entirety by the Agreement and
Plan of Merger which is incorporated by reference to Exhibit 2.1 to
EQUITY SECURITIES
the Current Report on Form 8-K filed with the SEC by Callidus on
January 30, 2018.
American Depositary Shares
See “Item 5. Operating and Financial Review and Prospects— Fees and Charges Payable by ADR Holders
Liquidity and Capital Disclosures”, for information on our credit
Deutsche Bank Trust Company Americas is the Depositary for
facilities.
SAP SE’s ADR program. ADR holders may be required to pay the
following charges:
Compliance With Regulations
– taxes and other governmental charges;
Pursuant to Section 219 of the U.S. Iran Threat Reduction and
– registration fees as may be in effect from time to time for the
Syria Human Rights Act of 2012 and Section 13(r) of the U.S. registration of transfers of SAP ordinary shares on any applicable
Securities Exchange Act of 1934, SAP has filed the required Iran register to the Depositary or its nominee or the custodian or its
Notice with the SEC. See Note (G.4) to our Consolidated Financial
nominee in connection with deposits or withdrawals under the
Statements for more information. Deposit Agreement;
– applicable air courier, cable, telex and facsimile expenses of the
Documents on Display Depositary;
We are subject to the informational requirements of the – expenses incurred by the Depositary in the conversion of foreign
Securities Exchange Act of 1934, as amended. In accordance with currency;
these requirements, we file reports and furnish other information as – US $5.00 or less per 100 ADSs (or portion thereof) to the
a foreign private issuer with the SEC. These materials, including this Depositary for the execution and delivery of ADRs (including in
report and the exhibits thereto, may be inspected and copied at the connection with the depositing of SAP ordinary shares or the
SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, exercising of rights) and the surrender of ADRs;
Washington, D.C. 20549. The SEC also maintains a Web site at – a maximum aggregate service fee of US $3.00 per 100 ADSs (or
www.sec.gov that contains reports and other information regarding portion thereof) per calendar year to the Depositary for the
registrants that file electronically with the SEC. This report as well as services performed by the Depositary in administering the ADR
some of the other information submitted by us to the SEC may be program, including for processing any cash dividends and other
accessed through this Web site. In addition, information about us is cash distributions; and
available at our Web site: www.sap.com. – US $5.00 or less per 100 ADSs (or portion thereof) to the
Depositary for distribution of securities other than SAP ordinary
shares or rights.
These fees may at any time and from time to time be changed by
agreement between SAP SE and the Depositary. These charges are
described more fully in Section 5.9 of the Amended and Restated
Deposit Agreement dated as of November 25, 2009, as amended by
Amendment No. 1 dated as of March 18, 2016 and as may be further

99
amended from time to time, incorporated by reference as Exhibits set off the amount of the fees from any distribution to be made to
4.1.1 and 4.1.2 to this report. the ADR holder, all in accordance with the Deposit Agreement.
Applicable service fees are either deducted from any cash If any taxes or other governmental charges are payable by the
dividends or other cash distributions or charged separately to holders and/or beneficial owners of ADSs to the Depositary, the
holders in a manner determined by the Depositary, depending on Depositary, the custodian or SAP may withhold or deduct from any
whether ADSs are registered in the name of investors (whether distributions made in respect of the deposited SAP ordinary share
certificated or in book-entry form) or held in brokerage and and may sell for the account of the holder and/or beneficial owner
custodian accounts (via DTC). In the case of distributions of any or all of the deposited ordinary shares and apply such
securities, the Depositary charges the applicable ADS record date distributions and sale proceeds in payment of such taxes (including
holder concurrent with the distribution. In the case of ADSs applicable interest and penalties) or charges, with the holder and
registered in the name of the investor, whether certificated or in the beneficial owner thereof remaining fully liable for any deficiency.
book entry form, the Depositary sends invoices to the applicable
record date ADS holders. For ADSs held in brokerage and custodian Fees and Other Payments Payable by the
accounts via DTC, the Depositary may, if permitted by the Depositary to SAP
settlement systems provided by DTC, collect the fees through those In connection with the ADR program, the Depositary has agreed
settlement systems from the brokers and custodians holding ADSs to make certain payments to SAP and waive certain costs of
in their DTC accounts. The brokers and custodians who hold their providing ADR administrative and reporting services, including
clients’ ADSs in DTC accounts in such case may in turn charge their reporting of ADR program activity, distribution of information to
clients’ accounts the amount of the service fees paid to the investors and managing the ADR program. For the period beginning
Depositary. November 25, 2017 and ending November 24, 2018, the Depositary
In the event of a refusal to pay applicable fees, the Depositary made direct and indirect payments to SAP in an aggregate amount
may refuse the requested services until payment is received or may of US$2,414,387.85 related to the ADR program.

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PART II Management’s Annual Report on Internal
Control Over Financial Reporting
The management of SAP is responsible for establishing and
maintaining adequate internal control over financial reporting as

ITEM 13. DEFAULTS,

such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934. SAP’s internal control over

DIVIDEND ARREARAGES financial reporting is a process designed under the supervision of

SAP’s CEO and CFO to provide reasonable assurance regarding the

AND DELINQUENCIES reliability of financial reporting and the preparation of financial

statements for external reporting purposes in accordance with
None. International Financial Reporting Standards as issued by the
International Accounting Standards Board.
SAP’s management assessed the effectiveness of the

ITEM 14. MATERIAL Company’s internal control over financial reporting as of December
31, 2018. In making this assessment, it used the criteria set forth by
MODIFICATIONS TO THE the Committee of Sponsoring Organizations of the Treadway
Commission in “Internal Control — Integrated Framework (2013)”.
RIGHTS OF SECURITY Based on the assessment under these criteria, SAP management
has concluded that, as of December 31, 2018, the Company’s
HOLDERS AND USE OF internal control over financial reporting was effective.

PROCEEDS KPMG AG Wirtschaftsprüfungsgesellschaft, our independent

registered public accounting firm, has issued its audit report on the
effectiveness of SAP’s internal control over financial reporting,
None.
which is included in Item 18. Financial Statements, “Report of
Independent Registered Public Accounting Firm.”

ITEM 15. CONTROLS AND Changes in Internal Control Over

PROCEDURES Financial Reporting
There has been no change in our internal control over financial
Evaluation of Disclosure Controls and reporting framework during the period covered by this report that
has materially affected, or is reasonably likely to materially affect,
Procedures our internal control over financial reporting.
Disclosure controls and procedures are controls and other
procedures of SAP that are designed to ensure that information
required to be disclosed by SAP in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Commission’s rules
and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that
information required to be disclosed by SAP in the reports that it
files or submits under the Exchange Act is accumulated and
communicated to SAP management, including SAP’s principal
executive and financial officers (i.e. SAP’s chief executive officer
(CEO) and chief financial officer (CFO)), or persons performing
similar functions, as appropriate to allow timely decisions regarding
required disclosure. SAP’s management evaluated, with the
participation of SAP’s CEO and CFO the effectiveness of SAP’s
disclosure controls and procedures as of December 31, 2018. The
evaluation was led by SAP’s Global Governance Risk & Compliance
function, including dedicated “SOX Champions” in all of SAP’s major
entities and business units with the participation of process owners,
SAP’s key corporate senior management, senior management of
each business group, and as indicated above under the supervision
of SAP’s CEO and CFO. Based on the foregoing, SAP’s
management, including SAP’s CEO and CFO, concluded that as of
December 31, 2018, SAP’s disclosure controls and procedures were
effective.

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ITEM 16. [RESERVED] Audit Committee’s Pre-Approval Policies
and Procedures
As required under German law, our shareholders appoint our
ITEM 16A. AUDIT external independent auditors to audit our financial statements,
based on a proposal that is legally required to be submitted by the
COMMITTEE FINANCIAL Supervisory Board. The Supervisory Board’s proposal is based on a
recommendation by the Audit Committee. See also the description
EXPERT in “Item 10. Additional Information — Corporate Governance.”
In 2002 our Audit Committee adopted a policy with regard to the
Our Supervisory Board has determined that Erhard Schipporeit pre-approval of audit and non-audit services to be provided by our
is an “audit committee financial expert”, as defined by the external independent auditors. This policy, which is designed to
regulations of the Commission issued pursuant to Section 407 of assure that such engagements do not impair the independence of
the Sarbanes-Oxley Act of 2002 and meeting the requirements of our auditors, was amended several times since 2002 with the latest
Item 16A. He is “independent”, as such term is defined in Rule 10A-3 changes made to reflect the provisions on audit and non-audit
under the Exchange Act. services introduced by European Union in 2014. The policy requires
prior approval of the Audit Committee for all services to be provided
by our external independent auditors for any entity of the SAP
ITEM 16B. CODE OF ETHICS Group. With regard to non-audit services the policy distinguishes
among three categories of services:
In 2003, SAP adopted a Code of Business Conduct that applies – “Prohibited services:” This category includes services that our
to all employees (including all personnel in the accounting and external independent auditors must not be engaged to perform.
controlling departments), managers and the members of SAP’s These are services that are not permitted by applicable law or
Executive Board (including our CEO and CFO). Our Code of that would be inconsistent with maintaining the auditors’
Business Conduct constitutes a “code of ethics” as defined in Item independence.
16.B of Form 20-F. Our Code of Business Conduct sets standards – “Services requiring universal approval:” Services of this category
for all dealings with customers, partners, competitors and suppliers may be provided by our external independent auditors up to a
and includes, among others, regulations with regard to certain aggregate amount in fees per year that is determined by
confidentiality, loyalty, preventing conflicts of interest, preventing the Audit Committee.
bribery, data protection and privacy and avoiding anti-competitive – “Services requiring individual approval:” Services of this category
practices. International differences in culture, language, and legal may only be provided by our external independent auditors if
and social systems make the adoption of uniform Codes of Business they have been individually (specifically) pre-approved by the
Conduct across an entire global company challenging. As a result, Audit Committee or an Audit Committee member who is
SAP has set forth a master code containing minimum standards. In authorized by the Audit Committee to make such approvals.
turn, each company within the SAP Group has been required to Our Chief Accounting Officer or individuals empowered by him
adopt a similar code that meets at least these minimum standards, review all individual requests to engage our external independent
but may also include additional or more stringent rules of conduct. auditors as a service provider in accordance with this policy and
Newly acquired companies also are required to meet the minimum determines the category to which the requested service belongs. All
standards set forth in the Code of Business Conduct. SAP amends requests for engagements with expected fees over a specified limit
its Code of Business Conduct as necessary, including in February are additionally reviewed by our CFO. Based on the determination of
2012 and December 2016, and most recently in March 2018.We the category the request is (i) declined if it is a “prohibited service,”
have made our amended Code of Business Conduct publicly (ii) approved if it is a “service requiring universal approval” and the
available by posting the full text on our Web site under maximum aggregate amount fixed by the Audit Committee has not
http://www.sap.com/corporate- been reached or (iii) forwarded to the Audit Committee for
en/investors/governance/policies-statutes.epx. individual approval if the “service requires individual approval” or is
a “service requiring universal approval” and the maximum
aggregate amount fixed by the Audit Committee has been
ITEM 16C. PRINCIPAL exceeded.

ACCOUNTANT FEES AND

Our Audit Committee’s pre-approval policies also include
information requirements to ensure the Audit Committee is kept

SERVICES aware of the volume of engagements involving our external

independent auditors that were not individually pre-approved by the
Audit Committee itself.
Audit Fees, Audit Related Fees, Tax Fees Substantially all of the work performed to audit our Consolidated
and All Other Fees Financial Statements was performed by our principal accountant’s
Refer to Note (G.8) to our Consolidated Financial Statements for full-time, permanent employees.
information on fees charged by our independent registered public
accounting firm, KPMG, for audit services and other professional
services.

102
ITEM 16D. EXEMPTIONS ITEM 16G. DIFFERENCES IN
FROM THE LISTING CORPORATE GOVERNANCE
STANDARDS FOR AUDIT PRACTICES
COMMITTEES The following summarizes the principal ways in which our
corporate governance practices differ from the New York Stock
Rule 10A-3 of the Exchange Act requires that all members of our Exchange (NYSE) corporate governance rules applicable to U.S.
audit committee be independent, subject to certain exceptions. In domestic issuers (the NYSE Rules).
accordance with German law, the Audit Committee consists of both
employee and shareholder elected members. Rule 10A-3 provides Introduction
an exception for an employee of a foreign private issuer such as SAP
SAP is incorporated under the laws of the European Union and
who is not an executive officer of that issuer and who is elected to Germany, with securities publicly traded on markets in Germany,
the supervisory board or audit committee of that issuer pursuant to including the Frankfurt Exchange and in the United States on the
the issuer’s governing law. In this case, the employee is exempt
NYSE.
from the independence requirements of Rule 10A-3 and is permitted The NYSE Rules permit foreign private issuers to follow
to sit on the audit committee. applicable home country corporate governance practices in lieu of
We rely on this exemption. Our Audit Committee includes two
the NYSE corporate governance standards, subject to certain
employee representatives, Panagiotis Bissiritsas and Martin Duffek, exceptions. Foreign private issuers electing to follow home country
who were appointed to our Supervisory Board pursuant to the corporate governance rules are required to disclose the principal
Agreement on the Involvement of Employees in SAP SE (see “Item
differences in their corporate governance practices from those
6. Directors, Senior Management and Employees.” for details). We required under the NYSE Rules. This Item 16G summarizes the
believe that our reliance on this exemption does not materially principal ways in which SAP’s corporate governance practices differ
adversely affect the ability of our Audit Committee to act
from the NYSE Rules applicable to domestic issuers.
independently and to satisfy the other requirements of Rule 10A-3.
Legal Framework
ITEM 16E. PURCHASES OF The primary sources of law relating to the corporate governance
of a European Company are the Council Regulation (EC) No.

EQUITY SECURITIES BY 2157/2001 on the Statute for a European Company (the “SE
Regulation”), the German Act on the Implementation of Council
THE ISSUER AND Regulation No. 2157/2001 of October 8, 2001 on the Statute for a
European Company (Gesetz zur Ausführung der Verordnung (EG)
AFFILIATED PURCHASERS Nr. 2157/2001 des Rates vom 8. Oktober 2001 über das Statut der
Europäischen Gesellschaft (SE) – SE-Ausführungsgesetz; “SE-AG”)
At the Annual General Meeting of Shareholders on May 17, 2018, of December 22, 2004, and the German Stock Corporation Act
the Executive Board was authorized to acquire, on or before May 16, (Aktiengesetz). Additionally, the European Regulation (EU) No
2023, up to 120 million shares of SAP. The authorization from May 596/2014 of the European Parliament and the Council on market
17, 2018 replaced the authorization from June 4, 2013. abuse (the “MAR”), the German Securities Trading Act
The authorization is subject to the provision that the shares to be (Wertpapierhandelsgesetz), the German Securities Purchase and
purchased, together with any other shares already acquired and Take Over Act (Wertpapiererwerbs- und Übernahmegesetz), the
held by SAP or which are attributable to SAP pursuant to Section Stock Exchange Admission Regulations, the German Commercial
71d and Section 71e AktG (German Stock Corporation Act), do not Code (Handelsgesetzbuch) and certain other German statutes
account for more than 10% of SAP’s capital stock. contain corporate governance rules applicable to SAP. In addition to
In 2018 there were no purchases made by us or on our behalf or these mandatory rules, the German Corporate Governance Code
on behalf of SAP of SAP shares or SAP ADRs. The maximum (“GCGC”) summarizes the mandatory statutory corporate
number of SAP shares that SAP could purchase under existing governance principles found in the German Stock Corporation Act
repurchase programs was 87,996,069 as of December 31, 2018. and other provisions of German law. Further, the GCGC contains
supplemental recommendations and suggestions for standards on
responsible corporate governance intended to reflect generally
ITEM 16F. CHANGES IN accepted best practices.
The German Stock Corporation Act requires the executive and
REGISTRANT’S the supervisory board of publicly listed companies like SAP to

CERTIFYING ACCOUNTANT
declare annually that the recommendations set forth in the GCGC
have been and are being complied with or which of the
recommendations have not been or are not being complied with and
Not applicable.
why not. SAP disclosed and reasoned deviations from a few of the
GCGC recommendations in its Declaration of Implementation on a
yearly basis from 2003 through February 21, 2018. In its most

103
recent Declaration of Implementation issued in October 2018, SAP of the Code, and determine annually whether such numbers have
declared that it has complied since February 21, 2018, and will been met. According to this definition, a Supervisory Board member
comply also in the future, with all recommendations of the GCGC. is not to be considered independent in particular if s/he has
Declarations from 2012 forward are available on the SAP website. personal or business relations with the company, its executive
bodies, a controlling shareholder or an enterprise associated with
Significant Differences any of the preceding persons and entities which could cause a
We believe the following to be the significant differences between substantial and sustained conflict of interest. The members of the
applicable European and German corporate governance practices, Supervisory Board must ensure that they have enough time to
as SAP has implemented them, and those applicable to domestic perform their board duties and must carry out their duties carefully
companies under the NYSE Rules. and in the company’s best interests. They must be loyal to SAP in
their conduct, and the GCGC recommends that they should not
SAP SE is a European Company With a accept appointment to governing bodies of, or exercise advisory
functions at, companies that are in significant competition with SAP.
Two-Tier Board System
The GCGC further recommends that each member of the
SAP is governed by three separate bodies: (i) the Supervisory Supervisory Board should inform the Supervisory Board of any
Board, which counsels, supervises and controls the Executive conflicts of interest, and that material and sustained conflicts of
Board; (ii) the Executive Board, which is responsible for the
interest involving a member of the Supervisory Board should result
management of SAP; and (iii) the General Meeting of Shareholders. in the termination of that member’s Supervisory Board mandate.
The rules applicable to these governing bodies are defined by Supervisory Board members must disclose any planned conclusion
European and German law and by SAP’s Articles of Incorporation.
of advisory or other service agreements or contracts for work with
This corporate structure differs from the unitary board of directors SAP, or loan agreements between them or persons closely related
established by the relevant laws of all U.S. states and the NYSE to them and SAP to the Supervisory Board promptly. Such
Rules. Under the SE Regulation and the German Stock Corporation
agreements require the consent of the Supervisory Board. The
Act, the Supervisory Board and Executive Board are separate and Supervisory Board may grant its permission for any such
no individual may be a member of both boards. See “Item 10. transaction only if it is based on terms and conditions that are
Additional Information — Corporate Governance” for additional standard for the type of transaction in question and if the
information on the corporate structure. transaction is not contrary to SAP’s interest.
SAP complies with the director independence requirements and
Director Independence Rules recommendations described above. In particular, the Supervisory
The NYSE Rules require that a majority of the members of the Board of SAP SE determined in fiscal year 2018 that all nine
board of directors of a listed issuer and each member of its shareholders’ representatives on the Supervisory Board are
nominating, corporate governance, compensation and audit independent within the meaning of Section 5.4.2 of the GCGC, and
committee be “independent.” As a foreign private issuer, SAP is not that also considering the employee representatives the Supervisory
subject to the NYSE board, compensation committee and corporate Board has what it considers to be an adequate number of
governance committee independence requirements but instead can independent members.
elect to follow its home country rules. With respect to the audit Section 5.3.2 of the GCGC recommends that the chairperson of
committee, SAP is required to satisfy Rule 10A-3 of the Exchange the Audit Committee of the Supervisory Board should have specific
Act, which provides certain exemptions from the audit committee knowledge and experience in applying accounting principles and
independence requirements in the case of employee board internal control procedures, and should be independent, and not be
representatives. The NYSE Rules stipulate that no director qualifies a former member of the Executive Board whose term of office
as “independent” unless the board of directors has made an ended less than two years ago. Furthermore, the chairperson of the
affirmative determination that the director has no material direct or Audit Committee should not simultaneously chair the Supervisory
indirect relationship with the listed company. However, under the Board as a whole. Mr. Erhard Schipporeit who is the Chairman of
NYSE Rules a director may still be deemed independent even if the SAP’s Audit Committee meets these recommendations. However,
director or a member of a director’s immediate family has received applicable European and German corporate law does not require the
during a 12 month period within the prior three years up to Supervisory Board to make an affirmative determination for each
$120,000 in direct compensation. In addition, a director may also be individual member that it is independent or that a majority of
deemed independent even if a member of the director’s immediate Supervisory Board members or the members of a specific
family works for the company’s auditor in a non-partner capacity committee are independent. As described above, the GCGC only
and not on the company’s audit. recommends that the Supervisory Board determines the
By contrast, the German Stock Corporation Act and the GCGC independence of its members.
require that the Supervisory Board ensure that its members The NYSE independence requirements are closely linked with
collectively have the knowledge, competencies and professional risks specific to unitary boards of directors that are customary for
experience required to properly perform their duties. Additionally, U.S. companies. In contrast, the two-tier board structure requires a
the GCGC recommends that the Supervisory Board should strict separation of the executive board and supervisory board. In
implement and adhere to concrete director independence criteria, addition, the supervisory board of a European Company formed by
specify what it considers to be appropriate numbers of conversion from a large German stock corporation which was
shareholders’ representatives and Supervisory Board members subject to the principle of employee codetermination as outlined in
generally which are independent within the meaning of Section 5.4.2 the German Co-Determination Act of 1976 (Mitbestimmungsgesetz)

104
is subject to at least the same level of employee participation which General and Compensation Committee, Audit Committee,
formerly existed in the German stock corporation that was Technology and Strategy Committee, Finance and Investment
converted to an SE. The terms of employee participation with regard Committee, Nomination Committee, Special Committee and People
to the Supervisory Board of SAP SE are, among others, set out in and Organization Committee (See “Item 10. Additional Information
the Agreement on the Involvement of Employees in SAP SE. As a — Corporate Governance” for more information).
result, the Supervisory Board of SAP SE consists of 18 members, of
which nine are representatives of SAP SE’s shareholders elected at Rules on Shareholders’ Compulsory
the Annual General Meeting and nine members are representatives Approval are Different
of the European employees. Only a shareholders’ representative
Section 312 of the NYSE Rules requires U.S. companies to seek
may be elected as chairperson of the Supervisory Board. In case of a
shareholder approval of all equity-compensation plans, including
tied vote, the vote of the chairperson and, in the event that the
certain material revisions thereto (subject to certain exemptions as
chairperson does not participate in passing the resolution, the vote
described in the rules), issuances of common stock, including
of the deputy chairperson, provided that he or she is a shareholders’
convertible stock, if the common stock has, or will have upon
representative, will be decisive (casting vote). This board structure
issuance, voting power of or in excess of 20% of the then
creates a different system of checks and balances, including
outstanding common stock, and issuances of common stock if they
employee participation, and cannot be directly compared with a
trigger a change of control.
unitary board system.
According to applicable European law, the German Stock
Corporation Act and other applicable German laws, shareholder
Audit Committee Independence approval is required for a broad range of matters, such as
As a foreign private issuer, the NYSE Rules require SAP to amendments to the articles of association, certain significant
establish an Audit Committee that satisfies the requirements of corporate transactions (including inter-company agreements and
Rule 10A-3 of the Exchange Act with respect to audit committee material restructurings), the offering of stock options and similar
independence. SAP is in compliance with these requirements. The equity compensation to its Executive Board members or its
Chairman of SAP’s Audit Committee and Dr. Friederike Rotsch employees by a way of a conditional capital increase or by using
meet the independence requirements of Rule 10A-3 of the Exchange treasury shares (including significant aspects of such an equity
Act. The other two Audit Committee members, Panagiotis compensation plan as well as the exercise thresholds), the issuance
Bissiritsas and Martin Duffek, are employee representatives who are of new shares, the authorization to purchase the corporation’s own
eligible for the exemption provided by Rule 10 A-3 (b) (1) (iv) (C) shares, and other essential issues, such as transfers of all, or
(see “Item 16D Exemptions from the listing standards for audit substantially all, of the assets of the stock corporation, including
committees” for details). shareholdings in subsidiaries.
The Audit Committee independence requirements are similar to
the Board independence recommendations of the GCGC. See the Specific Principles of Corporate
section above under “Director Independence Rules.” Nonetheless,
SAP meets the NYSE Rules on audit committee independence
Governance
applicable to foreign private issuers. Under the NYSE Rules Section 303A.09 listed companies must
adopt and disclose corporate guidelines. Since October 2007, SAP
Rules on Non-Management Board has applied, with few exceptions, and since February 2018 without
any exceptions, the recommended corporate governance standards
Meetings are Different of the GCGC rather than company-specific principles of corporate
Section 303 A.03 of the NYSE Rules stipulates that the non- governance. The GCGC recommendations differ from the NYSE
management board of each listed issuer must meet at regularly Standards primarily as outlined in this Item 16G.
scheduled executive sessions without the management. Under
applicable European and German corporate law and the GCGC the Specific Code of Business Conduct
Supervisory Board is entitled but not required to exclude Executive
NYSE Rules Section 303 A.10 requires listed companies to adopt
Board members from its meetings. The Supervisory Board
and disclose a code of business conduct and ethics for directors,
exercises this right generally during its meetings.
officers and employees, and to disclose promptly any waivers of the
code for directors or executive officers. Although not required under
Rules on Establishing Committees Differ applicable European and German law, SAP has adopted a Code of
Pursuant to Section 303 A.04 and 303 A.05 of the NYSE Rules Business Conduct, which is equally applicable to employees,
listed companies are required to set up a Nominating/Corporate managers and members of the Executive Board. SAP complies with
Governance Committee and a Compensation Committee, each the requirement to disclose the Code of Business Conduct and any
composed entirely of independent directors and having a written waivers of the code with respect to directors and executive officers.
charter specifying the committee’s purpose and responsibilities. In See “Item 16B. Code of Ethics” for details.
addition, each committee’s performance must be reviewed
annually. Applicable European and German corporate law does not
mandate the creation of specific supervisory board committees.
The GCGC recommends that the Supervisory Board establish an
Audit Committee and a Nomination Committee. SAP has the
following committees, which are in compliance with the GCGC:

105
PART III
ITEM 17. FINANCIAL STATEMENTS
Not applicable.

ITEM 18. FINANCIAL STATEMENTS

The Consolidated Financial Statements are included herein on pages F-1 through F-81.
The following are filed as part of this report:
– Report of Independent Registered Public Accounting Firm.
– Consolidated Financial Statements
 Consolidated Income Statements for the years ended December 31, 2018, 2017, and 2016.
 Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016.
 Consolidated Statements of Financial Position as of December 31, 2018 and 2017.
 Consolidated Statements of Changes in Equity for the years ended December 31, 2018, 2017 and 2016.
 Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016.
 Notes to the Consolidated Financial Statements.

ITEM 19. EXHIBITS

The following documents are filed as exhibits to this report:
1 Articles of Incorporation (Satzung) of SAP SE, effective as of June 4, 2018 (English translation).
2.1 Form of global share certificate for ordinary shares (English translation). (1)
Certain instruments which define rights of holders of long-term debt of SAP SE and its subsidiaries are not being filed because the
total amount of securities authorized under each such instrument does not exceed 10% of the total consolidated assets of SAP SE
and its subsidiaries. SAP SE and its subsidiaries hereby agree to furnish a copy of each such instrument to the Securities and
Exchange Commission upon request.
4.1.1 Amended and Restated Deposit Agreement dated as of November 25, 2009, by and among SAP SE, Deutsche Bank Trust Company
Americas as Depositary, and all owners and holders from time to time of American Depositary Receipts issued thereunder. (2)
4.1.2 Amendment No. 1 dated March 18, 2016 to the Amended and Restated Deposit Agreement, by and among SAP SE, Deutsche Bank
Trust Company Americas as Depositary, and all owners and holders from time to time of American Depositary Receipts issued
thereunder, including the form of American Depositary Receipt. (3)
4.10 Agreement and Plan of Merger dated January 29, 2018 by and among Callidus Software Inc. SAP America, Inc., and Emerson One
Acquisition Corp.(4)
8 For a list of our subsidiaries see Note (G.10) to our Consolidated Financial Statements in “Item 18. Financial Statements”.
12.1 Certification of Bill McDermott, Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a).
12.2 Certification of Luka Mucic, Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a).
13.1 Certification of Bill McDermott, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
13.2 Certification of Luka Mucic, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
15 Consent of Independent Registered Public Accounting Firm.
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Schema Linkbase Document
101.CAL XBRL Taxonomy Calculation Linkbase Document
101.DEF XBRL Taxonomy Definition Linkbase Document
101.LAB XBRL Taxonomy Labels Linkbase Document
101.PRE XBRL Taxonomy Presentation Linkbase Document
(1)
Incorporated by reference to Exhibit 2.1 to SAP SE’s 2014 Annual Report on Form 20-F filed with the SEC on March 20, 2015.
(2)
Incorporated by reference to Exhibit 99.(a)(2) of Post Effective Amendment #1 to SAP SE’s Registration Statement on Form F-6 filed on November 25, 2009.
(3)
Incorporated by reference to Exhibit 99.(a)(2) of Post Effective Amendment #2 to SAP SE’s Registration Statement on Form F-6 filed on March 18, 2016.
(4)
Incorporated by reference to Exhibit 2.1 to Callidus Software Inc.’s Current Report on Form 8-K filed with the Commission on January 30, 2018.

106
Signatures
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this report on its behalf.

SAP SE
(Registrant)
By: /s/ BILL MCDERMOTT
_____________________________________________
Name: Bill McDermott
Title: Chief Executive Officer

Dated: February 28, 2019

By: /s/ LUKA MUCIC

_____________________________________________
Name: Luka Mucic
Title: Chief Financial Officer

Dated: February 28, 2019

107
SAP SE AND SUBSIDIARIES

Index to the Consolidated Financial Statements

Page

Report of Independent Registered Public Accounting Firm F-2

Consolidated Financial Statements IFRS:

Consolidated Income Statements for the years ended December 31, 2018, 2017 and 2016 F-4

Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016 F-5

Consolidated Statements of Financial Position as of December 31, 2018 and 2017 F-6

Consolidated Statements of Changes in Equity for the years ended December 31, 2018, 2017 and 2016 F-7

Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 F-8

Notes to the Consolidated Financial Statements IFRS F-9 to F-82

F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and Supervisory Board of SAP SE:

Opinion on the Consolidated Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of SAP SE and subsidiaries (the Company) as of
December 31, 2018 and 2017, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows
for each of the years in the three-year period ended December 31, 2018, and the related notes (collectively, the consolidated financial
statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2018, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-year period
ended December 31, 2018, in conformity with International Financial Reporting Standards as issued by the International Accounting
Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 31, 2018 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principles

As discussed in Notes A.5 to the consolidated financial statements, the Company has changed its method of accounting for revenue from
contracts with customers in 2018 due to the adoption of International Financial Reporting Standard 15, Revenue from Contracts with
Customers.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a
public accounting firm registered with Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

F-2
/s/KPMG AG Wirtschaftsprüfungsgesellschaft
____________
We have served as the Company’s auditor since 2002.

Mannheim, Germany
February 20, 2019

F-3
SAP SE AND SUBSIDIARIES

Consolidated Financial Statements

IFRS

Consolidated Income Statements of SAP Group for the Years Ended December 31
€ millions, unless otherwise stated Notes 2018 2017 2016
Cloud subscriptions and support 4,993 3,769 2,993
Software licenses 4,647 4,872 4,859
Software support 10,981 10,908 10,571
Software licenses and support 15,628 15,780 15,431
Cloud and software 20,622 19,549 18,424
Services 4,086 3,912 3,639
Total revenue (A.1), (C.2) 24,708 23,461 22,062

Cost of cloud subscriptions and support –2,068 –1,660 –1,313

Cost of software licenses and support –2,092 –2,234 –2,182
Cost of cloud and software –4,160 –3,893 –3,495
Cost of services –3,302 –3,158 –3,089
Total cost of revenue –7,462 –7,051 –6,583
Gross profit 17,246 16,410 15,479
Research and development –3,624 –3,352 –3,044
Sales and marketing –6,781 –6,924 –6,265
General and administration –1,098 –1,075 –1,005
Restructuring (B.6) –19 –182 –28
Other operating income/expense, net –20 1 –3
Total operating expenses –19,005 –18,584 –16,928
Operating profit 5,703 4,877 5,135

Other non-operating income/expense, net (C.3) –56 –36 –234

Finance income 371 476 230
Finance costs –418 –288 –259
Financial income, net (C.4) –47 188 –29
Profit before tax (C.2) 5,600 5,029 4,872

Income tax expense (C.5) –1,511 –983 –1,242

Profit after tax 4,088 4,046 3,629
Attributable to owners of parent 4,083 4,008 3,642

Attributable to non-controlling interests 6 38 –13

Earnings per share, basic (in €) (C.6) 3.42 3.35 3.04

Earnings per share, diluted (in €) (C.6) 3.42 3.35 3.04

The accompanying Notes are an integral part of these Consolidated Financial Statements.

F-4
Consolidated Statements of Comprehensive Income of SAP Group for the Years Ended December 31
€ millions Notes 2018 2017 2016

Profit after tax 4,088 4,046 3,629

Items that will not be reclassified to profit or loss

Remeasurements on defined benefit pension plans, before tax 12 29 –10

Income taxes relating to remeasurements on defined benefit pension plans –1 –7 2

Remeasurements on defined benefit pension plans, net of tax 11 22 –8

Other comprehensive income for items that will not be reclassified to profit or loss, net of tax 11 22 –8

Items that will be reclassified subsequently to profit or loss

Gains (losses) on exchange differences on translation, before tax 910 –2,730 865

Reclassification adjustments on exchange differences on translation, before tax 0 0 –1

Exchange differences, before tax 910 –2,730 864

Income taxes relating to exchange differences on translation 0 –2 –25

Exchange differences, net of tax (E.2) 910 –2,732 839

Gains (losses) on remeasuring available-for-sale financial assets, before tax 0 114 –18

Reclassification adjustments on available-for-sale financial assets, before tax 0 –250 –26

Available-for-sale financial assets, before tax (F.2), (F.3) 0 –136 –44

Income taxes relating to available-for-sale financial assets 0 1 1

Available-for-sale financial assets, net of tax (E.2) 0 –135 –43

Gains (losses) on cash flow hedges/cost of hedging, before tax –10 81 –24

Reclassification adjustments on cash flow hedges/cost of hedging, before tax –22 –41 8

Cash flow hedges/cost of hedging, before tax (F.1), (F.3) –32 39 –15

Income taxes relating to cash flow hedges/cost of hedging 9 –10 4

Cash flow hedges/cost of hedging, net of tax (E.2) –23 29 –11

Other comprehensive income for items that will be reclassified to profit or loss, net of tax 887 –2,838 785

Other comprehensive income, net of tax 898 –2,816 777

Total comprehensive income 4,986 1,229 4,406

Attributable to owners of parent 4,980 1,191 4,418

Attributable to non-controlling interests 6 38 –13

The accompanying Notes are an integral part of these Consolidated Financial Statements.

F-5
 Consolidated Statements of Financial Position of SAP Group as at December 31
€ millions Notes 2018 2017

Cash and cash equivalents (E.3) 8,627 4,011

Other financial assets (D.5), (E.3) 448 990

Trade and other receivables (A.2) 6,362 5,899

Other non-financial assets (A.3), (G.1) 889 725

Tax assets 293 306

Total current assets 16,620 11,930

Goodwill (D.2) 23,725 21,271

Intangible assets (D.3) 3,227 2,967

Property, plant, and equipment (D.4) 3,553 2,967

Other financial assets (D.5), (E.3) 1,536 1,155

Trade and other receivables (A.2) 118 118

Other non-financial assets (A.3), (G.1) 1,301 687

Tax assets 397 352

Deferred tax assets (C.5) 1,015 1,037

Total non-current assets 34,871 30,554

Total assets 51,491 42,484

Trade and other payables 1,486 1,151

Tax liabilities 611 597

Financial liabilities (E.3) 1,125 1,561

Other non-financial liabilities (B.5), (G.2) 4,120 3,982

Provisions (A.4), (B.4), (B.5), (B.6) 110 149

Contract liabilities/deferred income (A.1) 3,028 2,771

Total current liabilities 10,481 10,210

Trade and other payables 129 119

Tax liabilities 495 434

Financial liabilities (E.3) 10,553 5,034

Other non-financial liabilities (B.5), (G.2) 501 514

Provisions (A.4), (B.4), (B.5), (B.6) 270 328

Deferred tax liabilities (C.5) 97 251

Contract liabilities/deferred income (A.1) 88 79

Total non-current liabilities 12,133 6,759

Total liabilities 22,614 16,969

Issued capital 1,229 1,229

Share premium 543 570

Retained earnings 27,407 24,769

Other components of equity 1,234 508

Treasury shares –1,580 –1,591

Equity attributable to owners of parent 28,832 25,484

Non-controlling interests 45 31

Total equity (E.2) 28,877 25,515

Total equity and liabilities 51,491 42,484

The accompanying Notes are an integral part of these Consolidated Financial Statements.

F-6
Consolidated Statements of Changes in Equity of SAP Group for the Years Ended December 31
€ millions Equity Attributable to Owners of Parent Non- Total Equity
Controlling
Issued Share Retained Other Treasury Total Interests
Capital Premium Earnings Components Shares
of Equity

Notes (E.2) (E.2) (E.2) (E.2)

1/1/2016 1,229 558 20,033 2,561 –1,124 23,257 28 23,285
Profit after tax 3,642 3,642 –13 3,629
Other comprehensive income –8 785 777 777
Comprehensive income 3,634 785 4,418 –13 4,406
Share-based payments 16 16 16
Dividends –1,378 –1,378 –1,378

Reissuance of treasury shares 25 25 50 50

under share-based payments

Other changes –2 –2 6 4
12/31/2016 1,229 599 22,287 3,346 –1,099 26,361 21 26,383
Profit after tax 4,008 4,008 38 4,046
Other comprehensive income 22 –2,838 –2,816 –2,816
Comprehensive income 4,029 –2,838 1,191 38 1,229
Share-based payments –43 –43 –43
Dividends –1,499 –1,499 –66 –1,565
Purchase of treasury shares –500 –500 –500

Reissuance of treasury shares 13 8 22 22

under share-based payments

Hyperinflation –17 –17 –17

Changes in non-controlling –33 –33 35 2

interests

Other changes 2 2 2 4
12/31/2017 1,229 570 24,769 508 –1,591 25,484 31 25,515
Adoption of IFRS 15 83 83 83
Adoption of IFRS 9 135 –160 –25 –25
1/1/2018 1,229 570 24,987 347 –1,591 25,542 31 25,573
Profit after tax 4,083 4,083 6 4,088
Other comprehensive income 11 887 898 898
Comprehensive income 4,093 887 4,980 6 4,986
Share-based payments –40 –40 –40
Dividends –1,671 –1,671 –13 –1,684

Reissuance of treasury shares 13 11 24 24

under share-based payments

Shares to be issued 7 7 7
Hyperinflation –8 –8 –8

Changes in non-controlling 0 19 19
interests

Other changes –2 –2 3 1

12/31/2018 1,229 543 27,407 1,234 –1,580 28,832 45 28,877

The accompanying Notes are an integral part of these Consolidated Financial Statements.

F-7
Consolidated Statements of Cash Flows of SAP Group for the Years Ended December 31
€ millions Notes 2018 2017 2016

Profit after tax 4,088 4,046 3,629

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

Depreciation and amortization (D.2)–(D.4) 1,362 1,272 1,268

Income tax expense (C.5) 1,511 983 1,242

Financial income, net (C.4) 47 –188 29

Decrease/increase in sales and bad debt allowances on trade receivables –67 –32 51

Other adjustments for non-cash items –14 –34 39

Decrease/increase in trade and other receivables 136 –309 –675

Decrease/increase in other assets –454 –355 –248

Decrease/increase in trade payables, provisions, and other liabilities 93 389 513

Decrease/increase in contract liabilities/deferred income –561 718 368

Interest paid –251 –200 –190

Interest received 99 88 79

Income taxes paid, net of refunds –1,687 –1,332 –1,477

Net cash flows from operating activities 4,303 5,045 4,628

Business combinations, net of cash and cash equivalents acquired –2,036 –291 –106

Cash flows from derivative financial instruments related to business combinations –103 0 0

Total cash flows for business combinations, net of cash and cash equivalents acquired (D.1) –2,140 –291 –106

Purchase of intangible assets and property, plant, and equipment –1,458 –1,275 –1,001

Proceeds from sales of intangible assets or property, plant, and equipment 57 97 63

Purchase of equity or debt instruments of other entities –1,013 –2,914 –1,549

Proceeds from sales of equity or debt instruments of other entities 1,488 3,272 793

Net cash flows from investing activities –3,066 –1,112 –1,799

Dividends paid (E.2) –1,671 –1,499 –1,378

Dividends paid on non-controlling interests –7 –45 0

Purchase of treasury shares (E.2) 0 –500 0

Proceeds from reissuance of treasury shares 0 0 27

Proceeds from borrowings (E.3) 6,368 27 443

Repayments of borrowings (E.3) –1,407 –1,391 –1,800

Transactions with non-controlling interests 0 2 3

Net cash flows from financing activities 3,283 –3,406 –2,705

Effect of foreign currency rates on cash and cash equivalents 97 –218 167

Net decrease/increase in cash and cash equivalents 4,617 309 291

Cash and cash equivalents at the beginning of the period (E.3) 4,011 3,702 3,411

Cash and cash equivalents at the end of the period (E.3) 8,627 4,011 3,702

The accompanying Notes are an integral part of these Consolidated Financial Statements.

F-8
SAP SE AND SUBSIDIARIES

Notes to the Consolidated Financial

Statements IFRS

(IN.1) Basis for Preparation consider it particularly important to the understanding of a Note’s
content.
General Information The following table provides an overview of where our accounting
The registered seat of SAP SE is in Walldorf, Germany policies, management judgments, and estimates are disclosed:
(Commercial Register of the Lower Court of Mannheim
HRB 719915). The Consolidated Financial Statements for 2018 of Note Accounting Policies, Judgments, and Estimates
SAP SE and its subsidiaries (collectively, “we,” “us,” “our,” “SAP,”
(IN.1) Basis for Preparation
“Group,” and “Company”) have been prepared in accordance with
International Financial Reporting Standards (IFRS). (A.1) Revenue
We have applied all IFRS standards and interpretations that were (A.2) Trade and Other Receivables
effective on and endorsed by the European Union (EU) as at
(A.3) Capitalized Cost from Contracts with Customers
December 31, 2018. There were no standards or interpretations as
at December 31, 2018, impacting our Consolidated Financial (A.4) Customer-Related Provisions
Statements for the years ended December 31, 2018, 2017, and (B.3) Share-Based Payments
2016, that were effective but not yet endorsed. Therefore, our
(B.4) Pension Plans and Similar Obligations
Consolidated Financial Statements comply with both, IFRS as
issued by the International Accounting Standards Board (IASB) and (B.5) Other Employee-Related Obligations
IFRS as endorsed by the EU. (B.6) Restructuring
Our Executive Board approved the Consolidated Financial
(C.1) Results of Segments
Statements on February 20, 2019, for submission to our
Supervisory Board. (C.5) Income Taxes
All amounts included in the Consolidated Financial Statements Business Combinations
(D.1)
are reported in millions of euros (€ millions) except where otherwise
(D.2) Goodwill
stated. As figures are rounded, numbers presented throughout this
document may not add up precisely to the totals we provide and (D.3) Intangible Assets
percentages may not precisely reflect the absolute figures.
(D.4) Property, Plant, and Equipment
Amounts disclosed in the Notes that are taken directly from our
Consolidated Income Statements or our Consolidated (D.5) Equity Securities

Statements of Financial Position are marked by the symbols (E.3) Liquidity

and , respectively.
(F.1) Financial Risk Factors and Risk Management

Accounting Policies, Management Judgments (F.2) Fair Value Disclosures on Financial Instruments
and Sources of Estimation Uncertainty (G.1) Other Non-Financial Assets

How We Present Our Accounting Policies, (G.4) Other Litigation, Claims, and Legal Contingencies
Judgments, and Estimates Executive and Supervisory Board Compensation
(G.6)
To ease the understanding of our financial statements, we
present the accounting policies, management judgments, and
sources of estimation uncertainty (hereafter: accounting policies, General Accounting Policies
judgments, and estimates) on a given subject together with other
Bases of Measurement
disclosures related to the same subject in the Note that deals with
The Consolidated Financial Statements have been prepared on the
this subject. Accounting policies, judgments, and estimates that do
historical cost basis except for the following:
not relate to a specific subject are presented in the following
section. – Derivative financial instruments and liabilities for cash-settled
For easier identification of our accounting policies, judgments, share-based payments are measured at fair value. In accordance
and estimates, disclosures are marked with the symbol and with IFRS 9, financial assets with cash flows that are not solely
framed by a light gray box. They focus on the accounting choices payments of principal or interest are also measured at fair value.
made within the framework of the prevailing IFRS and refrain from
repeating the underlying promulgated IFRS guidance, unless we

F-9
– Post-employment benefits are measured at the present value of price indexes at the reporting date. The restated financial
the defined benefit obligations less the fair value of the plan statements of our subsidiaries in Venezuela and Argentina are
assets. translated at closing rates. Most significantly impacted by this
– Monetary assets and liabilities denominated in foreign currencies accounting are the following:
are translated at period-end exchange rates. – Total revenue (decrease of €19 million in 2018)
Foreign Currencies and Hyperinflation – Operating profit (decrease of €12 million in 2018)
Income and expenses and operating cash flows of our foreign – Other non-operating income/expense (gain of €25 million in
subsidiaries that use a functional currency other than the euro are 2018)
translated at average rates of foreign exchange (FX) computed on a – Equity (retained earnings and other comprehensive income)
monthly basis. Exchange differences resulting from foreign (decrease of €32 million as at December 31, 2018)
currency transactions are recognized in other non-operating
– Total liabilities (increase of €19 million as at December 31, 2018)
income/expense, net.
We apply hyperinflation accounting for our subsidiaries in Argentina
and Venezuela by restating the financial statements of these The exchange rates of key currencies affecting the Company were
subsidiaries for the current period to account for changes in the as follows:
general purchasing power of the local currency based on relevant

Exchange Rates
Equivalent to €1 Middle Rate Annual Average Exchange Rate
as at 12/31
2018 2017 2018 2017 2016

U.S. dollar USD 1.1450 1.1993 1.1815 1.1315 1.1045

Pound sterling GBP 0.8945 0.8872 0.8847 0.8770 0.8206

Japanese yen JPY 125.85 135.01 130.41 126.85 119.77

Swiss franc CHF 1.1269 1.1702 1.1549 1.1159 1.0886

Indian rupee INR 79.7298 76.6055 80.7277 73.9595 73.9685

Australian dollar AUD 1.6220 1.5346 1.5799 1.4794 1.4850

Cost of Cloud and Software General and Administration

Cost of cloud and software includes the costs incurred in producing General and administration includes costs related to finance and
the goods and providing the services that generate cloud and administrative functions, human resources, and general
software revenue. Consequently, this line item primarily includes management as long as they are not directly attributable to one of
employee expenses relating to these services, amortization of the other operating expense line items.
acquired intangibles, fees for third-party licenses, shipping, ramp-up
costs, and depreciation of our property, plant, and equipment (for
example, of our data centers in which we host our cloud solutions). Management Judgments and Sources of
Cost of Services Estimation Uncertainty
Cost of services includes the costs incurred in providing the services The preparation of the Consolidated Financial Statements requires
that generate service revenue, such as consulting and training our management to make judgments, estimates, and assumptions
activities, messaging, as well as certain application management that affect the application of accounting policies and the reported
services for our customers and our partners. amounts of assets, liabilities, revenues, and expenses, as well as
disclosure of contingent liabilities.
Research and Development
We base our judgments, estimates, and assumptions on historical
Research and development includes the costs incurred by activities
and forecast information, and on regional and industry economic
related to the development of software solutions (new products,
conditions in which we or our customers operate. Changes to these
updates, and enhancements) including resource and hardware
conditions could adversely affect our estimates. Although we
costs for the development systems. For more information about the
believe we have made reasonable estimates about the ultimate
recognition of internally generated intangible assets from
resolution of the underlying uncertainties, no assurance can be
development, see Note (D.3).
given that the final outcome of these matters will be consistent with
Sales and Marketing what is reflected in our recognized assets, liabilities, revenues, and
Sales and marketing includes costs incurred for the selling and expenses and disclosed contingent liabilities. Actual results could
marketing activities related to our software and cloud solutions and differ from original estimates.
our service portfolio.

F-10
The accounting policies that most frequently or significantly require practical expedients offered by the standard (such as non-
us to make judgments, estimates, and assumptions, and therefore capitalization of short-term leases and low-value leases, and the use
are critical to understanding our results of operations, include the of hindsight when determining the lease term if the contract
following: contains options to extend or terminate the lease). When measuring
the right-of-use asset, there are two options in transition. We plan to
apply the retrospective approach for our larger leases (primarily
Note Significant Accounting Policies
facility leases), while smaller leases will be measured at an amount
(A.1) Revenue recognition equal to the lease liability and adjusted by the amount of any
(A.2) Valuation of trade receivables prepaid or accrued lease payments existing immediately prior to the
date of initial application.
(B.3) Accounting for share-based payments
Prior to the adoption of IFRS 16, we established a project across
(C.5) Accounting for income taxes SAP’s finance and business functions. This project included the
(D.1) Accounting for business combinations implementation of a new SAP-based lease accounting and reporting
solution, and the development of IFRS 16 lease accounting policies
(D.2) Accounting for goodwill
and business processes to support those policies. In addition to this,
(D.3) Accounting for intangible assets (including recognition of we have provided training for the relevant stakeholders within the
internally generated intangible assets from development)
organization.
(G.4) Accounting for legal contingencies
The vast majority of the impact comes from our leased facilities,
data centers, and cars. These operating leases were previously off-
Our management periodically discusses these significant balance-sheet items (lease payments were expensed directly to rent
accounting policies with the Audit Committee of our Supervisory expense over the lease term) under IAS 17. We estimate the total
Board. assets and total liabilities will amount to approximately €1.9 billion
and €2.0 billion, respectively, as at January 1, 2019 (the date of
initially applying IFRS 16). The difference between these two
New Accounting Standards Not Yet Adopted amounts (less than €0.1 billion) is recorded as an adjustment to
The standards and interpretations (relevant to the Group) that are retained earnings as of the date of initial application. This difference
issued, but not yet effective, up to the date of issuance of the is primarily due to interest accruing retrospectively at a higher rate
Group’s financial statements are discussed below. We intend to in earlier years and decreasing over the lease term, while
adopt these standards when they become effective: depreciation is recorded on a straight-line basis. The adoption of
On January 13, 2016, the IASB issued IFRS 16 ‘Leases.’ This new IFRS 16 is expected to have a favorable impact on operating profit in
standard is effective for us starting January 1, 2019. We have 2019, since a portion of the costs that were previously classified as
decided to apply the modified retrospective approach, which rental expenses are classified as interest expense and thus recorded
requires that the cumulative effect of initially applying the standard outside operating profit. Based on the Group’s leases as of
be recognized as an adjustment to the opening balance of retained January 1, 2019, operating profit is expected to increase by
earnings on the date of initial application. The new standard substantially less than €0.1 billion. The actual impact on our profits
significantly impacts the lease accounting by lessees as, in general, depends not only on the lease agreements in effect at the time of
all leases need to be recognized on the lessee’s balance sheet. A adoption but also on new lease agreements entered into or
lessee recognizes a right-of-use asset representing its right to use terminated in 2019. IFRS 16 has also an impact on how lease
the underlying asset and a lease liability representing its obligation payments are presented in the cash flow statement. This will result
to make lease payments. The nature of expenses related to those in an increase in cash flows from operating activities and a decline in
leases will now change because we will recognize a depreciation cash flows from financing activities. Cash flows from operating
expense for right-of-use assets and interest expense on lease activities is expected to increase by approximately €0.3 billion to
liabilities. These changes apply to leases that had previously been €0.4 billion.
classified as operating leases under IAS 17. We have decided to use

F-11
Section A – Customers
This section discusses disclosures related to contracts with our – Software support revenue represents fees earned from providing
customers. These include but are not limited to explanations of how customers with standardized support services that comprise
we recognize revenue, revenue breakdowns, and information about unspecified future software updates, upgrades, and
our trade receivables and customer-related obligations. enhancements as well as technical product support services for
Furthermore, in this section we disclose the most significant on-premise software products.
differences to prior-year figures resulting from the application of Services revenue primarily represents fees earned from
IFRS 15 ‘Revenue from Contracts with Customers’ (see Note (A.5)). professional consulting services, premium support services, training
services, and messaging services.

(A.1) Revenue
Accounting Policies, Judgments, and Estimates
Classes of Revenue
Identification of Contract
We derive our revenue from fees charged to our customers for the
use of our hosted cloud offerings, for licenses to our on-premise We frequently enter into multiple contracts with the same customer
software products, and for standardized and premium support that we treat, for accounting purposes, as one contract if the
services, consulting, customer-specific software developments, contracts are entered into at or near the same time and are
training, and other services. economically interrelated. We do not combine contracts with
closing days more than three months apart because we do not
Cloud and software revenue, as presented in our Consolidated
consider them being entered into near the same time. Judgment is
Income Statements, is the sum of our cloud subscriptions and
required in evaluating whether various contracts are interrelated,
support revenue, our software license revenue, and our software
which includes considerations as to whether they were negotiated
support revenue.
as a package with a single commercial objective, whether the
– Revenue from cloud subscriptions and support represents fees amount of consideration on one contract is dependent on the
earned from providing customers with any of the following: performance of the other contract, or if some or all goods in the
 Software as a Service (SaaS), that is, a right to use software contracts are a single performance obligation.
functionality (including standard functionalities and custom New arrangements with existing customers can be either a new
cloud applications and extensions) in a cloud-based contract or the modification of prior contracts with the customer.
infrastructure hosted by SAP or third parties engaged by SAP, Our respective judgment in making this determination considers
where the customer does not have the right to terminate the whether there is a connection between the new arrangement and
hosting contract and take possession of the software to either the pre-existing contracts, whether the goods and services under
run it on its own IT infrastructure or to engage a third-party the new arrangement are highly interrelated with the goods and
provider unrelated to SAP to host and manage the software; services sold under prior contracts, and how the goods and services
SaaS also includes transaction and agent fees for under the new arrangement are priced. In determining whether a
transactions that customers of our network business execute change in transaction price represents a contract modification or a
on our cloud-based transaction platforms. change in variable consideration, we examine whether the change in
 Platform as a Service (PaaS), that is, access to a cloud-based price results from changing the contract or from applying
infrastructure to develop, run, and manage applications unchanged existing contract provisions.
 Infrastructure as a Service (IaaS), that is, hosting and related
application management services for software hosted by SAP Identification of Performance Obligations
or third parties engaged by SAP, where the customer has the Our customer contracts often include various products and
right to take possession of the software services. Typically, the products and services outlined in the Classes
 Premium cloud subscription support beyond the regular of Revenue section qualify as separate performance obligations and
support that is embedded in the basic cloud subscription fees the portion of the contractual fee allocated to them is recognized
– Software license revenue represents fees earned from the sale or separately. Judgment is required, however, in determining whether
license of software to customers for use on the customer’s a good or service is considered a separate performance obligation.
premises, in other words, where the customer has the right to In particular for our professional services and implementation
take possession of the software for installation on the customer’s activities, judgment is required to evaluate whether such services
premises or on hardware of third-party hosting providers significantly integrate, customize, or modify the on-premise
unrelated to SAP (on-premise software). Software license software or cloud service to which they relate. In this context, we
revenue includes revenue from both the sale of our standard consider the nature of the services and their volume relative to the
software products and customer-specific on-premise-software volume of the on-premise software or cloud service to which they
development agreements. relate. In general, the implementation services for our cloud services
go beyond pure setup activities and qualify as separate

F-12
performance obligations. Similarly, our on-premise implementation Judgment is required when estimating SSPs. To judge whether the
services and our custom development services typically qualify as historical pricing of our goods and services is highly variable, we
separate performance obligations. Non-distinct goods and services have established thresholds of pricing variability. For judging
are combined into one distinct bundle of goods and services whether contractual renewal prices are substantive, we have
(combined performance obligation). established floor prices that we use as SSPs whenever the
When selling goods or services, we frequently grant customers contractual renewal prices are below these floor prices. In judging
options to acquire additional goods or services (for example, whether contracts are expected to renew at their contractual
renewals of renewable offerings, or additional volumes of purchased renewal prices, we rely on our respective renewal history. The SSPs
software). We apply judgment in determining whether such options of material right options depend on the probability of option
provide a material right to the customer that the customer would exercise. In estimating these probabilities, we apply judgment
not receive without entering into that contract (material right considering historical exercise patterns.
options). In this judgment, we consider whether the options entitle We review the stand-alone selling prices periodically or whenever
the customer to a discount that exceeds the discount granted for facts and circumstances change to ensure the most objective input
the respective goods or services sold together with the option. parameters available are used.

Determination of Transaction Price Recognition of Revenue

We apply judgment in determining the amount to which we expect Cloud subscription and support revenue is recognized over time as
to be entitled in exchange for transferring promised goods or the services are performed. Where our performance obligation is
services to a customer. This includes estimates as to whether and to the grant of a right to continuously access and use a cloud offering
what extent subsequent concessions or payments may be granted for a certain term, revenue is recognized based on time elapsed and
to customers and whether the customer is expected to pay the thus ratably over this term.
contractual fees. In this judgment, we consider our history both with
the respective customer and more broadly.
Software revenue is recognized at a point in time or over time
Our typical cloud services do not provide the customer with a depending on whether we deliver standard software or customer-
software license because the customer does not have the right to specific software:
terminate the hosting contract and take possession of the software.
– Licenses for our standard on-premise software products are
Consequently, cloud fees that are based on transaction volumes are
typically delivered by providing the customer with access to
considered in the transaction price based on estimates rather than
download the software. The license period starts when such
being accounted for as sales-based license royalties.
access is granted. We recognize revenue for these on-premise
Only very rarely do our contracts include significant financing licenses at the point in time when the customer has access to
components. We do not account for financing components if the and thus control over the software. In judging whether our on-
period between when SAP transfers the promised goods or services premise software offerings grant customers a right to use, rather
to the customer and when the customer pays for those goods or than a right to access, our intellectual property, we have
services is one year or less. considered the usefulness of our software without subsequent
updates to it.
Allocation of Transaction Price – Typically, our customer-specific on-premise-software
We have established a hierarchy to identify the standalone selling development agreements:
prices (SSPs) that we use to allocate the transaction price of a  Are for software developed for specific needs of individual
customer contract to the performance obligations in the contract. customers and therefore it does not have any alternative use
– Where standalone selling prices for an offering are observable for us
and reasonably consistent across customers (that is, not highly  Provide us with an enforceable right to payment for
variable), our SSP estimates are derived from our respective performance completed to date
pricing history. Typically, our standardized support offerings and
For such development agreements, we recognize revenue over
our professional service offerings follow this approach.
time as the software development progresses. Judgment is
– Where sales prices for an offering are not directly observable or required in identifying an appropriate method to measure the
highly variable across customers, we use estimation techniques. progress toward complete satisfaction of such performance
For renewable offerings with highly variable pricing, these obligations. We typically measure progress of our development
techniques consider the individual contract’s expected renewal agreements based on the direct costs incurred to date in
price as far as this price is substantive. Typically, our cloud developing the software as a percentage of the total reasonably
subscription offerings follow this approach. For non-renewable estimated direct costs to fully complete the development work
offerings, these estimations follow a cost-plus-margin approach. (percentage-of-completion method). This method of measuring
– For offerings that lack renewals, have highly variable pricing, and progress faithfully depicts the transfer of the development
lack substantial direct costs to estimate based on a cost-plus- services to the customer, as substantially all of these costs are
margin approach, we allocate the transaction price by applying a cost of the staff or third parties performing the development
residual approach. We use this technique in particular for our work. In estimating the total cost to fully complete the
standard on-premise software offerings. development work, we consider our history with similar projects.

F-13
Support revenue is typically recognized based on time elapsed and Contract Balances
thus ratably over the term of the support arrangement. Under our We recognize trade receivables for performance obligations
standardized support services, our performance obligation is to satisfied over time gradually as the performance obligation is
stand ready to provide technical product support and unspecified satisfied and in full once the invoice is due. Judgment is required in
updates, upgrades, and enhancements on a when-and-if-available determining whether a right to consideration is unconditional and
basis. Our customers simultaneously receive and consume the thus qualifies as a receivable.
benefits of these support services as we perform. Contract liabilities primarily reflect invoices due or payments
received in advance of revenue recognition.
Service revenue is typically recognized over time. Where we stand Typically, we invoice fees for on-premise standard software on
ready to provide the service (such as access to learning content), contract closure and software delivery. Periodic fixed fees for cloud
we recognize revenue based on time elapsed and thus ratably over subscription services, software support services, and other multi-
the service period. Consumption-based services (such as separately period agreements are typically invoiced yearly or quarterly in
identifiable consulting services and premium support services, advance. Such fee prepayments account for the majority of our
messaging services, and classroom training services) are contract liability balance. Fees based on actual transaction volumes
recognized over time as the services are utilized, typically following for cloud subscriptions and fees charged for non-periodical services
the percentage-of-completion method or ratably. When using the are invoiced as the services are delivered. While payment terms and
percentage-of-completion method, we typically measure the conditions vary by contract type and region, our terms typically
progress toward complete satisfaction of the performance require payment within 30 to 60 days.
obligation in the same way and with the same reasoning and
judgment as we do for customer-specific on-premise software
Geographic Information
development agreements. We apply judgment in determining
The amounts for revenue by region in the following tables are
whether a service qualifies as a stand-ready service or as a
based on the location of customers. The regions in the following
consumption-based service.
table are EMEA (Europe, Middle East, and Africa), Americas (North
America and Latin America), and APJ (Asia Pacific Japan).
Revenue for combined performance obligations is recognized over
the longest period of all promises in the combined performance
obligation.
Total Revenue by Region
€ millions 2018 2017 2016

Germany 3,658 3,352 3,034

Judgment is also required to determine whether revenue is to be
recognized at a point in time or over time. For performance Rest of EMEA 7,446 7,063 6,721
obligations satisfied over time, we need to measure progress using EMEA 11,104 10,415 9,755
the method that best reflects SAP’s performance. When using cost
United States 7,880 7,436 7,167
incurred as a measure of progress for recognizing revenue over
time, we apply judgment in estimating the total cost to satisfy the Rest of Americas 1,832 1,911 1,763
performance obligation. Americas 9,713 9,347 8,931

Japan 963 885 825

All of the judgments and estimates mentioned above can Rest of APJ 2,928 2,814 2,552
significantly impact the timing and amount of revenue to be APJ 3,891 3,699 3,377
recognized.
SAP Group 24,708 23,461 22,062

Major Revenue Classes by Region

€ millions Cloud Subscriptions Cloud and Software Revenue
and Support Revenue

2018 2017 2016 2018 2017 2016

EMEA 1,441 1,029 703 9,339 8,759 8,192

Americas 2,941 2,321 2,000 7,973 7,666 7,366

APJ 611 419 290 3,310 3,124 2,865

SAP Group 4,993 3,769 2,993 20,622 19,549 18,424

For information about the breakdown of revenue by segment and segment revenue by region, see Note (C.1).

F-14
Remaining Performance Obligations account for expected credit losses by recording an allowance on a
Amounts of a customer contract’s transaction price that are portfolio basis. We apply the simplified impairment approach in that,
allocated to the remaining performance obligations represent on initial measurement of the receivables, we consider all credit
contracted revenue that has not yet been recognized. They include losses that are expected to occur during the lifetime of the
amounts recognized as contract liabilities and amounts that are receivables. We use a provision matrix to estimate these losses.
contracted but not yet due. Additionally, we recognize allowances for individual receivables if
The transaction price allocated to performance obligations that there is objective evidence of credit impairment.
are unsatisfied or partially unsatisfied as at December 31, 2018, is Account balances are written off either partially or in full if we judge
€31.3 billion. This amount mostly comprises obligations to provide that the likelihood of recovery is remote.
software support or cloud subscriptions and support, as the
For information about how the default risk for trade receivables is
respective contracts typically have durations of one or multiple
analyzed and managed, how the loss rates for the provision matrix
years.
are determined, how credit impairment is determined and what our
The majority of this amount is expected to be recognized as revenue
criteria for write offs are, see the section on credit risk in Note (F.1).
over the next 12 months following the respective balance sheet date.
This estimation is judgmental, as it needs to consider estimates of In our Consolidated Income Statements, net gains/losses include
possible future contract modifications. The amount of transaction income/expenses from expected credit loss allowances from
price allocated to the remaining performance obligations, and applying the provision matrix, from credit-impaired customer
changes in this amount over time, are impacted by, among others: balances, and from write offs and related reversals which are
– Currency fluctuations included in other operating income/expense, net. Gains/losses
– The contract period of our cloud and support contracts from foreign currency exchange rate fluctuations are included in
remaining at the balance sheet date and thus by the timing of Other non-operating income/expense, net.
contract renewals Determining our expected credit loss allowance involves significant
judgment. In this judgment, we primarily consider our historical
Performance Obligations Satisfied in Previous experience with credit losses in the respective provision matrix risk
Years class and current data on overdue receivables. We expect that our
Revenue recognized in the reporting period for performance historical default rates represent a reasonable approximation for
obligations satisfied in earlier periods was €132 million, mainly future expected customer defaults. Besides historical data, our
resulting from changes in estimates related to percentage-of- judgment used in developing the provision matrix considers
completion-based contracts and changes in estimates of variable reasonable and supportable forward-looking information (for
considerations. example, changes in country risk ratings, and fluctuations in credit
default swaps of the countries in which our customers are located).
Contract Balances The assessment of whether a receivable is collectible involves the
Contract liabilities as at December 31, 2018, were €3.1 billion use of judgment and requires us to make assumptions about
(January 1, 2018: €3.5 billion). customer defaults that could change significantly.
Increases in contract liabilities mainly result from billing and
In applying this judgment, we evaluate available information about a
invoices becoming due (€7.0 billion). Decreases in contract
particular customer’s financial situation to determine whether it is
liabilities mainly result from satisfying performance obligations
probable that a credit loss had occurred and, if so, whether the
(€7.5 billion). The Callidus acquisition contributed to the increase in
amount of the loss is reasonably estimable. If it is, an allowance for
the contract liabilities balance (for more information, see
that specific account is then necessary. Basing the expected credit
Note (D.1)).
loss allowance for the remaining receivables primarily on our
The amount of revenue recognized in the reporting period that
historical loss experience likewise requires judgment, as history may
was included in the contract liability balance as at January 1, 2018,
not be indicative of future development. Also, including reasonable
was €3.2 billion.
and supportable forward-looking information in the loss rates of the
expected credit loss allowance requires judgment, as they may not
provide a reliable prognosis for future development. Changes in our
(A.2) Trade and Other Receivables
estimates about the loss allowance could materially impact reported
Accounting Policies, Management Judgments, and Sources of assets and expenses, and our profit could be adversely affected if
Estimation Uncertainty actual credit losses exceed our estimates.
We measure trade receivables and contract assets from contracts
with customers at amortized cost less expected credit losses. We
Trade and Other Receivables
€ millions 2018 2017

Current Non-Current Total Current Non-Current Total

Trade receivables, net 6,182 6 6,188 5,809 1 5,810

Other receivables 180 112 293 90 116 207

Total 6,362 118 6,480 5,899 118 6,017

F-15
 Contract assets as at December 31, 2018, were €116 million Amortization of capitalized costs to fulfill contracts for custom
(January 1, 2018: €14 million). cloud applications and extensions is included in the cost of cloud
subscriptions and support.
For more information about financial risk, how we manage credit
risk, and details of our trade receivables and contract assets
allowances, see Note (F.1). For information about the transition to Capitalized Cost from Contracts with Customers
IFRS 9, see Note (F.3). € millions 2018

Current Non- Total

Current
(A.3) Capitalized Cost from Contracts Capitalized cost of obtaining 326 1,006 1,332
with Customers customer contracts

Accounting Policies, Judgments, and Estimates Capitalized cost to fulfill customer 35 66 101
contracts
Incremental Costs of Obtaining Customer Contracts
Capitalized contract cost 361 1,072 1,433
Capitalized costs from customer contracts are classified as non-
financial assets in our statement of financial position. Other non-financial assets 889 1,301 2,191
The capitalized assets for the incremental costs of obtaining a
Capitalized contract cost 41 82 65
customer contract primarily consist of sales commissions earned by as % of other non-financial assets
our sales force. Judgment is required in determining the amounts to
be capitalized, particularly where the commissions are based on
As at December 31, 2017, before application of IFRS 15,
cumulative targets and where commissions relate to multiple
capitalized contract costs were €696 million, of which €199 million
performance obligations in one customer contract. We capitalize
were current and €497 million were non-current.
such cumulative target commissions for all customer contracts that
count towards the cumulative target but only if nothing other than
Amortization expenses in 2018 for the costs of obtaining
obtaining customer contracts can contribute to achieving the
customer contracts and for the costs of fulfilling customer contracts
cumulative target. Commissions for contracts with multiple
were €231 million and €50 million respectively.
performance obligations or probable renewals thereof are allocated
to these performance obligations and probable renewals relative to
the standalone selling price.
(A.4) Customer-Related Provisions
Typically, we either do not pay sales commissions for customer
contract renewals or such commissions are not commensurate with Accounting Policies, Judgments, and Estimates
the commissions paid for new contracts. Thus, the commissions Customer-related provisions mainly include expected contract
paid for renewable new contracts also relate to expected renewals losses. We adjust these provisions as further information becomes
of these contracts. Consequently, we amortize sales commissions available and as circumstances change. Non-current provisions are
paid for new customer contracts on a straight-line basis over the measured at the present value of their expected settlement
expected contract life including probable contract renewals. amounts as at the reporting date.
Judgment is required in estimating these contract lives. In Furthermore, these provisions also include obligations resulting
exercising this judgment, we consider our respective renewal from customer-related litigation and claims. We are currently
history adjusted for indications that the renewal history is not fully confronted with various claims and legal proceedings, including
indicative of future renewals. The amortization periods range from claims that relate to customers demanding indemnification for
18 months to eight years depending on the type of offering. proceedings initiated against them based on their use of SAP
Amortization of the capitalized costs of obtaining customer software, and occasionally claims that relate to customers being
contracts is classified as sales and marketing expense. dissatisfied with the products and services that we have delivered to
We expense incremental costs of obtaining a customer contract as them. The obligations arising from customer-related litigation and
incurred if we expect an amortization period of one year or less. claims comprise cases in which we indemnify our customers against
liabilities arising from a claim that our products infringe a third
party’s patent, copyright, trade secret, or other proprietary rights.
Costs to Fulfill Customer Contracts
Due to uncertainties relating to these matters, provisions are based
Capitalized costs incurred to fulfill customer contracts mainly
on the best information available. Significant judgment is required in
consist of direct costs for custom cloud development contracts as
the determination of whether a provision is to be recorded and what
far as these costs are not in scope of other standards than IFRS 15.
the appropriate amount for such provision should be. Notably,
These costs are amortized after completion of the development on a
judgment is required in the following:
straight-line basis over the expected life of the cloud subscription
contract and including expected renewals. Judgment is required in – Determining whether an obligation exists
evaluating whether costs are direct or indirect and in estimating – Determining the probability of outflow of economic benefits
contract lives. Derived from our respective history, the amortization
– Determining whether the amount of an obligation is reliably
period is typically six years.
estimable

F-16
– Estimating the amount of the expenditure required to settle the financial statements) are not restated to conform to the new
present obligation policies.
At the end of each reporting period, we reassess the potential The impacts of the policy change in 2018 were as follows:
obligations related to our pending claims and litigation and adjust – Software license and support revenues experienced a benefit of
our respective provisions to reflect the current best estimate. In €170 million, with most of the difference resulting from:
addition, we monitor and evaluate new information that we receive  Exercise of customer software purchase options granted in
after the end of the respective reporting period but before the prior years, which result in software revenue
Consolidated Financial Statements are authorized for issue to  Revised recognition patterns for on-premise software
determine whether this provides additional information regarding subscription contracts, which combine the delivery of
conditions that existed at the end of the reporting period. Changes software and support service and the obligation to deliver, in
to the estimates and assumptions underlying our accounting for the future, unspecified software products
legal contingencies, and outcomes that differ from these estimates  Revised recognition patterns for contracts that combine
and assumptions, could require material adjustments to the customer-specific on-premise software development
carrying amounts of the respective provisions recorded and agreements and the sale of standard on-premise software
additional provisions. The expected timing or amounts of any Together with other offsetting effects, this resulted in a benefit of
outflows of economic benefits resulting from these lawsuits and €158 million on total revenue.
claims is uncertain and not estimable, as they generally depend on – Operating expenses benefitted, in cost of sales and marketing, in
the duration of the legal proceedings and settlement negotiations the amount of €239 million from higher capitalization of sales
required to resolve the litigation and claims and the unpredictability commissions net of higher amortization of amounts capitalized.
of the outcomes of legal disputes in several jurisdictions. – The abovementioned revenue and expense effects, together with
other insignificant effects, resulted in a net positive impact on
Contingent liabilities exist in respect of customer-related litigation
operating profit of approximately €399 million.
and claims for which no provision has been recognized. It is not
As at December 31, 2018, balance sheet items are affected by the
practicable to estimate the financial impact of these contingent
application of IFRS 15 as compared to our pre-IFRS 15 accounting
liabilities due to the uncertainties around these lawsuits and claims
policies as follows:
as outlined above.
– Non-current and current other non-financial assets were higher
by €336 million and €64 million respectively (January 1, 2018:
higher by €132 million and €26 million respectively) due to the
(A.5) Adoption of IFRS 15 higher capitalization of sales commissions.
– Trade and other receivables and contract liabilities were lower by
Effective January 1, 2018, we started to apply IFRS 15 ‘Revenue
from Contracts with Customers’ retrospectively, using the €132 million and €188 million respectively (January 1, 2018:
cumulative catch-up approach and the practical expedient to apply higher by €560 million and €650 million respectively), resulting
from changes in the timing of and amounts recognized as
the new standard only to contracts that were not completed as of
January 1, 2018. This practical expedient affected both the contract balances.
transition adjustment amount recognized in retained earnings and – Provisions were lower by €4 million (January 1, 2018: lower by
€25 million), reflecting lower provisions for onerous customer
our revenues and expenses.
On adopting IFRS 15, SAP changed several of its accounting contracts.
policies. Under the cumulative catch-up approach, prior years – Intangible assets were higher by €37 million (January 1, 2018:
higher by €14 million), due to the capitalization of costs for
(including the prior-period numbers presented in the primary
certain custom on-premise software development
arrangements.

F-17
Section B – Employees
This section provides financial insights into our employee benefit (B.1) Employee Headcount
arrangements. It should be read in conjunction with the
compensation disclosures for key management personnel in The following table provides an overview of employee headcount,
Note (G.6) as well as SAP’s Compensation Report. broken down by function and by the regions EMEA (Europe, Middle
East, and Africa), Americas (North America and Latin America), and
APJ (Asia Pacific Japan).

Employee Headcount by Region and Function

Full-time 12/31/2018 12/31/2017 12/31/2016
equivalents
EMEA Americas APJ Total EMEA Americas APJ Total EMEA Americas APJ Total

Cloud and software 6,341 4,268 5,374 15,983 5,869 3,895 4,719 14,482 6,406 4,184 5,412 16,002

Services 8,120 5,736 5,620 19,476 7,536 4,878 4,965 17,379 6,535 4,119 3,967 14,621

Research and 12,478 5,651 8,930 27,060 11,349 5,250 8,273 24,872 10,525 4,860 7,977 23,363
development

Sales and 9,843 9,452 4,918 24,213 9,196 9,169 4,854 23,219 8,542 8,999 4,435 21,977
marketing

General and 2,906 1,970 1,147 6,024 2,676 1,781 1,047 5,504 2,629 1,746 1,018 5,393
administration

Infrastructure 2,160 951 631 3,742 1,732 855 501 3,087 1,584 788 454 2,827

SAP Group 41,848 28,029 26,620 96,498 38,357 25,827 24,359 88,543 36,222 24,696 23,265 84,183
(12/31)

Thereof 657 952 434 2,043 149 133 7 289 37 172 0 209
acquisitions

SAP Group 40,496 27,454 25,759 93,709 37,512 25,459 24,029 86,999 34,932 23,532 22,145 80,609
(months' end
average)

(B.2) Employee Benefits Expenses recognized as employee benefits and classified in our Consolidated
Income Statements according to the activities that the employees
Components of Employee Benefits Expenses perform.
€ millions 2018 2017 2016 Most of these awards are described in detail below. SAP has other
share-based payment plans not described below, which are,
Salaries 9,025 8,693 7,969
individually and in aggregate, immaterial to our Consolidated
Social security expense 1,339 1,281 1,135 Financial Statements.
Share-based payment expense 830 1,120 785 Where we economically hedge our exposure to cash-settled awards,
Pension expense 330 312 270 changes in the fair value of the respective hedging instruments are
also recognized as employee benefits expenses in profit or loss. The
Employee-related restructuring 19 180 33
expense fair values of hedging instruments are based on market data
reflecting current market expectations.
Termination benefits outside of 52 57 37
restructuring plans We use certain assumptions in estimating the fair values for our
Employee benefits expense 11,595 11,643 10,229 share-based payments, including expected share price volatility and
expected award life (which represents our estimate of the average
remaining life until the awards are exercised or expire unexercised).
(B.3) Share-Based Payments In addition, the final payout for plans also depends on the
achievement of performance indicators and on our share price on
Accounting Policy, Management Judgment, and Sources of the respective exercise dates. Changes to these assumptions and
Estimation Uncertainty outcomes that differ from these assumptions could require material
Share-based payments cover cash-settled and equity-settled adjustments to the carrying amount of the liabilities we have
awards issued to our employees. The respective expenses are recognized for these share-based payments. The fair value of the

F-18
share units granted under the LTI 2016 Plan are dependent on our the XETRA closing prices of the SAP share on the 20 trading days
performance against a group of peer companies (Peer Group following the publication of SAP’s fourth-quarter results.
Index), the volatility, and the expected correlation between the price All share units granted in this way, comprising 60% Performance
of the index and our share price. Share Units (PSUs) and 40% Retention Share Units (RSUs), have a
We believe that the expected volatility is the most sensitive vesting period of approximately four years. At the end of the vesting
assumption we use in estimating the fair values of our share period, the corresponding share units are non-forfeitable. The
options. Regarding future payout under our cash-settled plans, the payout price used for the settlement is the arithmetic mean of the
SAP share price is the most relevant factor. With respect to our XETRA closing prices of the SAP share on the 20 trading days
LTI 2016 Plan, we believe that future payout will be significantly following the publication of SAP’s fourth-quarter results subsequent
impacted not only by our share price but also by the relative to the end of the vesting period. The payout price is capped at
performance against the Peer Group Index. Changes in these 300% of the grant price. The LTI tranche is cash-settled and paid in
factors could significantly affect the estimated fair values as euros after the Annual General Shareholders’ Meeting of the
calculated by the valuation model, and the future payout. corresponding year.
The number of PSUs ultimately paid out depends on the
Under certain programs, we grant our employees discounts on
performance of the SAP share – absolute and relative to the Peer
purchases of SAP shares. Since those discounts are not dependent
Group Index. In contrast, the final number of RSUs is fixed. SAP’s
on future services to be provided by our employees, the discount is
absolute share price performance is measured by comparing the
recognized as an expense when the discounts are granted.
grant price against the payout price. If the SAP share price
performance equals the Peer Group Index performance over the
The operating expense line items in our income statement same period, the performance factor is set at 100%. If the SAP
include the following share-based payment expenses: share price performs better than the Peer Group Index (measured
as difference between SAP share price performance and Peer Group
Share-Based Payment Expenses by Function
Index performance), the performance factor is increased by the
€ millions 2018 2017 2016 percentage point of the outperformance of the SAP share price. The
Cost of cloud and software 78 115 89 percentage point is doubled if, additionally, the payout price is
higher than the grant price. The performance factor is capped at
Cost of services 142 158 101
150%. If the Peer Group Index performs better than the SAP share
Research and development 210 269 190 price, the performance factor is decreased by the percentage point
Sales and marketing 312 442 292 of the outperformance of the Peer Group Index. All PSUs lapse if the
performance factor is below 50%.
General and administration 88 135 113
If an Executive Board member’s service contract is terminated
Share-based payments 830 1,120 785 before the end of the third year following the year in which the share
Thereof cash-settled share- 674 963 678 units were granted, both the RSUs and PSUs are forfeited in whole
based payments or in part, depending on the circumstances of the relevant
Thereof equity-settled share- 156 157 107 resignation from office or termination of the service contract.
based payments
Long-Term Incentive 2015 Plan (LTI 2015 Plan)
Under the LTI 2015 Plan, we granted members of our former
a) Cash-Settled Share-Based Payments Global Managing Board virtual shares, referred to as share units,
between 2012 and 2015 (2012–2015 tranches).
Long-Term Incentive 2016 Plan (LTI 2016 Plan) Each share unit vested at the end of the year in which it was
The purpose of the LTI 2016 Plan is to reward our Executive granted. The share units are subject to a three-year holding period
Board Members for the annual achievement of SAP’s operating before payout. The payout depends on the number of vested share
profit (non-IFRS, at constant currency) targets, to ensure long-term units and the SAP share price, which is set directly after the
retention of our Executive Board members, and to reward them for publication of SAP’s fourth-quarter results for the last financial year
the long-term SAP share price performance as compared to its main of the respective three-year holding period.
peer group (Peer Group).
SAP Stock Option Plan 2010 (SOP 2010)
The virtual share program came into effect on January 1, 2016. A
Under the SOP 2010, we granted virtual stock options to
LTI tranche is granted annually and has a term of four years (2016–
members of the Senior Leadership Team, Global Executives,
2018 tranches). Each grant starts with determining a grant amount
employees with an exceptional rating, and high potentials between
in euros. The grant amount is based on the Executive Board
2010 and 2015, and only in 2010 and 2011 to members of the
members’ contractual LTI target amount and the operating profit
Executive Board.
target achievement for the previous year. The Supervisory Board
The grant base value was based on the average closing price of
sets the grant amount at a level between 80% and 120% of the
the SAP share over the five trading days prior to the Executive
contractual LTI target amount, taking into account the operating
Board resolution date.
profit target achievement. This grant amount is converted into
The options granted under the SOP 2010 give the employees the
virtual shares, referred to as share units, by dividing the grant
right to receive a certain amount of cash by exercising the options.
amount by the grant price. The grant price is the arithmetic mean of
After a three-year vesting period (four years for members of the
Executive Board), the plan provides for 11 predetermined exercise

F-19
dates every calendar year (one date per month except for April) receive a cash payment determined by the SAP share price and the
until the rights lapse six years after the grant date (seven years for number of share units that ultimately vest.
members of the Executive Board). Employees can exercise their Granted share units will vest in different tranches, either:
options only if they are employed by SAP; if they leave the – Over a one-to-three-year service period only, or
Company, the options forfeit. Executive Board members’ options – Over a three-year service period and upon achieving certain key
are non-forfeitable once granted – if the service agreement ends in performance indicators (KPIs)
the grant year, the number of options is reduced pro rata temporis. The number of performance-based share units (PSUs) that will
Any options not exercised up to the end of their term expire. vest under the different tranches were contingent upon
The exercise price is 110% of the grant base value, which is achievement of the operating profit (non-IFRS, at constant
€59.85 for the 2013 tranche, €60.96 for the 2014 tranche, and currency) KPI target in the year of grant. Depending on
€72.18 for the 2015 tranche. The weighted average exercise price of performance, the number of PSUs vesting ranges between 0% and
exercised options in 2018 was €67.59 (2017: €58.16) and of 200% of the number initially granted. Performance against the KPI
outstanding options at year end 2018 was €67.62 (2017: €67.55). target was 106.7% (2017: 78.2%; 2016: 85.1%). All share units are
Monetary benefits will be capped at 100% of the exercise. paid out in cash upon vesting.

Restricted Stock Unit Plan Including Move SAP

The valuation of our outstanding cash-settled plans was based
Plan (RSU Plan)
on the following parameters and assumptions:
To retain and motivate executives and certain employees, we
grant since 2014 virtual shares representing a contingent right to

Fair Value and Parameters Used at Year End 2018 for Cash-Settled Plans
€, unless otherwise stated LTI 2016 Plan LTI 2015 Plan SOP 2010 RSU Plan
(2016–2018 (2014–2015 (2013–2015 (2015–2018
Tranches) Tranches) Tranches) Tranches)
Weighted average fair value as at 12/31/2018 65.89 86.93 20.67 85.24

Information how fair value was measured at measurement date

Option pricing model used Monte Carlo Other1) Monte Carlo Other1)

Share price 86.93 86.93 86.93 86.93

Risk-free interest rate, depending on maturity (in %) –0.70 to –0.55 NA –0.67 to –0.25 –0.69 to –0.31

Expected volatility (in %) 17.9 to 21.4 NA 22.8 to 38.5 NA

Expected dividend yield (in %) 1.63 NA 1.63 1.63

Weighted average remaining life of awards outstanding as at 12/31/2018 2.4 0.1 1.2 1.0
(in years)

1)
For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until maturity of the respective award
from the prevailing share price as of the valuation date.

Fair Value and Parameters Used at Year End 2017 for Cash-Settled Plans
€, unless otherwise stated LTI 2016 Plan LTI 2015 Plan SOP 2010 RSU Plan
(2016–2017 (2013–2015 (2011–2015 (2014–2017
Tranches) Tranches) Tranches) Tranches)

Weighted average fair value as at 12/31/2017 84.16 92.40 26.45 92.08

Information how fair value was measured at measurement date

Option pricing model used Monte Carlo Other1) Monte Carlo Other1)

Share price 93.45 93.45 93.45 93.45

Risk-free interest rate, depending on maturity (in %) –0.63 to –0.48 –0.81 –0.62 to –0.41 –0.70 to –0.32

Expected volatility (in %) 17.5 to 19.6 NA 21.1 to 34.5 NA

Expected dividend yield (in %) 1.38 1.38 1.38 1.38

Weighted average remaining life of awards outstanding as at 12/31/2017 2.9 0.8 1.6 1.1
(in years)
1)
For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until maturity of the respective award
from the prevailing share price as of the valuation date.

For the SOP 2010, expected volatility of the SAP share price is
based on a blend of implied volatility from traded options with

F-20
corresponding remaining lives and exercise prices as well as price of 36% to 42% (2017: 41% to 48%) are based on historical
historical volatility with the same expected life as the options data for the SAP share price and index price.
granted. The expected remaining life of the options reflects both the
For the LTI 2016 Plan valuation, the Peer Group Index price on contractual term and the expected, or historical, exercise behavior.
December 31, 2018, was US$277.92 (2017: US$247.24); the The risk-free interest rate is derived from German government
expected dividend yield of the index of 1.30% (2017: 1.16%), the bonds with a similar duration. The SAP dividend yield is based on
expected volatility of the index of 19% to 24% (2017: 16% to 17%), expected future dividends.
and the expected correlation of the SAP share price and the index

Changes in Outstanding Awards Under Our Cash-Settled Plans

Thousands, unless otherwise stated LTI 2016 Plan LTI 2015 Plan SOP 2010 RSU Plan
(2016–2018 (2013–2015 (2011–2015 (2014–2018
Tranches) Tranches) Tranches) Tranches)

12/31/2016 377 684 23,375 10,901

Granted 295 0 0 7,835

Adjustment based upon KPI target achievement NA 0 NA –124

Exercised 0 –152 –7,769 –4,388

Forfeited –41 0 –1,134 –704

12/31/2017 631 531 14,472 13,520

Granted 295 0 0 8,512

Adjustment based upon KPI target achievement NA 0 NA 49

Exercised 0 –146 –6,913 –5,840

Forfeited 0 0 –473 –977

12/31/2018 926 385 7,086 15,264

Outstanding awards exercisable as at

12/31/2017 0 0 4,948 0

12/31/2018 0 0 7,086 0

Total carrying amount (in € millions) of liabilities as at

12/31/2017 22 51 354 708

12/31/2018 30 35 146 774

Total intrinsic value of vested awards (in € millions) as at

12/31/2017 5 49 172 0

12/31/2018 3 34 137 0

Weighted average share price (in €) for awards exercised in

2017 NA 84.94 91.13 90.91

2018 NA 88.27 100.61 88.67

Total expense (in € millions) recognized in

2016 7 7 183 458

2017 14 9 221 712

2018 8 –3 43 611

F-21
Share-Based Payment Balances
€ millions 2018 2017

Current Non-Current Total Current Non-Current Total

Share-based payment liabilities 714 316 1,030 815 340 1,154

Other non-financial liabilities 4,120 501 4,621 3,982 514 4,496

Share-based payment liabilities as % of 17 63 22 20 66 26

other non-financial liabilities

Derivatives - Call options for share- 68 0 68 90 0 90

based payments

Other financial assets 448 1,536 1,984 990 1,155 2,145

Derivatives - Call options for share-based 15 0 3 9 0 4

payments as % of other financial
assets

For more information about the derivatives, see Note (F.1).

b) Equity-Settled Share-Based Payments (B.4) Pension Plans and Similar

Own SAP Plan (Own) Obligations
Under Own implemented in 2016, employees have the Accounting Policy
opportunity to purchase SAP shares without any holding period on a Pension expense includes the amounts recorded for our defined
monthly basis. The investment per each eligible employee is limited benefit and defined contribution plans. Expenses for local state
to a percentage of the respective employee's monthly base salary. pension plans are included in social security expense. The discount
SAP matches the employee investment by 40% and adds a subsidy rates used in measuring our post-employment benefit assets and
of €20 per month for non-executives. This plan is not open to liabilities are derived from rates available on high-quality corporate
members of the Executive Board. bonds and government bonds for which the timing and amounts of
payments match the timing and the amounts of our projected
pension payments. Net interest expense and other expenses related
Number of Shares Purchased
to defined benefit plans are recognized as employee benefits
Millions 2018 2017 2016 expenses and classified in our Consolidated Income Statements
Own 5.3 5.0 1.4 according to the activities that the employees owning the awards
perform. Since our domestic defined benefit pension plans primarily
consist of an employee-financed post-retirement plan that is fully
As a result of our equity-settled share-based payments
financed with qualifying insurance policies, current service cost may
transactions, we have commitments to grant SAP shares to
become a credit as a result of adjusting the defined benefit liability’s
employees. We intend to meet these commitments by reissuing
carrying amount to the fair value of the qualifying plan assets. Such
treasury shares or to fulfill these obligations through an agent who
adjustments are recorded in service cost. Total expenses on defined
administers the equity-settled programs and therefor purchases
benefit pension plans comprise related current and past service
shares on the open market. Since 2016, we have fulfilled the
costs as well as interest income and expense.
obligations of Own through an agent.

Recognized Expense for Equity-Settled Plans

€ millions 2018 2017 2016

Own 149 140 77

F-22
Defined Benefit Plans

Present Value of the Defined Benefit Obligations (DBO) and the Fair Value of the Plan Assets
€ millions Domestic Plans Foreign Plans Other Post- Total
Employment Plans

2018 2017 2018 2017 2018 2017 2018 2017

Present value of the DBO 886 857 418 382 132 118 1,436 1,357

Fair value of the plan assets 878 848 355 319 59 56 1,292 1,223

Net defined benefit liability (asset) 8 9 63 63 73 62 144 134

Portion of net defined benefit liability (asset)

recognized in the Consolidated Statement of
Financial Position - % of:

Non-current other financial assets 0 0 0 0 0 0 0 0

Non-current provisions 3 3 24 20 27 19 54 41

€824 million (2017: €794 million) of the present value of the DBO The following significant weighted average assumptions were
of our domestic plans relate to plans that provide for lump-sum used for the actuarial valuation of our domestic and foreign pension
payments not based on final salary, and €356 million (2017: liabilities as well as other post-employment benefit obligations as at
€329 million) of the present value of the defined benefit obligations the respective measurement date:
of our foreign plans relate to plans that provide for annuity
payments not based on final salary.

Significant Actuarial Assumptions

Percent Domestic Plans Foreign Plans Other Post-Employment Plans

2018 2017 2016 2018 2017 2016 2018 2017 2016

Discount rate 2.3 2.3 2.1 1.0 0.8 0.6 4.2 3.9 4.0

The sensitivity analysis table below shows how the present value The sensitivity analysis considers change in discount rate
of all defined benefit obligations would have been influenced by assumptions, holding all other actuarial assumptions constant.
reasonably possible changes to significant actuarial assumptions.

Sensitivity Analysis
€ millions Domestic Plans Foreign Plans Other Post-Employment Total
Plans

2018 2017 2016 2018 2017 2016 2018 2017 2016 2018 2017 2016

Present value of defined

benefit obligations if:

Discount rate was 50 basis 836 806 800 391 357 344 126 114 93 1,353 1,277 1,237
points higher

Discount rate was 50 basis 940 912 913 450 411 398 141 123 101 1,531 1,446 1,412
points lower

Investments in Plan Assets horizon for all major foreign benefit plans. Although our policy is to
Our investment strategy on domestic benefit plans is to invest all invest in a risk-diversified portfolio consisting of a mix of assets,
contributions in stable insurance policies. both the defined benefit obligation and plan assets can fluctuate
Our investment strategies for foreign benefit plans vary over time, which exposes the Group to actuarial and market
according to the conditions in the country in which the respective (investment) risks. Depending on the statutory requirements in
benefit plans are situated. We have adopted a long-term investment each country, it might be necessary to reduce any underfunding by
addition of liquid assets.

F-23
Plan Asset Allocation
€ millions 2018 2017

Quoted in an Not Quoted in an Quoted in an Not Quoted in an

Active Market Active Market Active Market Active Market

Total plan assets 387 905 350 873

Thereof: Asset category

Equity investments 116 0 105 0

Corporate bonds 142 0 122 0

Insurance policies 5 905 5 873

Our expected contribution in 2019 to our domestic and foreign Total Expense of Defined Contribution Plans and
defined benefit pension plans is immaterial. The weighted duration State Plans
of our defined benefit plans amounted to 12 years as at
€ millions 2018 2017 2016
December 31, 2018, and 13 years as at December 31, 2017.
Total future benefit payments from our defined benefit plans as Defined contribution plans 280 260 234

at December 31, 2018, are expected to be €1,783 million (2017: State plans 630 603 529
€1,670 million). Of this amount, 80% has maturities of over five Total expense 910 863 763
years, and 66% relates to domestic plans.

Defined Contribution Plans/State Plans

We also maintain domestic and foreign defined contribution (B.5) Other Employee-Related
plans. Amounts contributed by us under such plans are based on a Obligations
percentage of the employees’ salaries or on the amount of
contributions made by employees. Furthermore, in Germany and Accounting Policy
some other countries, we make contributions to public pension As far as the provision for long-term employee benefits is secured
plans that are operated by national or local government or similar by pledged reinsurance coverage, it is offset with the relating plan
institutions. asset.

Other Employee-Related Liabilities

€ millions 2018 2017

Current Non-Current Total Current Non-Current Total

Other employee-related liabilities 2,866 185 3,051 2,599 175 2,774

Other non-financial liabilities 4,120 501 4,621 3,982 514 4,496

Other employee-related liabilities 70 37 66 65 34 62

as % of other non-financial liabilities

Other employee-related liabilities mainly relate to bonus and Other Employee-Related Provisions
sales commission obligations, vacation obligations, and employee-
€ millions 2018
related social security obligations.
Current Non- Total
Current

Other employee-related provisions as 24 117 141

at 1/1/2018

Addition 53 44 97

Utilization –48 –107 –155

Release –3 –2 –5

Currency impact –1 0 –1
Other employee-related provisions as 25 52 77
at 12/31/2018

Provisions 110 270 380

Other employee-related provisions 23 19 20

as % of provisions

F-24
 Employee-related provisions primarily comprise obligations for Restructuring Expenses
time credits, severance payments, and jubilee expenses. While most
€ millions 2018 2017 2016
of these employee-related provisions could be claimed within the
next 12 months, we do not expect the related cash outflows within Employee-related restructuring –19 –180 –33
this time period. expenses

Onerous contract-related 0 –2 5
(B.6) Restructuring restructuring expenses

Restructuring expenses –19 –182 –28

Accounting Policy
We only recognize provisions for restructuring if and when the Restructuring provisions primarily include employee benefits
following occurs: that result from severance payments for employee terminations and
– SAP has designed a program that materially changes the scope onerous contract costs. The cash outflows associated with
of one our businesses or the manner in which the business is employee-related restructuring costs are substantially short-term in
conducted, and nature. Utilization of the portion of the facility-related restructuring
– A detailed and documented restructuring plan has been provisions depends on the remaining term of the associated lease.
approved by our Executive Board, a member thereof, or a direct In 2018, no significant new restructuring activities occurred,
report of an Executive Board member, and except for follow-up costs resulting from restructuring programs of
previous years and activities limited to individual business units to
– The program established is planned to start shortly after the
enhance our profitability and organizational efficiency. In 2017,
program plan is approved and is expected to be capable of being
restructuring provisions related primarily to a restructuring
completed within 12 months, and
program executed in the Digital Business Services (DBS) board area
– The program has been announced to the parties affected or has which went hand-in-hand with the DBS transformation. The
commenced. transformation was prompted by changing service requirements, as
We consider whether a change in business is material based on the an increasing amount of software deployments are moving to the
business affected rather than for SAP as a whole. In judging whether cloud.
a unit qualifies for restructuring, we consider if the unit has its own If not presented separately in our income statement,
management team, has access to all inputs and processes restructuring expenses would have been allocated to the different
necessary to provide outputs, and generates or could generate expense items in our income statement as follows:
revenues. Materiality in this context refers to the scope of business
and the manner in which the business is conducted. Consequently, Restructuring Expenses by Functional Area
the term “materially” cannot necessarily be associated with a
€ millions 2018 2017 2016
certain quantitative threshold. Either the size or the nature of the
restructuring, or a combination of both, have to be the determining Cost of cloud and software –3 –55 –3
factor. Cost of services –3 –118 –7

Research and development –3 –9 –7

Sales and marketing –11 –2 –10

General and administration 0 2 –1

Restructuring expenses –19 –182 –28

F-25
Section C – Financial Results
This section provides insight into the financial results of SAP's Digital Interconnect now qualifies as an operating segment. Due to
reportable segments and of SAP overall as far as not already its size, however, Digital Interconnect is not a reportable segment.
covered by previous sections. This includes but is not limited to The segment information for prior periods has been restated to
segment results, income taxes, and earnings per share. conform to the current year’s presentation.

Accounting Policies, Judgments, and Sources for

(C.1) Results of Segments Management Reporting
Our management reporting system reports our intersegment
General Information
services as cost reductions and does not track them as internal
At year end 2018, SAP had four operating segments that are
revenue. Intersegment services mainly represent utilization of
regularly reviewed by the Executive Board, which is responsible for
human resources of one segment by another segment on a project
assessing the performance of the Company and for making
basis. Intersegment services are charged based on internal cost
resource allocation decisions as the chief operating decision maker
rates including certain indirect overhead costs but excluding a profit
(CODM). The operating segments are largely organized and
margin.
managed separately according to their product and service
offerings, notably whether the products and services relate to our Most of our depreciation and amortization expense affecting
business network activities, customer experience solutions, or segment profits is allocated to the segments as part of broader
messaging services, or cover other areas of our business. infrastructure allocations and is thus not tracked separately on the
The Applications, Technology & Services segment derives its operating segment level. Depreciation and amortization expense
revenues primarily from the sale of software licenses and cloud that is directly allocated to the operating segments is immaterial in
subscriptions (as far as not included in one of the other segments), all segments presented.
and from the sale of related services (mainly support services, Our management reporting system produces a variety of reports
various professional services, premium support services, that differ by the currency exchange rates used in the accounting
implementation services for our software products, and education for foreign-currency transactions and operations, where both actual
services on the use of our products). Service revenues also and constant currency numbers are reported to and used by our
comprise almost all services related to our customer experience CODM. Reports based on actual currencies use the same currency
solutions (as far as not included in the Customer Experience rates as are used in our financial statements. Reports based on
segment). constant currencies report revenues and expenses using the
The SAP Business Network segment derives its revenues mainly average exchange rates from the previous year’s corresponding
from transaction fees charged for the use of SAP’s cloud-based period.
collaborative business networks and from services relating to the We use an operating profit indicator to measure the performance of
SAP Business Network (including cloud applications, professional our operating segments. However, the accounting policies applied in
services, and education services). Within the SAP Business Network the measurement of operating segment revenue and profit differ as
segment, we mainly market and sell the cloud offerings developed follows from the IFRS accounting principles used to determine the
by SAP Ariba, SAP Concur, and SAP Fieldglass. operating profit measure in our income statement:
On April 5, 2018, we acquired Callidus Software Inc. and changed
– The measurements of segment revenue and results include the
the structure of the Applications, Technology & Services segment.
recurring revenues that would have been recorded by acquired
The Callidus business was combined with our existing customer
entities had they remained stand-alone entities but which are not
experience activities to form a new end-to-end business unit. This
recorded as revenue under IFRS due to fair value accounting for
new unit, which qualifies as an operating segment (called Customer
customer contracts in effect at the time of an acquisition.
Experience), comprises on-premise and cloud-based products that
run front office functions across the customer experience. Support – The expense measures exclude:
revenues related to our on-premise customer experience solutions  Acquisition-related charges such as amortization expense
continue to be reported in the Applications, Technology & Services and impairment charges for intangibles acquired in business
segment, as we are unable to split the total software support combinations and certain stand-alone acquisitions of
revenues into support services provided for different solutions. intellectual property (including purchased in-process
Additionally, for one offering, revenues are currently included in the research and development), settlements of pre-existing
Customer Experience segment, whereas related development costs business relationships in connection with a business
(2018: €16 million, 2017: €21 million, 2016: €19 million) are combination, and acquisition-related third-party expenses
allocated to the Applications, Technology & Services segment.  Share-based payment expenses
Further, the manner in which our messaging services are
 Restructuring expenses
reported to our CODM has changed such that our business unit

F-26
– Certain activities are exclusively managed on corporate level, outlined above, are disclosed under the Other revenue and Other
including finance, accounting, legal, human resources, business expenses items in the reconciliation in Note (C.2).
operations, and marketing. They are not included in the results of Information about assets and liabilities and additions to non-current
our reportable segments. assets by segment are not regularly provided to our Executive
Revenues and expenses of our operating but non-reportable Board. Goodwill by segment is disclosed in Note (D.2).
segment, and the certain activities managed on corporate level, as

Applications, Technology & Services

€ millions 2018 2017 2016

Actual Constant Actual Constant Actual

Currency Currency3) Currency Currency3) Currency

Cloud subscriptions and support – SaaS/PaaS1) 1,829 1,894 1,403 1,423 1,074

Cloud subscriptions and support – IaaS2) 488 506 328 334 206

Cloud subscriptions and support 2,317 2,400 1,732 1,758 1,280

Software licenses 4,233 4,456 4,434 4,538 4,350

Software support 10,968 11,477 10,890 10,987 10,544

Software licenses and support 15,201 15,933 15,325 15,524 14,894

Cloud and software 17,518 18,333 17,056 17,282 16,174

Services 3,288 3,559 3,162 3,183 3,037

Total segment revenue 20,806 21,892 20,218 20,465 19,211

Cost of cloud subscriptions and support – SaaS/PaaS1) –777 –818 –572 –581 –404

Cost of cloud subscriptions and support – IaaS2) –424 –436 –305 –307 –225

Cost of cloud subscriptions and support –1,201 –1,254 –877 –888 –630

Cost of software licenses and support –1,899 –2,031 –1,948 –1,958 –1,896

Cost of cloud and software –3,101 –3,285 –2,825 –2,846 –2,525

Cost of services –2,524 –2,695 –2,437 –2,453 –2,401

Total cost of revenue –5,625 –5,980 –5,262 –5,300 –4,926

Segment gross profit 15,181 15,912 14,957 15,165 14,284

Other segment expenses –6,435 –6,729 –6,478 –6,549 –5,949

Segment profit 8,746 9,183 8,478 8,616 8,335

1)
Software as a service/platform as a service
2)
Infrastructure as a service
3)
Constant currency numbers are calculated by translating numbers of the current period using the average exchange rates from the previous year's corresponding period
instead of the current period. 2018 constant currency numbers are thus only comparable to 2017 actual currency numbers; 2017 constant currency numbers are only
comparable to 2016 actual currency numbers.

F-27
SAP Business Network
€ millions 2018 2017 2016

Actual Constant Actual Constant Actual

Currency Currency3) Currency Currency3) Currency

Cloud subscriptions and support – SaaS/PaaS1) 2,178 2,265 1,840 1,870 1,595

Cloud subscriptions and support – IaaS2) 0 0 0 0 0

Cloud subscriptions and support 2,178 2,265 1,840 1,870 1,595

Software licenses 0 0 –1 –1 0

Software support 16 16 18 18 28

Software licenses and support 16 17 17 18 27

Cloud and software 2,193 2,282 1,857 1,887 1,622

Services 436 451 404 413 303

Total segment revenue 2,629 2,733 2,261 2,300 1,925

Cost of cloud subscriptions and support – SaaS/PaaS1) –483 –503 –428 –435 –384

Cost of cloud subscriptions and support – IaaS2) 0 0 0 0 0

Cost of cloud subscriptions and support –483 –503 –428 –435 –384

Cost of software licenses and support –6 –7 –5 –5 –1

Cost of cloud and software –489 –510 –433 –440 –385

Cost of services –324 –337 –292 –297 –247

Total cost of revenue –813 –847 –725 –737 –632

Segment gross profit 1,816 1,886 1,536 1,563 1,293

Other segment expenses –1,285 –1,341 –1,148 –1,166 –953

Segment profit 531 545 388 397 340
1)
Software as a service/platform as a service
2)
Infrastructure as a service
3)
Constant currency numbers are calculated by translating numbers of the current period using the average exchange rates from the previous year's corresponding period
instead of the current period. 2018 constant currency numbers are thus only comparable to 2017 actual currency numbers; 2017 constant currency numbers are only
comparable to 2016 actual currency numbers.

F-28
Customer Experience
€ millions 2018 2017 2016

Actual Constant Actual Constant Actual

Currency Currency3) Currency Currency3) Currency

Cloud subscriptions and support – SaaS/PaaS1) 528 539 200 203 119

Cloud subscriptions and support – IaaS2) 0 0 0 0 0

Cloud subscriptions and support 528 539 200 203 119

Software licenses 413 421 438 445 513

Software support 1 1 0 0 0

Software licenses and support 414 422 437 445 514

Cloud and software 942 961 637 648 633

Services 9 9 6 6 4
Total segment revenue 951 970 643 654 637

Cost of cloud subscriptions and support – SaaS/PaaS1) –176 –178 –81 –82 –30

Cost of cloud subscriptions and support – IaaS2) 0 0 0 0 0

Cost of cloud subscriptions and support –176 –178 –81 –82 –30

Cost of software licenses and support –20 –20 –45 –45 –54

Cost of cloud and software –196 –198 –126 –127 –84

Cost of services –3 –3 –1 –1 –1

Total cost of revenue –199 –202 –127 –127 –85

Segment gross profit 751 768 516 527 552

Other segment expenses –613 –630 –431 –437 –388

Segment profit 138 139 85 90 164
1)
Software as a service/platform as a service
2)
Infrastructure as a service
3)
Constant currency numbers are calculated by translating numbers of the current period using the average exchange rates from the previous year's corresponding period
instead of the current period. 2018 constant currency numbers are thus only comparable to 2017 actual currency numbers; 2017 constant currency numbers are only
comparable to 2016 actual currency numbers.

Segment Revenue by Region

€ millions 2018

Actual Currency
Applications, Technology & SAP Business Network Customer Experience Total Reportable Segments
Services

EMEA 10,178 443 416 11,037

Americas 7,197 1,915 421 9,532

APJ 3,431 271 114 3,817

Total segment revenue 20,806 2,629 951 24,386

For a breakdown of revenue by region for the SAP Group, see Note (A.1).

F-29
(C.2) Reconciliation of Segment Measures to Income Statement
€ millions 2018 2017 2016

Actual Constant Actual Constant Actual

Currency Currency1) Currency Currency1) Currency

Applications, Technology & Services 20,806 21,892 20,218 20,465 19,211

SAP Business Network 2,629 2,733 2,261 2,300 1,925

Customer Experience 951 970 643 654 637

Total segment revenue for reportable segments 24,386 25,596 23,122 23,419 21,773

Other revenue 356 365 341 346 294

Adjustment for currency impact 0 –1,219 0 –301 0

Adjustment of revenue under fair value accounting –33 –33 –3 –3 –5

Total revenue 24,708 24,708 23,461 23,461 22,062

Applications, Technology & Services 8,746 9,183 8,478 8,616 8,335

SAP Business Network 531 545 388 397 340

Customer Experience 138 139 85 90 164

Total segment profit for reportable segments 9,415 9,867 8,951 9,103 8,840

Other revenue 356 365 341 346 294

Other expenses –2,608 –2,751 –2,523 –2,529 –2,501

Adjustment for currency impact 0 –317 0 –151 0

Adjustment for

Revenue under fair value accounting –33 –33 –3 –3 –5

Acquisition-related charges –577 –577 –587 –587 –680

Share-based payment expenses –830 –830 –1,120 –1,120 –785

Restructuring –19 –19 –182 –182 –28

Operating profit 5,703 5,703 4,877 4,877 5,135

Other non-operating income/expense, net –56 –56 –36 –36 –234

Financial income, net –47 –47 188 188 –29

Profit before tax 5,600 5,600 5,029 5,029 4,872

1)
Constant currency numbers are calculated by translating numbers of the current period using the average exchange rates from the previous year's corresponding period
instead of the current period. 2018 constant currency numbers are thus only comparable to 2017 actual currency numbers; 2017 constant currency numbers are only
comparable to 2016 actual currency numbers.

F-30
(C.3) Other Non-Operating € millions Adjustments as Adjustments as
at 12/31/2017 at 12/31/2016
Income/Expense, Net
Other non-financial assets 66 65
€ millions 2018 2017 2016
Tax assets –91 –80
Foreign currency exchange gain/loss, net –31 –12 –210
Total non-current assets –25 –15
Thereof from financial assets at fair 444 615 531
value through profit or loss Total assets –25 –15

Thereof from financial assets at 148 96 26

amortized cost (2017, 2016: loans and Tax liabilities –36 –32
receivables)
Provisions 36 32
Thereof from financial liabilities at fair –415 –435 –569
Total non-current liabilities 0 0
value through profit or loss
Total liabilities 0 0
Thereof from financial liabilities at –202 –317 –174
amortized cost
Retained earnings –25 –15
Miscellaneous income/expense, net –25 –24 –23
Equity attributable to owners of –25 –15
Other non-operating –56 –36 –234
parent
income/expense, net
Total equity –25 –15

Total equity and liabilities –25 –15

(C.4) Financial Income, Net
€ millions 2018 2017 2016 Judgment is required in evaluating whether interest or penalties
related to income taxes meet the definition of income taxes, and, if
Finance income 371 476 230
not, whether it is of financial nature. In this judgment, we particularly
Thereof gains from financial assets at 227 382 164 consider applicable local tax laws and interpretations on IFRS by
fair value through profit and loss (2017,
2016: from available-for-sale financial national standard setters in the area of group financial reporting.
assets)
We are subject to changing tax laws in multiple jurisdictions within
Finance costs –418 –288 –259 the countries in which we operate. Our ordinary business activities
Thereof interest expense from financial –106 –89 –108
also include transactions where the ultimate tax outcome is
liabilities at amortized cost uncertain due to different interpretations of tax laws, such as those
involving revenue sharing and cost reimbursement arrangements
Thereof interest expense from financial –206 –116 –114
liabilities at fair value through profit between SAP Group entities. In addition, the amount of income
and loss (2017, 2016: from available- taxes we pay is generally subject to ongoing audits by domestic and
for-sale financial liabilities)
foreign tax authorities. As a result, judgment is necessary in
Financial income, net –47 188 –29 determining our worldwide income tax provisions. We make our
estimates about the ultimate resolution of our tax uncertainties
based on current tax laws and our interpretation thereof. Changes
(C.5) Income Taxes to the assumptions underlying these estimates and outcomes that
differ from these assumptions could require material adjustments
Accounting Policies, Judgments, and Estimates to the carrying amount of our income tax provisions.
In 2018, we adopted the IFRS Interpretations Committee’s agenda The assessment whether a deferred tax asset is impaired requires
decision on the accounting for interest and penalties related to judgment, as we need to estimate future taxable profits to
income taxes. As a result, interest and penalties which are related to determine whether the utilization of the deferred tax asset is
income taxes but do not, themselves, meet the definition of income probable. In evaluating our ability to utilize our deferred tax assets,
taxes are now presented, we consider all available positive and negative evidence, including
– in our statement of financial position, under other non-financial the level of historical taxable income and projections for future
assets or other non-financial liabilities/provisions, and taxable income over the periods in which the deferred tax assets are
– in our income statement, depending on the nature of the items recoverable. Our judgment regarding future taxable income is based
either in financial income or other non-operating on assumptions about future market conditions and future profits of
income/expense. SAP. Changes to these assumptions and outcomes that differ from
these assumptions could require material adjustments to the
Previously, these items were classified as income taxes. Prior-
carrying amount of our deferred tax assets.
period numbers were adjusted to conform to the new classification.
The following table summarizes the impact on our Consolidated
Statements of Financial Position.

F-31
Tax Expense by Geographic Location Relationship Between Tax Expense and Profit
Before Tax
€ millions 2018 2017 2016
€ millions, unless otherwise 2018 2017 2016
Current tax expense stated
Germany 733 935 866 Profit before tax 5,600 5,029 4,872
Foreign 1,019 716 537 Tax expense at applicable tax 1,478 1,327 1,286
rate of 26.4%
Total current tax expense 1,752 1,651 1,403 (2017: 26.4%; 2016: 26.4%)
Deferred tax expense/income
Tax effect of:
Germany 57 –584 –38
Foreign tax rates –147 –403 –107
Foreign –298 –84 –123
Changes in tax laws and tax 0 –212 3
Total deferred tax income –241 –668 –161 rates

Total income tax expense 1,511 983 1,242 Non-deductible expenses 106 82 78

Tax-exempt income –38 –95 –106

Withholding taxes 91 131 112

Major Components of Tax Expense
Research and development –33 –26 –36
€ millions 2018 2017 2016 and foreign tax credits
Current tax expense/income Prior-year taxes –17 –26 –30
Tax expense for current year 1,665 1,623 1,412 Reassessment of deferred tax 58 185 43
assets, research and
Taxes for prior years 87 28 –9 development tax credits, and
foreign tax credits
Total current tax expense 1,752 1,651 1,403

Deferred tax expense/income Other 13 20 –1

Origination and reversal of –501 –891 –403 Total income tax expense 1,511 983 1,242
temporary differences
Effective tax rate (in %) 27.0 19.5 25.5
Unused tax losses, research and 260 223 242
development tax credits, and
foreign tax credits

Total deferred tax income –241 –668 –161

Total income tax expense 1,511 983 1,242

Profit Before Tax by Geographic Location

€ millions 2018 2017 2016

Germany 3,106 2,788 3,118

Foreign 2,494 2,241 1,754

Total 5,600 5,029 4,872

The following table reconciles the expected income tax expense,

computed by applying our combined German tax rate of 26.4%
(2017: 26.4%; 2016: 26.4%), to the actual income tax expense. Our
2018 combined German tax rate includes a corporate income tax
rate of 15.0% (2017: 15.0%; 2016: 15.0%), plus a solidarity
surcharge of 5.5% (2017: 5.5%; 2016: 5.5%) thereon, and trade
taxes of 10.6% (2017: 10.6%; 2016: 10.6%).

F-32
Components of Recognized Deferred Tax Assets Of the unused tax losses, €213 million (2017: €263 million; 2016:
and Liabilities €309 million) relate to U.S. state tax loss carryforwards.
In 2018, subsidiaries that suffered a tax loss in either the current
€ millions 2018 2017
or the preceding period recognized deferred tax assets in excess of
Deferred tax assets deferred tax liabilities amounting to €47 million (2017: €79 million;
Intangible assets 668 563 2016: €189 million), because it is probable that sufficient future
taxable profit will be available to allow the benefit of the deferred tax
Property, plant, and equipment 28 10
assets to be utilized.
Other financial assets 11 12 We have not recognized a deferred tax liability on approximately
Trade and other receivables 55 57 €14.04 billion (2017: €13.21 billion) for undistributed profits of our
subsidiaries, because we are in a position to control the timing of the
Pension provisions 116 112
reversal of the temporary difference and it is probable that such
Share-based payments 140 164 differences will not reverse in the foreseeable future.
Other provisions and obligations 424 408

Contract liabilities/deferred income 229 77 Income Tax-Related Litigation

Carryforwards of unused tax losses 150 202 We are subject to ongoing tax audits by domestic and foreign tax
authorities. Currently, we are in dispute mainly with the German and
Research and development and foreign tax 21 166
credits
only a few foreign tax authorities. The German dispute is in respect
of intercompany financing matters and certain secured capital
Other 181 75 investments, while the few foreign disputes are in respect of the
Total deferred tax assets 2,023 1,846 deductibility of intercompany royalty payments and intercompany
services. In all cases, we expect that a favorable outcome can only
Deferred tax liabilities
be achieved through litigation. For all of these matters, we have not
Intangible assets 628 617 recorded a provision as we believe that the tax authorities’ claims
Property, plant, and equipment 95 92 have no merit and that no adjustment is warranted. If, contrary to
our view, the tax authorities were to prevail in their arguments
Other financial assets 133 115
before the court, we would expect to have an additional expense of
Trade and other receivables 153 125 approximately €1,746 million (2017: €1,884 million) in total
Pension provisions 12 9 (including related interest expenses and penalties of €842 million
(2017: €869 million)).
Share-based payments 0 1

Other provisions and obligations 18 29

Contract liabilities/deferred income 23 22

(C.6) Earnings per Share
Other 43 50 € millions, unless otherwise 2018 2017 2016
stated
Total deferred tax liabilities 1,105 1,060
Profit attributable to equity 4,083 4,008 3,642
Total deferred tax assets, net 918 786 holders of SAP SE

Issued ordinary shares1) 1,229 1,229 1,229

Items Not Resulting in a Deferred Tax Asset
Effect of treasury shares1) –35 –31 –30
€ millions 2018 2017 2016 Weighted average shares 1,194 1,197 1,198
outstanding, basic1)
Unused tax losses
Dilutive effect of share-based 0 1 1
Not expiring 575 375 338
payments1)
Expiring in the following year 7 9 32
Weighted average shares 1,194 1,198 1,199
Expiring after the following year 476 535 649 outstanding, diluted1)

Earnings per share, basic, 3.42 3.35 3.04

Total unused tax losses 1,058 919 1,019
attributable to equity holders of
Deductible temporary 509 524 33 SAP SE (in €)
differences
Earnings per share, diluted, 3.42 3.35 3.04
Unused research and attributable to equity holders of
development and foreign tax SAP SE (in €)
credits
1)
Number of shares in millions
Not expiring 54 38 33

Expiring in the following year 0 2 1

Expiring after the following year 18 34 30

Total unused tax credits 72 74 64

F-33
Section D – Invested Capital
This section highlights the non-current assets including representing consideration transferred in cash of approximately
investments that form the basis of our operating activities. US$2.4 billion. The acquisition aims to accelerate and strengthen
Additions in invested capital include separate asset acquisitions or SAP’s position and solution offerings in the Sales Performance
business combinations. Further, we disclose information about Management (SPM) and configure-price-quote (CPQ) spaces.
purchase obligations and capital contributions.

Callidus Acquisition: Consideration Transferred

(D.1) Business Combinations € millions

Accounting Policies, Judgments, and Estimates Cash paid 1,957

We decide for each business combination whether to measure the Liabilities incurred 47
non-controlling interest in the acquiree at fair value or at the Total consideration transferred 2,004
proportionate share of the acquiree’s identifiable net assets. We
classify costs related to executing business combinations as general
The liabilities incurred relate to the earned portion of unvested
and administration expense.
share-based payment awards. These liabilities were incurred by
In our accounting for business combinations, judgment is required replacing, upon acquisition, equity-settled share-based payment
in determining whether an intangible asset is identifiable, and should awards held by employees of Callidus with cash-settled share-based
be recorded separately from goodwill. Additionally, estimating the payment awards, which are subject to forfeiture. The respective
acquisition-date fair values of the identifiable assets acquired and liabilities represent the portion of the replacement awards that
liabilities assumed involves considerable judgment. The necessary relates to pre-acquisition services provided by the acquiree’s
measurements are based on information available on the employees and were measured at the fair value determined under
acquisition date and are based on expectations and assumptions IFRS 2.
that have been deemed reasonable by management. These The initial accounting for the Callidus business combination is
judgments, estimates, and assumptions can materially affect our incomplete because we are still obtaining some information
financial position and profit for several reasons, including the necessary to identify and measure tax-related assets and liabilities.
following: Accordingly, the amounts recognized in our financial statements for
– Fair values assigned to assets subject to depreciation and these items are provisional as at December 31, 2018.
amortization affect the amounts of depreciation and Measurement period adjustments recorded in 2018 (which were
amortization to be recorded in operating profit in the periods not material) mostly relate to intangible assets (finalization of the
following the acquisition. fair value calculation) and tax-related assets and liabilities (deferred
– Subsequent negative changes in the estimated fair values of taxes from investments in subsidiaries and unused tax losses, and
assets may result in additional expense from impairment so on).
charges. The following table summarizes the preliminary values of
identifiable assets acquired and liabilities assumed in connection
– Subsequent changes in the estimated fair values of liabilities and
with the acquisition of Callidus, as at the acquisition date:
provisions may result in additional expense (if increasing the
estimated fair value) or additional income (if decreasing the
estimated fair value).

We acquire businesses in specific areas of strategic interest to us,

particularly to broaden our product and service portfolio.
In 2018, we concluded several business combinations, with the
Callidus Software Inc. (“Callidus”) acquisition being the only
material transaction.
Prior-year acquisitions are described in the Notes to the 2017
Consolidated Financial Statements, Note (4).

Acquisition of Callidus
On April 5, 2018, following satisfaction of applicable regulatory
and other approvals, we acquired 100% of the shares of Callidus
(NDSQ: CALD), a leading provider of customer relationship
management (CRM) solutions. SAP paid US$36 per share,

F-34
Callidus Acquisition: Recognized Assets and Had Callidus been consolidated as at January 1, 2018, our
Liabilities estimated pro forma revenue for the reporting period would have
been €24,766 million, and pro forma profit after tax would have
€ millions
been €4,071 million.
Cash and cash equivalents 63 These amounts were calculated after applying SAP’s accounting
Other financial assets 64 policies and after adjusting the results for Callidus to reflect
significant effects from, for example:
Trade and other receivables 32
– Additional depreciation and amortization that would have been
Other non-financial assets 11 charged assuming the fair value adjustment to property, plant,
Property, plant, and equipment 26 and equipment, and to intangible assets had been applied from
January 1, 2018
Intangible assets 515
– The impact of fair value adjustments on contract
Thereof acquired technology 121 liabilities/deferred income on a cumulative basis
Thereof customer relationship and other intangibles 390 – The borrowing costs on the funding levels and debt/equity
position of SAP after the business combination
Thereof software and database licenses 4
– Employee benefits, such as share-based compensation
Total identifiable assets 711 – Transaction expenses incurred as part of the acquisition
Trade and other payables 55 – Related income taxes

Current and deferred tax liabilities 65

These pro forma numbers have been prepared for comparative
Provisions and other non-financial liabilities 15 purposes only. The pro forma revenue and profit numbers are not
Contract liabilities/deferred income 55
necessarily indicative either of the results of operations that would
have actually occurred had the acquisition been in effect at the
Total identifiable liabilities 190 beginning of the respective period, or of future results.
Total identifiable net assets 521

Goodwill 1,483
(D.2) Goodwill
Total consideration transferred 2,004
Accounting Policies, Judgments, and Estimates

The goodwill arising from our acquisitions consists largely of The annual goodwill impairment test is performed at the level of our
synergies and the know-how and technical skills of the acquired operating segments since there are no lower levels in SAP at which
businesses’ workforces. goodwill is monitored for internal management purposes. The test is
For the Callidus acquisition, we expect synergies particularly in performed at the same time (at the beginning of the fourth quarter)
the following areas: for all operating segments.
– Cross-selling opportunities of Callidus products to existing SAP In making impairment assessments for our goodwill and intangible
customers across all regions, using SAP’s sales organization assets, the outcome of these tests is highly dependent on
– Integrating Callidus products into SAP C/4 HANA to strengthen management’s assumptions regarding future cash flow projections
SAP’s customer experience suite of solutions and economic risks, which require significant judgment and
– Improved profitability in Callidus sales and operations assumptions about future developments. They can be affected by a
variety of factors, including:
We have allocated the Callidus goodwill and intangibles to the – Changes in business strategy
newly established Customer Experience segment. For more
– Internal forecasts
information about our segments and about the changes in our
segment structure, see Note (C.1). – Estimation of weighted-average cost of capital
Changes to the assumptions underlying our goodwill and intangible
assets impairment assessments could require material adjustments
Impact of the Business Combination on Our
to the carrying amount of our recognized goodwill and intangible
Financial Statements
assets as well as the amounts of impairment charges recognized in
The amounts of revenue and profit or loss of the Callidus profit or loss.
business acquired in 2018 since the acquisition date are included in
The outcome of goodwill impairment tests may also depend on the
the consolidated income statements for the reporting period as
allocation of goodwill to our operating segments. This allocation
follows:
involves judgment as it is based on our estimates regarding which
Callidus Acquisition: Impact on SAP’s Financials operating segments are expected to benefit from the synergies of
business combinations.
€ millions 2018 Contribution
as Reported of Callidus

Revenue 24,708 180

Profit after tax 4,088 –60

F-35
Goodwill For more information about our segments and the changes in
2018, see Note (C.1).
€ millions
For impairment testing purposes, the carrying amount of
Historical cost goodwill has been allocated to the operating segments expected to
1/1/2017 23,415 benefit from goodwill as follows:

Foreign currency exchange differences –2,249

Additions from business combinations 205

12/31/2017 21,371

Foreign currency exchange differences 847

Additions from business combinations 1,609

12/31/2018 23,827

Accumulated amortization

1/1/2017 104

Foreign currency exchange differences –4

12/31/2017 100

Foreign currency exchange differences 2

12/31/2018 102

Carrying amount

12/31/2017 21,271

12/31/2018 23,725

Goodwill by Operating Segment

€ millions Applications, SAP Business Customer Other Total
Technology & Network Experience
Services

12/31/2017 14,654 6,617 0 0 21,271

12/31/2018 13,498 6,925 3,293 9 23,725

At the end of 2018, the goodwill allocated to the Customer The key assumptions on which management based its cash flow
Experience segment includes goodwill of €1,656 million reallocated projections for the period covered by the underlying business plans
from the Applications, Technology & Services segment due to the are as follows:
changes in segment composition in 2018.

F-36
Key Assumption Basis for Determining Values Assigned to Key Assumption

Budgeted revenue growth Revenue growth rate achieved in the current fiscal year, adjusted for an expected increase in SAP’s
addressable cloud and database markets; expected growth in the established software applications and
analytics markets. Values assigned reflect our past experience and our expectations regarding an
increase in the addressable markets.

Budgeted operating margin Operating margin budgeted for a given budget period equals the operating margin achieved in the current
fiscal year, increased by expected efficiency gains. Values assigned reflect past experience, except for
efficiency gains.

Discount rates Our estimated cash flow projections are discounted to present value using discount rates (after-tax rates
for the SAP Business Network segment and pre-tax rates for all other segments). Pre-tax discount rates
are based on the weighted average cost of capital (WACC) approach.

Terminal growth rate Our estimated cash flow projections for periods beyond the business plan were extrapolated using
segment-specific terminal growth rates. These growth rates do not exceed the long-term average growth
rates for the markets in which our segments operate.

Key Assumptions and Detailed Planning Period

Percent, unless otherwise stated Applications, Technology & Services SAP Business Network Customer Experience

2018 2017 2018 2017 2018 2017

Budgeted revenue growth (average of 4.8 4.8 13.8 14.9 32.9 NA

the budgeted period)

Pre-tax discount rate 11.0 10.6 11.5 11.9 11.7 NA

After-tax discount rate 8.6 8.2 9.0 9.3 9.4 NA

Terminal growth rate 3.0 2.9 3.0 3.0 3.0 NA

Detailed planning period (in years) 5 3 9 9 5 NA

Applications, Technology & Services The recoverable amount exceeds the carrying amount by
€13,580 million (2017: €8,143 million).
The recoverable amount of the segment has been determined
The following table shows the amounts by which the key
based on a value-in-use calculation. The calculation uses cash flow
assumptions would need to change individually for the recoverable
projections based on actual operating results and a group-wide
amount to be equal to the carrying amount:
business plan approved by management.
We believe that no reasonably possible change in any of the
above key assumptions would cause the carrying amount of our Sensitivity to Change in Assumptions
Applications, Technology & Services segment to exceed the
recoverable amount. SAP Business Network

2018 2017
SAP Business Network Budgeted revenue growth (change in pp) –11.8 –8.6
The recoverable amount of the segment has been determined After-tax discount rate (change in pp) 6.6 4.3
based on fair value less costs of disposal calculation. The fair value
Target operating margin at the end of the –22 –17
measurement was categorized as a level 3 fair value based on the budgeted period (change in pp)
inputs used in the valuation technique. The cash flow projections are
based on actual operating results and specific estimates covering a
detailed planning period and the terminal growth rate thereafter. Customer Experience
The projected results were determined based on management’s The recoverable amount of the segment has been determined
estimates and are consistent with the assumptions a market based on a value-in-use calculation. The calculation uses cash flow
participant would make. The segment operates in a relatively projections based on actual operating results and a group-wide
immature area with significant growth rates projected for the near business plan approved by management. The recoverable amount
future. We therefore have a longer and more detailed planning exceeds the carrying amount by €8,476 million.
period than one would apply in a more mature segment. The following table shows the amounts by which the key
We are using a target operating margin of 33% (2017: 33%) for assumptions would need to change individually for the recoverable
the segment at the end of the budgeted period as a key assumption, amount to be equal to the carrying amount:
which is within the range of expectations of market participants (for
example, industry analysts).

F-37
Sensitivity to Change in Assumptions sales and marketing, and general and administration, depending on
the use of the respective intangible assets.
Customer Experience
Judgment is required in determining the following:
2018 2017
– The useful life of an intangible asset, as this is based on our
Budgeted revenue growth (change in pp) –8.3 NA estimates regarding the period over which the intangible asset is
expected to produce economic benefits to us
Pre-tax discount rate (change in pp) 10.2 NA
– The amortization method, as IFRS requires the straight-line
Target operating margin at the end of the –28 NA
budgeted period (change in pp) method to be used unless we can reliably determine the pattern
in which the asset’s future economic benefits are expected to be
consumed by us
(D.3) Intangible Assets Both the amortization period and the amortization method have an
impact on the amortization expense that is recorded in each period.
Accounting Policies, Judgments, and Estimates
Determining whether internally generated intangible assets from
We classify intangible assets according to their nature and use in
development qualify for recognition requires significant judgment,
our operations. Software and database licenses consist primarily of
particularly in the following areas:
technology for internal use, whereas acquired technology consists
primarily of purchased software to be incorporated into our product – Determining whether activities should be considered research
offerings and in-process research and development (IPRD). activities or development activities
Customer relationship and other intangibles consist primarily of – Determining whether the conditions for recognizing an intangible
customer relationships and acquired trademark licenses. asset are met requires assumptions about future market
All our purchased intangible assets other than goodwill have finite conditions, customer demand, and other developments.
useful lives. They are initially measured at acquisition cost and – The term “technical feasibility” is not defined in IFRS, and
subsequently amortized based on the expected consumption of therefore determining whether the completion of an asset is
economic benefits over their estimated useful lives ranging from technically feasible requires judgment and a company-specific
two to 20 years. approach.
Acquired in-process research and development project assets are – Determining the future ability to use or sell the intangible asset
typically amortized over five to seven years (starting upon arising from the development and the determination of the
completion / marketing of the respective projects). probability of future benefits from sale or use
Whereas in general, expenses for internally generated intangibles – Determining whether a cost is directly or indirectly attributable to
are expensed as incurred, development expenses incurred on an intangible asset and whether a cost is necessary for
standard-related customer development projects (for which the completing a development
IAS 38 criteria are met cumulatively) are capitalized on a limited These judgments impact the total amount of intangible assets that
scale with those amounts being amortized over the estimated useful we present in our balance sheet as well as the timing of recognizing
life of eight years. development expenses in profit or loss.
Amortization expenses of intangible assets are classified as cost of
cloud and software, cost of services, research and development,

F-38
Intangible Assets
€ millions Software and Acquired Customer Total
Database Licenses Technology/IPRD Relationship and
Other Intangibles
Historical cost

1/1/2017 791 2,907 5,119 8,817

Foreign currency exchange differences –22 –278 –523 –823

Additions from business combinations 0 51 73 124

Other additions 93 0 10 103

Retirements/disposals –53 –688 –62 –803

12/31/2017 809 1,992 4,617 7,418

Adoption of IFRS 15 0 0 14 14

1/1/2018 809 1,992 4,631 7,432

Foreign currency exchange differences 8 100 204 312

Additions from business combinations 4 148 410 562

Other additions 193 0 36 229

Retirements/disposals –43 –62 –41 –146

Transfers 25 0 –28 –3

12/31/2018 996 2,178 5,212 8,386

Accumulated amortization

1/1/2017 589 2,186 2,256 5,031

Foreign currency exchange differences –16 –208 –219 –443

Additions amortization 79 254 327 660

Retirements/disposals –51 –688 –58 –797

12/31/2017 601 1,544 2,306 4,451

Foreign currency exchange differences 6 77 87 170

Additions amortization 95 216 337 648

Retirements/disposals –23 –62 –25 –110

12/31/2018 679 1,775 2,705 5,159

Carrying amount

12/31/2017 208 448 2,311 2,967

12/31/2018 317 403 2,507 3,227

Significant Intangible Assets

€ millions, unless otherwise stated Carrying Amount Remaining Useful
Life
2018 2017 (in years)

Sybase – Customer relationships 179 226 3 to 5

SuccessFactors – Customer relationships 225 261 7

Ariba – Customer relationships 323 366 7 to 9

Concur – Acquired technologies 114 180 3

Concur – Customer relationships 1,033 1,073 12 to 16

Callidus – Acquired technologies 103 0 4 to 6

Callidus – Customer relationships 384 0 10 to 14

Total significant intangible assets 2,361 2,106

F-39
(D.4) Property, Plant, and Equipment Useful Lives of Property, Plant, and Equipment
Accounting Policies, Judgments, and Estimates Buildings Predominantly
25 to 50 years
Property, plant, and equipment are typically depreciated using the
straight-line method. Judgment is required in estimating the useful Leasehold improvements Based on the term of the lease contract
life of the assets. In this assessment we consider, among others, our
Information technology 2 to 6 years
history with similar assets and current and future changes in equipment
technology.
Office furniture 4 to 20 years

Automobiles 4 to 5 years

Property, Plant, and Equipment

€ millions Land and Other Property, Advance Total
Buildings Plant, and Payments and
Equipment Construction in
Progress
12/31/2017 1,162 1,592 213 2,967

12/31/2018 1,344 1,985 224 3,553

Additions (other than those from business combinations)

2017 96 933 167 1,196

2018 199 1,026 77 1,302

The additions (other than from business combinations) relate profit or loss (FVTPL), depending on the contractual cash flows of
primarily to the replacement and purchase of IT infrastructure (data and our business model for holding the respective asset.
centers, and so on) and the construction of new buildings. For more
For equity securities, as the cash flow characteristics are typically
information about the expected effect of the initial application of
other than solely principal and interest, we take an investment-by-
IFRS 16, see Note (IN.1).
investment decision whether to classify as FVTPL or FVOCI.
Judgment is required particularly in estimating the fair values of
(D.5) Equity Investments equity securities that are not listed publicly.
Accounting Policies, Judgments, and Estimates Gains / losses on equity securities at FVTPL include gains / losses
As we do not designate financial assets as “at fair value through from fair value fluctuations, from disposals as well as dividends
profit or loss,” we generally classify financial assets into the while gains / losses on equity securities at FVOCI only include
following categories: at amortized cost (AC), at fair value through dividends, all of which are shown in Financial Income, net. Regular
other comprehensive income (FVOCI), and at fair value through way purchases and sales are recorded as at the trade date.

Equity Investments
€ millions 2018 2017

Current Non-Current Total Current Non-Current Total

Equity securities 0 1,248 1,248 0 827 827

Investments in associates 0 26 26 0 32 32

Total 0 1,274 1,274 0 859 859

Other financial assets 448 1,536 1,984 990 1,155 2,145

% of other financial assets 0 83 64 0 74 40

For a list of the names of other equity investments, see Note (G.10).

F-40
Financial Commitments in Venture Capital Funds Americas 22,380 19,500
€ millions 2018 2017 APJ 922 723
Investments in venture capital funds 187 182 SAP Group 32,228 28,276

SAP invests and holds interests in unrelated parties that manage For a breakdown of our employee headcount by region, see
investments in venture capital. On December 31, 2018, total Note (B.1), and for a breakdown of revenue by region, see
commitments to make such investments amounted to €418 million Note (A.1).
(2017: €342 million), of which €232 million had been drawn (2017:
€161 million). By investing in such venture capital funds, we are
exposed to the risks inherent in the business areas in which the
entities operate. Our maximum exposure to loss is the amount (D.7) Purchase Obligations
invested plus unavoidable future capital contributions.
€ millions 2018 2017

Contractual obligations for acquisition of 123 207

Maturities property, plant, and equipment and intangible
assets
€ millions 12/31/2018
Other purchase obligations 2,010 934
Investments
in Venture Purchase obligations 2,133 1,141
Capital Funds

Due 2019 187

The contractual obligations for acquisition of property, plant, and
Due 2020 to 2023 0 equipment and intangible assets relate primarily to the construction
of new and existing facilities and to the purchase of hardware,
Due thereafter 0
software, patents, office equipment, and vehicles. The remaining
Total 187 obligations relate mainly to marketing, consulting, maintenance,
license agreements, cloud services, and other third-party
agreements. The increase is mainly due to new purchase obligations
(D.6) Non-Current Assets by Region related to cloud services. Historically, the majority of such purchase
obligations have been realized.
The table below shows non-current assets excluding financial
instruments, deferred tax assets, post-employment benefit assets,
and rights arising under insurance contracts. Maturities
€ millions 12/31/2018
Non-Current Assets by Region
Purchase Obligations
€ millions 2018 2017
Due 2019 827
Germany 4,184 3,714
Due 2020 to 2023 1,290
Rest of EMEA 4,742 4,338
Due thereafter 17
EMEA 8,926 8,052
Total 2,133
United States 22,123 19,300

Rest of Americas 258 201

F-41
Section E – Capital Structure,
Financing, and Liquidity
This section describes how SAP manages its capital structure. customer confidence, and to support the growth of our business.
Our capital management is based on a high equity ratio, modest We seek to maintain a capital structure that will allow us to cover
financial leverage, a well-balanced maturity profile, and deep debt our funding requirements through the capital markets on
capacity. reasonable terms and, in so doing, ensure a high level of
independence, confidence, and financial flexibility.
(E.1) Capital Structure Management SAP SE’s long-term credit rating is “A2” by Moody’s with stable
outlook, and “A” by Standard & Poor’s. Standard & Poor’s revised
The primary objective of our capital structure management is to the outlook from positive to stable in 2018.
maintain a strong financial profile for investor, creditor, and

12/31/2018 12/31/2017 ∆ in %
€ millions % of € millions % of
Total Equity and Total Equity and
Liabilities Liabilities
Equity 28,877 56 25,515 60 13

Current liabilities 10,481 20 10,210 24 3

Non-current liabilities 12,133 24 6,759 16 80

Liabilities 22,614 44 16,969 40 33

Thereof financial debt 11,331 22 6,264 15 81

Total equity and liabilities 51,491 100 42,484 100 21

In 2018, we repaid €1,150 million in Eurobonds and (E.2) Total Equity

US$150 million in U.S. private placements at maturity. The
repayment was partly refinanced through the issuance of a Issued Capital
US$300 million USD bond. We took out a three-tranche Eurobond
of €1,500 million in total and a five-tranche Eurobond of SAP SE has issued no-par value bearer shares with a calculated
€4,500 million in total with maturities of two to 12 years to finance nominal value of €1 per share. All of the shares issued are fully paid.
the acquisitions of Callidus and Qualtrics. Thus, the ratio of total
nominal volume of financial debt to total equity and liabilities Number of Shares
increased by 7pp. millions Issued Treasury
Capital Shares

1/1/2016 1,228.5 –30.6

Reissuance of treasury shares under share- 0 0.7

based payments

12/31/2016 1,228.5 –29.9

Purchase of treasury shares 0 –5.4

Reissuance of treasury shares under share- 0 0.2

based payments

12/31/2017 1,228.5 –35.1

Reissuance of treasury shares under share- 0 0.2

based payments

12/31/2018 1,228.5 –34.9

F-42
Authorized Shares Contingent Shares
The Articles of Incorporation authorize the Executive Board to
SAP SE’s share capital is subject to a contingent capital increase,
increase the issued capital as follows:
which may be effected only to the extent that the holders or
– By up to a total amount of €250 million by issuing new no-par
creditors of convertible bonds or stock options issued or
value bearer shares against contributions in cash until
guaranteed by SAP SE or any of its directly or indirectly controlled
May 19, 2020 (Authorized Capital I). The issuance is subject to
subsidiaries under certain share-based payments exercise their
the statutory subscription rights of existing shareholders.
conversion or subscription rights, and no other methods for
– By up to a total amount of €250 million by issuing new no-par
servicing these rights are used. As at December 31, 2018,
value bearer shares against contributions in cash or in kind until
€100 million, representing 100 million shares, was still available for
May 19, 2020 (Authorized Capital II). Subject to the consent of
issuance (2017: €100 million).
the Supervisory Board, the Executive Board is authorized to
exclude the shareholders’ statutory subscription rights in certain
cases.

Other Components of Equity

€ millions Exchange Available-for- Cash Flow Total
Differences Sale Financial Hedges/Cost of
Assets Hedging

1/1/2016 2,222 336 3 2,561

Other comprehensive income for items that will be reclassified to profit or loss, net 839 –43 –11 785
of tax

12/31/2016 3,062 292 –8 3,345

Other comprehensive income for items that will be reclassified to profit or loss, net –2,732 –135 29 –2,838
of tax

12/31/2017 330 157 21 508

Adoption of IFRS 9 0 –158 –3 –160

1/1/2018 330 0 18 347

Other comprehensive income for items that will be reclassified to profit or loss, net 910 0 –23 887
of tax

12/31/2018 1,239 0 –5 1,234

Treasury Shares
Distribution Policy and Dividends
By resolution of SAP SE’s General Meeting of Shareholders held
on May 17, 2018, the authorization granted by the General Meeting Our general intention is to remain in a position to return liquidity
of Shareholders on June 4, 2013, regarding the acquisition of to our shareholders by distributing annual dividends totaling 40% or
treasury shares was revoked to the extent it had not been exercised more of our profit after tax and by potentially repurchasing treasury
at that time, and replaced by a new authorization of the Executive shares in future.
Board of SAP SE to acquire, on or before May 16, 2023, shares of In 2018, we distributed €1,671 million (€1.40 per share) in
SAP SE representing a pro rata amount of capital stock of up to dividends for 2017 compared to €1,499 million (€1.25 per share)
€120 million in aggregate, provided that the shares purchased paid in 2017 for 2016 and €1,378 million (€1.15 per share) paid in
under the authorization, together with any other shares in the 2016 for 2015. Aside from the distributed dividend, in 2017, we also
Company previously acquired and held by, or attributable to, returned €500 million to our shareholders by repurchasing treasury
SAP SE do not account for more than 10% of SAP SE’s issued share shares.
capital. Although treasury shares are legally considered The total dividend available for distribution to SAP SE
outstanding, there are no dividend or voting rights associated with shareholders is based on the profits of SAP SE as reported in its
them. We may redeem or resell shares held in treasury, or we may statutory financial statements prepared under the accounting rules
use treasury shares for the purpose of servicing option or in the German Commercial Code (Handelsgesetzbuch). For the year
conversion rights under the Company’s share-based payment ended December 31, 2018, the Executive Board intends to propose
plans. Also, we may use shares held in treasury as consideration in that a dividend of €1.50 per share (that is, an estimated total
connection with mergers with, or acquisitions of, other companies. dividend of €1,790 million), be paid from the profits of SAP SE.

F-43
(E.3) Liquidity spread for a prolonged time period while the overall market
environment remains generally stable. Such financial assets are
Accounting Policies written off either partially or in full if the likelihood of recovery is
Non-Derivative Financial Debt Investments considered remote, which might be evidenced, for example, by
Our non-derivative financial debt investments comprise cash at the bankruptcy of a counterparty of such financial assets.
banks and cash equivalents (highly liquid investments with original – Loans and other financial receivables are monitored based on
maturities of three months or less, such as time deposits and borrower-specific internal and external information to determine
money-market funds), loans and other financial receivables, and whether there has been a significant increase in credit risk since
acquired debt securities. initial recognition. We consider such assets to be in default if they
As we do not designate financial assets as “at fair value through are significantly beyond their due date or if the borrower is
profit or loss,” we generally classify financial assets as: at amortized unlikely to pay its obligation. A write-off occurs when the
cost (AC), at fair value through other comprehensive income likelihood of recovery is considered remote, for example when
(FVOCI), or at fair value through profit or loss (FVTPL), depending bankruptcy proceedings have been finalized or when all
on the contractual cash flows of, and our business model for, enforcement efforts have been exhausted.
holding the respective asset. Financial assets having cash flow
characteristics other than solely principal and interest such as Non-Derivative Financial Liabilities
money market and similar funds are generally classified as FVTPL.
Non-derivative financial liabilities include bank loans, issued bonds,
Generally, all other financial assets with cash flows consisting solely
private placements, and other financial liabilities. Included in other
of principal and interest are classified as AC because we follow a
financial liabilities are customer funding liabilities which are funds
conservative investment approach, safeguarding our liquidity by
we draw from and make payments on behalf of our customers for
ensuring the safety of principal investment amounts.
customers’ employee expense reimbursements, related credit card
Gains / losses on non-derivative financial debt investments at payments, and vendor payments. We present these funds in cash
FVTPL are reported in Financial income, net and show interest and cash equivalents and record our obligation to make these
income / expenses separately from other gains / losses which expense reimbursements and payments on behalf of our customers
include gains / losses from fair value fluctuations and disposals. as customer funding liabilities.
Gains / losses on non-derivative financial debt investments at AC
As we do not designate financial liabilities as FVTPL, we generally
are reported in Financial income, net and show interest income /
classify non-derivative financial liabilities as AC.
expenses separately from other gains / losses which include gains /
losses disposals and changes in expected and incurred credit Expenses and gains or losses on financial liabilities at AC mainly
losses. Gains / losses from foreign currency exchange rate consist of interest expense which is shown in Financial income, net.
fluctuations are included in Other non-operating income/expense, Gains / losses from foreign currency exchange rate fluctuations are
net. Regular way purchases and sales are recorded as at the trade included in Other non-operating income/expense, net.
date.
For these financial assets, we apply considerable judgment by
Group Liquidity
employing the general impairment approach as follows:
€ millions 2018 2017 ∆
– For cash at banks, time deposits, and debt securities such as
acquired bonds and commercial paper, we apply the low credit Cash and cash equivalents 8,627 4,011 4,617
risk exception, as it is our policy to invest only in high-quality Current time deposits and debt 211 774 –563
assets of issuers with a minimum rating of at least investment securities
grade to minimize the risk of credit losses. Thus, these assets are
Group liquidity 8,838 4,785 4,053
always allocated to stage 1 of the three-stage credit loss model,
and we record a loss allowance at an amount equal to 12-month Current financial debt –759 –1,299 540
expected credit losses. This loss allowance is calculated based Non-current financial debt –10,572 –4,965 –5,607
on our exposure at the respective reporting date, the loss given
Financial debt –11,331 –6,264 –5,067
default for this exposure, and the credit default swap spread as a
measure for the probability of default. Even though we invest Net liquidity –2,493 –1,479 –1,013
only in assets of at least investment-grade, we also closely
observe the development of credit default swap spreads as a While we continuously monitor the ratios presented in the capital
measure of market participants’ assessments of the structure table, we actively manage our liquidity and structure of
creditworthiness of a debtor to evaluate probable significant our financial indebtedness based on the ratios group liquidity and
increases in credit risk to timely react to changes should these net liquidity.
manifest. Among others, we consider cash at banks, time Group liquidity consists of cash at banks, money market and
deposits, and debt securities to be in default when the other funds, time deposits, and debt securities (both with remaining
counterparty is unlikely to pay its obligations in full, when there is maturities of less than one year). Financial debt is defined as the
information about a counterparty’s financial difficulties or if there nominal volume of bank loans, private placements, and bonds. Net
is a drastic increase in a counterparty’s credit default swap liquidity is group liquidity less financial debt.

F-44
Cash and Cash Equivalents
€ millions 2018 2017

Current Non-Current Total Current Non-Current Total

Cash at banks 2,918 0 2,918 2,558 0 2,558

Time deposits 4,117 0 4,117 314 0 314

Money market and other funds 1,195 0 1,195 1,139 0 1,139

Debt securities 400 0 400 0 0 0

Expected credit loss allowance –3 0 –3 0 0 0

Cash and cash equivalents 8,627 0 8,627 4,011 0 4,011

Non-Derivative Financial Debt Investments

€ millions 2018 2017

Current Non-Current Total Current Non-Current Total

Time deposits 137 0 137 736 0 736

Debt securities 77 0 77 39 0 39

Financial instruments related to employee benefit plans 0 165 165 0 155 155

Loans and other financial receivables 57 91 147 58 105 163

Expected credit loss allowance –3 0 –3 0 0 0

Non-derivative financial debt investments 268 256 524 832 260 1,092

Other financial assets 448 1,536 1,984 990 1,155 2,145

Non-derivative financial debt investments 60 17 26 84 23 51

as % of other financial assets

Time deposits and debt securities with original maturity of three acquired bonds of mainly financial and non-financial corporations
months or less are presented as cash and cash equivalents, and and municipalities.
those with original maturities of greater than three months For more information about financial risk and the nature of risk,
(investments considered in group liquidity) are presented as other see Note (F.1).
financial assets. Debt securities consist of commercial papers and
Financial Debt
€ millions 2018 2017

Nominal Volume Carrying Amount Nominal Volume Carrying Amount

Current Non- Current Non- Total Current Non- Current Non- Total
Current Current Current Current

Bonds 750 9,512 759 9,445 10,204 1,150 4,000 1,149 3,997 5,147

Private 0 1,011 0 1,041 1,041 125 965 125 1,005 1,130

placement
transactions

Bank loans 9 49 9 49 58 24 0 24 0 24
Financial debt 759 10,572 768 10,536 11,303 1,299 4,965 1,298 5,002 6,301

Financial liabilities 1,125 10,553 11,678 1,561 5,034 6,595

Financial debt as 68 100 97 83 99 96

% of financial
liabilities

Financial liabilities are unsecured, except for the retention of title For information about the risk associated with our financial
and similar rights customary in our industry. Effective interest rates liabilities, see Note (F.1). For information about fair values, see
on our financial debt (including the effects from interest rate swaps) Note (F.2).
were 1.33% in 2018, 1.29% in 2017, and 1.25% in 2016.

F-45
Bonds
2018 2017

Maturity Issue Price Coupon Rate Effective Nominal Volume Carrying Carrying
Interest Rate (in respective Amount Amount
currency in (in € millions) (in € millions)
millions)

Eurobond 6 – 2012 2019 99.307% 2.125% (fix) 2.29% €750 759 768

Eurobond 7 – 2014 2018 100.000% 0.000% (var.) 0.00% €750 0 750

Eurobond 8 – 2014 2023 99.478% 1.125% (fix) 1.24% €1,000 996 995

Eurobond 9 – 2014 2027 99.284% 1.750% (fix) 1.87% €1,000 992 991

Eurobond 11 – 2015 2020 100.000% 0.000% (var.) 0.07% €650 649 649

Eurobond 12 – 2015 2025 99.264% 1.000% (fix) 1.13% €600 595 594

Eurobond 13 – 2016 2018 100.000% 0.000% (var.) 0.00% €400 0 400

Eurobond 14 – 2018 2021 100.519% 0.000% (var.) –0.15% €500 502 0

Eurobond 15 – 2018 2026 99.576% 1.000% (fix) 1.06% €500 498 0

Eurobond 16 – 2018 2030 98.687% 1.375% (fix) 1.50% €500 494 0

Eurobond 17 – 2018 2020 100.024% 0.000% (var.) –0.01% €500 500 0

Eurobond 18 – 2018 2022 99.654% 0.250% (fix) 0.36% €900 897 0

Eurobond 19 – 2018 2024 99.227% 0.750% (fix) 0.89% €850 843 0

Eurobond 20 – 2018 2028 98.871% 1.250% (fix) 1.38% €1,000 988 0

Eurobond 21 – 2018 2031 98.382% 1.625% (fix) 1.78% €1,250 1,229 0

Eurobonds 9,942 5,147

USD bond – 2018 2025 100.000% 3.306% (var.) 3.35% US$300 262 0

Bonds 10,204 5,147

All of our Eurobonds are listed for trading on the Luxembourg Stock Exchange.

Private Placements
2018 2017

Maturity Coupon Rate Effective Interest Nominal Volume Carrying Carrying Amount
Rate (in respective Amount (in € millions)
currency in (in € millions)
millions)

U.S. private placements

Tranche 4 – 2011 2018 3.43% (fix) 3.50% US$150 0 125

Tranche 6 – 2012 2020 2.82% (fix) 2.86% US$290 251 241

Tranche 7 – 2012 2022 3.18% (fix) 3.22% US$444.5 395 382

Tranche 8 – 2012 2024 3.33% (fix) 3.37% US$323 299 289

Tranche 9 – 2012 2027 3.53% (fix) 3.57% US$100 96 93

Private placements 1,041 1,130

The U.S. private placement notes were issued by one of our subsidiaries that has the U.S. dollar as its functional currency.

Reconciliation of Liabilities Arising from Financing Activities

The changes in our financial debts are reconciled to the cash flows from borrowings included in the cash flow from financing activities.

F-46
€ millions 12/31/2017 Cash Flows Business Foreign Fair Value Other 12/31/2018
Combinations Currency Changes

Current financial debt 1,299 –1,300 7 3 0 750 759

Non-current financial debt 4,965 6,308 0 49 0 –750 10,572

Financial debt (nominal volume) 6,264 5,008 7 51 0 0 11,331

Basis adjustment 62 0 0 –1 –19 0 42

Transaction costs –26 –48 0 0 0 3 –70

Financial debt (carrying amount) 6,301 4,961 7 50 –19 3 11,303

Accrued interest 34 0 0 –1 0 14 47

Interest rate swaps –24 0 0 –1 17 0 –7

Total liabilities from financing activities 6,311 4,961 7 48 –1 18 11,343

€ millions 12/31/2016 Cash Flows Business Foreign Fair Value Other 12/31/2017
Combinations Currency Changes

Current financial debt 1,435 –1,372 –1 –54 0 1,290 1,299

Non-current financial debt 6,390 8 0 –144 0 –1,289 4,965

Financial debt (nominal volume) 7,826 –1,364 –1 –197 0 1 6,264

Basis adjustment 86 0 0 7 –31 0 62

Transaction costs –32 0 0 0 0 7 –26

Financial debt (carrying amount) 7,880 –1,364 –1 –191 –31 7 6,301

Accrued interest 45 0 0 –2 0 –9 34

Interest rate swaps –47 0 0 –1 24 0 –24

Total liabilities from financing activities 7,878 –1,364 –1 –194 –7 –2 6,311

F-47
Section F – Management of Financial
Risk Factors
This section discusses financial risk factors and risk immediately recognized in Financial Income, net in profit and loss.
management regarding foreign currency exchange rate risk, interest Amounts accumulated in other comprehensive income are
rate risk, equity price risk, credit risk, and liquidity risk. Further, it reclassified to profit and loss to Other non-operating
contains information about financial instruments, including the income/expense, net and Financial income, net in the same period
adoption of IFRS 9 ‘Financial Instruments.’ when the hedged item affects profit and loss.
b) Fair Value Hedge
We apply fair value hedge accounting for certain of our fixed-rate
(F.1) Financial Risk Factors and Risk financial liabilities and show the fair value fluctuations in Financial
Management income, net.
Accounting policies c) Valuation and Testing of Effectiveness
We use derivatives to hedge foreign currency risk or interest rate At inception of a designated hedging relationship, we document our
risk and designate them as cash flow or fair value hedges if they risk management strategy and the economic relationship between
qualify for hedge accounting under IFRS 9, which involves judgment. hedged item and hedging instrument. The existence of an economic
relationship is demonstrated as well as the effectiveness of the
Derivatives Not Designated as Hedging hedging relationship tested prospectively by applying the critical
Instruments terms match for our foreign currency hedges, since currencies,
Many transactions constitute economic hedges, and therefore maturities, and the amounts are closely aligned for the forecasted
contribute effectively to the securing of financial risks but do not transactions and for the spot element of the forward exchange rate
qualify for hedge accounting under IFRS 9. To hedge currency risks contract or intrinsic value of the currency options, respectively. For
inherent in foreign-currency denominated and recognized monetary interest rate swaps, effectiveness is tested prospectively using
assets and liabilities, we do not designate our held-for-trading statistical methods in the form of a regression analysis, by which the
derivative financial instruments as accounting hedges, because the validity and extent of the relationship between the change in value of
profits and losses from the underlying transactions are recognized the hedged items as the independent variable and the fair value
in profit or loss in the same periods as the profits or losses from the change of the derivatives as the dependent variable is determined.
derivatives. The main sources of ineffectiveness are:
In addition, we occasionally have contracts that contain foreign – The effect of the counterparty and our own credit risk on the fair
currency embedded derivatives that are required to be accounted value of the forward exchange contracts and interest rate swaps,
for separately. which is not reflected in the respective hedged item, and
Fair value fluctuations in the spot component of such derivatives at – Differences in the timing of hedged item and hedged transaction
FVTPL are included in Other non-operating income/expense, net in our cash flow hedges.
while the forward element is shown in Financial income, net.
Derivatives Designated as Hedging Instruments We are exposed to various financial risks, such as market risks
a) Cash Flow Hedge (that is, foreign currency exchange rate risk, interest rate risk, and
equity price risk), credit risk, and liquidity risk.
In general, we apply cash flow hedge accounting to the foreign
We manage market risks, credit risk, and liquidity risk on a
currency risk of highly probable forecasted transactions. With
Group-wide basis through our global treasury department, global
regard to foreign currency risk, hedge accounting relates to the spot
risk management, and global credit management. Risk
price and the intrinsic values of the derivatives designated and
management policies are established to identify risks, to set
qualifying as cash flow hedges. Accordingly, the effective portion of
appropriate risk limits, and to monitor risks. Risk management
these components determined on a present value basis is recorded
policies and hedging strategies are laid out in our internal guidelines
in other comprehensive income. The forward element and time
(for example, treasury guideline and other internal guidelines), and
element as well as foreign currency basis spreads excluded from the
are subject to continuous internal review and analysis to reflect
hedging relationship are recorded as cost of hedging in a separate
changes in market conditions and our business.
position in other comprehensive income. As the amounts are not
We only purchase derivative financial instruments to reduce risks
material, they are presented together with the effective portion of
and not for speculation, which is defined as entering into derivative
the cash flow hedges in our consolidated statements of
instruments without a corresponding underlying transaction.
comprehensive income and consolidated statements of changes in
equity. All other components including counterparty credit risk
adjustments of the derivative and the ineffective portion are

F-48
Foreign Currency Exchange Rate Risk transactions are expected to occur and to be recognized in profit or
loss monthly within a time frame of 12 months from the date of the
Foreign Currency Exchange Rate Risk Factors statement of financial position.
As we are active worldwide, our ordinary operations are subject The amounts as at December 31, 2018, relating to items
to risks associated with fluctuations in foreign currencies. Since the designated as hedged items were as follows:
Group’s entities mainly conduct their operating business in their
own functional currencies, our risk of exchange rate fluctuations Designated Hedged Items in Foreign Currency
from ongoing ordinary operations is not considered significant. Exchange Rate Hedges
However, we occasionally generate foreign-currency-denominated
receivables, payables, and other monetary items by transacting in a Forecasted License Payments

currency other than the functional currency. To mitigate the extent € millions 2018
of the associated foreign currency exchange rate risk, the majority Change in value used for calculating –4
of these transactions are hedged as described below. hedge ineffectiveness
In rare circumstances, transacting in a currency other than the
Cash flow hedge –4
functional currency also leads to embedded foreign currency
Cost of hedging –2
derivatives being separated and measured at fair value through
profit or loss. Balances remaining in cash flow hedge 0
reserve for which hedge accounting is
In addition, the intellectual property (IP) holders in the SAP
no longer applied
Group are exposed to risks associated with forecasted
intercompany cash flows in foreign currencies. These cash flows
arise out of royalty payments from subsidiaries to the respective IP The amounts as at December 31, 2018, designated as hedging
holder. The royalties are linked to the subsidiaries’ external revenue. instruments were as follows:
This arrangement leads to a concentration of the foreign currency
exchange rate risk with the IP holders, as the royalties are mostly Designated Hedging Instruments in Foreign
denominated in the subsidiaries’ local currencies, while the Currency Exchange Rate Hedges
functional currency of the IP holders with the highest royalty volume Forecasted License Payments
is the euro. The highest foreign currency exchange rate exposure of
€ millions 2018
this kind relates to the currencies of subsidiaries with significant
operations, for example the U.S. dollar, the pound sterling, the Nominal amount 533
Japanese yen, the Swiss franc, and the Australian dollar. Carrying amount
Generally, we are not exposed to any significant foreign currency
Other financial assets 2
exchange rate risk with regard to our investing and financing
activities, as such activities are normally conducted in the functional Other financial liabilities –9
currency of the investing or borrowing entity. Change in value recognized in OCI 4

Hedge ineffectiveness recognized in 0

Finance income, net
Foreign Currency Exchange Rate Risk
Management Cost of hedging recognized in OCI 2

We continuously monitor our exposure to currency fluctuation Amount reclassified from cash flow 22
hedge in OCI to Other non-operating
risks based on monetary items and forecasted transactions and
income, net
pursue a Group-wide strategy to manage foreign currency exchange
rate risk, using derivative financial instruments, primarily foreign Amount reclassified from cost of –5
hedging in OCI to Finance income, net
exchange forward contracts, as appropriate, with the primary aim of
reducing profit or loss volatility. Most of the hedging instruments are
not designated as being in a hedge accounting relationship. On December 31, 2018, we held the following instruments to
hedge exposures to changes in foreign currency:
Currency Hedges Designated as Hedging Instruments (Cash Flow
Hedges)
We enter into derivative financial instruments, primarily foreign
exchange forward contracts, to hedge significant forecasted cash
flows (royalties) from foreign subsidiaries denominated in foreign
currencies with a hedge ratio of 1:1 and a hedge horizon of up to 12
months, which is also the maximum maturity of the foreign
exchange derivatives we use.
For all years presented, no previously highly-probable
transaction designated as a hedged item in a foreign currency cash
flow hedge relationship ceased to be probable. Therefore, we did not
discontinue any of our cash flow hedge relationships. Also,
ineffectiveness was either not material or non-existent in all years
reported. Generally, the cash flows of the hedged forecasted

F-49
Details on Hedging Instruments in Foreign Consequently, we are only exposed to significant foreign
Currency Exchange Rate Hedges currency exchange rate fluctuations with regard to the following:
– The spot component of derivatives held within a designated cash
Maturity
flow hedge relationship affecting other comprehensive income
2018 – Foreign currency embedded derivatives affecting other non-
1 to 6 months 6 to 12 months operating expense, net
Forward exchange contracts
– The foreign currency option held in connection with the planned
acquisition of Qualtrics affecting other non-operating expense,
Net exposure in € millions 337 195
net
Average EUR:GBP forward rate 89.42 90.21 Thus, our foreign currency exposure (and our average/high/low
Average EUR:JPY forward rate 130.91 130.06 exposure) as at December 31 was as follows:
Average EUR:CHF forward rate 1.15 1.14 Foreign Currency Exposure
Average EUR:AUD forward rate 1.61 1.62
€ billions 2018 2017

Year-end exposure toward all our major 6.3 0.9

currencies
Foreign Currency Exchange Rate Exposure
Our risk exposure is based on the following assumptions: Average exposure 2.1 0.9
– The SAP Group’s entities generally operate in their functional Highest exposure 6.3 1.0
currencies. In exceptional cases and limited economic Lowest exposure 0.7 0.9
environments, operating transactions are denominated in
currencies other than the functional currency, leading to a
foreign currency exchange rate risk for the related monetary Foreign Currency Exchange Rate Sensitivity
instruments. Where material, this foreign currency exchange rate We calculate our sensitivity on an upward/downward shift of
risk is hedged. Therefore, fluctuations in foreign currency +/– 10% of the foreign currency exchange rate between the euro
exchange rates have a significant impact neither on profit nor on and all major currencies (2017: +/– 10% of the foreign currency
other comprehensive income with regard to our non-derivative exchange rate between the euro and all other major currencies;
monetary financial instruments and related income or expenses. 2016: upward/downward shift of +/– 25% of the foreign currency
– Our free-standing derivatives designed for hedging foreign exchange rate between the euro and Brazilian real; +/– 10% of the
currency exchange rate risks almost completely balance the foreign currency exchange rate between the euro and all other
changes in the fair values of the hedged item attributable to major currencies). If, on December 31, 2018, 2017, and 2016, the
exchange rate movements in the Consolidated Income foreign currency exchange rates had been higher/lower as
Statements in the same period. As a consequence, the hedged described above, this would have the following effects on other non-
items and the hedging instruments are not exposed to foreign operating expense, net and other comprehensive income:
currency exchange rate risks, and thereby have no effect on
profit.

Foreign Currency Sensitivity

€ millions Effects on Other Non-Operating Effects on Other Comprehensive Income
Expense, Net

2018 2017 2016 2018 2017 2016

Derivatives held within a designated cash flow hedge relationship

All major currencies -10% (2017: all major currencies -10%; 2016: 62 71 79
Brazil real: –25%; all other major currencies –10%)

All major currencies +10% (2017: all major currencies +10%; 2016: –62 –71 –79
Brazil real: +25%; all other major currencies +10%)

Embedded derivatives

All currencies –10% 11 15 23

All currencies +10% –11 –15 –23

FX option held in connection with the acquisition of Qualtrics

USD –10% –29 0 0

USD +10% 559 0 0

F-50
Interest Rate Risk The amounts as at December 31, 2018, designated as hedging
instruments were as follows:
Interest Rate Risk Factors
We are exposed to interest rate risk as a result of our investing Designated Hedging Instruments in Interest Rate
and financing activities mainly in euros and U.S. dollars, since a Hedges
large part of our investments are based on variable rates and/or 2018
short maturities (2018: 48%; 2017: 79%) and most of our financing
€ millions Interest Rate Interest Rate
transactions are based on fixed rates and long maturities (2018:
Swaps for EUR Swaps for USD
83%; 2017: 71%). Borrowing Borrowing

Notional amount 750 535

Interest Rate Risk Management
Carrying amount
The aim of our interest rate risk management is to reduce profit
or loss volatility and optimize our interest result by creating a Other financial assets 10 1
balanced structure of fixed and variable cash flows. We therefore
Other financial liabilities 0 -3
manage interest rate risks by adding interest-rate-related derivative
instruments to a given portfolio of investments and debt financing. Change in fair value used for 10 -2
The desired fixed-floating mix of our net debt is set by the Treasury measuring ineffectiveness
Committee.

Derivatives Designated as Hedging Instruments (Fair Value As at December 31, 2018, we held the following instruments to
Hedges) hedge exposures to changes in interest rates:
To match the interest rate risk from our financing transactions to Details on Hedging Instruments in Interest Rate
our investments, we use receiver interest rate swaps to convert Hedges
certain fixed-rate financial liabilities to floating, and by this means
secure the fair value of the swapped financing transactions in a 1:1 2018
ratio. Including interest rate swaps, 71% (2017: 49%) of our total Maturity
interest-bearing financial liabilities outstanding as at
December 31, 2018, had a fixed interest rate. € millions 2019 2020 2022 2024
The amounts as at December 31, 2018, relating to items
EUR interest rate swaps
designated as hedged items were as follows:
Nominal amounts 750
Designated Hedged Items in Interest Rate Hedges
Average variable 0.613%
2018
interest rate
€ millions Fixed-Rate Fixed-Rate
Borrowing in EUR Borrowing in USD USD interest rate swaps

Notional amount 750 535 Nominal amounts 253 194 88

Carrying amount 749 534

Average variable 3.366% 3.341% 3.220%
Accumulated fair value 10 -32 interest rate
adjustments in Other financial
liabilities
None of the fair value adjustment from the receiver swaps, the
Change in fair value used for 10 1
basis adjustment on the underlying hedged items held in fair value
measuring ineffectiveness
hedge relationships, and the difference between the two recognized
Accumulated amount of fair value 0 -33 in financial income, net, is material in any of the years presented.
hedge adjustments for hedged
items ceased to be adjusted for
hedging gains / losses
Interest Rate Exposure
Our interest rate exposure (and our average/high/low exposure)
as at December 31 was as follows:

F-51
Interest Rate Risk Exposure

€ billions 2018 2017

Year-End Average High Low Year-End Average High Low

Fair value interest rate risk

From investments 0.08 0.09 0.10 0.08 0.04 0.12 0.31 0.03

Cash flow interest rate risk

From investments (including cash) 4.24 4.16 5.65 3.50 3.80 3.78 4.10 3.52

From financing 1.96 2.08 2.32 1.45 1.81 1.94 2.31 1.80

From interest rate swaps 1.28 1.31 1.36 1.27 1.35 1.75 2.22 1.35

Interest Rate Sensitivity interest rate swaps are not reflected in the sensitivity calculation,
A sensitivity analysis is provided to show the impact of our as they offset the fixed interest rate payments for the bonds and
interest rate risk exposure on profit or loss and equity in accordance private placements as hedged items. However, changes in
with IFRS 7, considering the following: market interest rates affect the amount of interest payments
– Changes in interest rates only affect the accounting for non- from the interest rate swap. As a consequence, we include those
derivative fixed-rate financial instruments if they are recognized effects of market interest rates on interest payments in the
at fair value. Therefore, such interest rate changes do not change profit-related sensitivity calculation.
the carrying amounts of our non-derivative fixed-rate financial Due to the different interest rate expectations for the U.S. dollar
liabilities, as we account for them at amortized cost. Investments and the euro area, we base our sensitivity analyses on a yield curve
in fixed-rate financial assets classified as available-for-sale were upward shift of +100/+30 basis points (bps) for the U.S. dollar/euro
not material at each year end reported. Thus, we do not consider area (2017: +100/+25bps for the U.S. dollar/euro area; 2016:
any fixed-rate instruments in the equity-related sensitivity +100/+50bps for the U.S. dollar/euro area), and a yield curve
calculation. downward shift of –25/–10bps for the U.S. dollar/euro area (2017:
– Income or expenses recorded in connection with non-derivative –25bps; 2016: –50bps).
financial instruments with variable interest rates are subject to If, on December 31, 2018, 2017, and 2016, interest rates had
interest rate risk if they are not hedged items in an effective been higher/lower as described above, this would not have had a
hedge relationship. Thus, we take into consideration interest rate material effect on financial income, net, for our variable interest rate
changes relating to our variable-rate financing and our investments and would have had the following effects on financial
investments in money market instruments in the profit-related income, net.
sensitivity calculation.
– The designation of interest rate receiver swaps in a fair value
hedge relationship leads to interest rate changes affecting
financial income, net. The fair value movements related to the

Interest Rate Sensitivity

€ millions Effects on Financial Income, Net

2018 2017 2016

Derivatives held within a designated fair value hedge relationship

Interest rates +100 bps for U.S. dollar area/+30 bps for euro area (2017: +100/+25 bps for U.S. –20 –26 –46
dollar/euro area; 2016: +100/+50 bps for U.S. dollar/euro area)
Interest rates –25 bps for U.S. dollar/–10 bps for euro area (2017: –25 bps for U.S. dollar/euro 5 9 29
area; 2016: –50 bps for U.S. dollar/euro area)
Variable-rate financing

Interest rates +100 bps for U.S. dollar area/+25 bps for euro area (2017: +25 bps for euro area; –24 –5 –21
2016: +50 bps for euro area)

Interest rates –25 bps for U.S. dollar/–10 bps for for euro area (2017: –25 bps for euro area; 4 0 0
2016: –50 bps for euro area)

Equity Price Risk Equity Price Risk Management

Equity Price Risk Factors Our listed equity investments are monitored based on the
We are exposed to equity price risk with regard to our current market value that is affected by the fluctuations in the
investments in equity securities and our share-based payments volatile stock markets worldwide. Unlisted equity investments are
plans. monitored based on detailed financial information provided by the

F-52
investees. The fair value of our listed equity investments depends on of only in the case of default of the counterparty to the investment.
the equity prices, while the fair value of the unlisted equity In the absence of other significant agreements to reduce our credit
investments is influenced by various unobservable input factors. risk exposure, the total amounts recognized as cash and cash
We also monitor the exposure with regard to our share-based equivalents, current investments, loans, and other financial
payment plans. To reduce resulting profit or loss volatility, we hedge receivables, trade receivables, and derivative financial assets
certain cash flow exposures associated with these plans by represent our maximum exposure to credit risks, except for the
purchasing derivative instruments, but we do not establish a agreements mentioned above.
designated hedge relationship.
Credit Risk Management
Equity Price Exposure
Cash at Banks, Time Deposits, and Debt Securities
Our exposure from our investments in equity securities was To mitigate the credit risk from our investing activities and
€1,248 million (2017: €827 million; 2016: €952 million).
derivative financial assets, we conduct all our activities only with
For information about the exposure from our share-based approved major financial institutions and issuers that carry high
payments plans, see Note (B.3). external ratings, as required by our internal treasury guideline.
Equity Price Sensitivity Among its stipulations, the guideline requires that we invest only in
assets from issuers with a minimum rating of at least “BBB flat.” We
In our sensitivity analysis for our share-based payments plans,
we include the hedging instruments and the underlying share-based only invest in issuers with a lower rating in exceptional cases. Such
payments even though the latter are scoped out of IFRS 7, as we investments were not material in 2018 and 2017. The weighted
average rating of our financial assets is in the range A to A–. We
believe that taking only the derivative instrument into account would
not properly reflect our equity price risk exposure. pursue a policy of cautious investments characterized by
Our sensitivity towards a fluctuation in equity prices is as follows: predominantly current investments, standard investment
instruments, as well as a wide portfolio diversification by doing
Equity Price Sensitivity business with a variety of counterparties.
To further reduce our credit risk, we require collateral for certain
€ millions 2018 2017 2016
investments in the full amount of the investment volume, which we
Investments in equity would be allowed to make use of in the case of default of the
securities
counterparty to the investment. As such collateral, we only accept
Increase in equity prices 65 56 84 bonds with at least investment-grade rating level.
and respective
unobservable inputs of 10% In addition, the concentration of credit risk that exists when
- increase of Financial counterparties are involved in similar activities by instrument,
income, net by sector, or geographic area is further mitigated by diversification of
Decrease in equity prices –65 –56 –81 counterparties throughout the world and adherence to an internal
and respective
unobservable inputs of 10%
limit system for each counterparty. This internal limit system
- decrease of Financial stipulates that the business volume with individual counterparties is
income, net by restricted to a defined limit that depends on the lowest official long-
Share-based payments term credit rating available by at least one of the major rating
Increase in equity prices of
agencies, the Tier 1 capital of the respective financial institution, or
20% participation in the German Depositors’ Guarantee Fund or similar
protection schemes. We continuously monitor strict compliance
- Increase of share- –279 –371 –333
based payment with these counterparty limits. As the premium for credit default
expenses by swaps mainly depends on market participants’ assessments of the
- Increase of offsetting 57 65 52 creditworthiness of a debtor, we also closely observe the
gains from hedging development of credit default swap spreads in the market to
instruments by
evaluate probable risk developments and react in a timely manner
Decrease in equity prices of to changes should these manifest.
20%

- Decrease of share-based 262 337 296 For cash at banks, time deposits, and debt securities such as
payment expenses by acquired bonds or commercial paper, we apply the general
- Decrease of offsetting –44 –46 –44 impairment approach. As it is our policy to only invest in high-quality
gains from hedging assets of issuers with a minimum rating of at least investment grade
instruments by
so as to minimize the risk of credit losses, we use the low credit risk
exception. Thus, these assets are always allocated to stage 1 of the
three-stage credit loss model and we record a loss allowance for an
Credit Risk amount equal to 12-month expected credit losses. This loss
Credit Risk Factors allowance is calculated based on our exposure as at the respective
reporting date, the loss given default for this exposure, and the
To reduce the credit risk in investments, we arrange to receive
credit default swap spread as a measure for the probability of
rights to collateral for certain investing activities in the full amount
default. To ensure that during their lifetime our investments always
of the investment volume, which we would be allowed to make use
fulfill the requirement of being investment-grade, we monitor

F-53
changes in credit risk by tracking published external credit ratings. which the historical data has been collected, current conditions, and
Among other things, we consider cash at banks, time deposits, and the expected changes in the economic conditions over the expected
debt securities to be in default when the counterparty is unlikely to life of the receivables. Forward-looking information is based on
pay its obligations in full, when there is information about a changes in country risk ratings, or fluctuations in credit default
counterparty’s financial difficulties, or in case of a drastic increase in swaps of countries of the customers we do business with. We
the credit default swap spread of a counterparty for a prolonged continuously monitor outstanding receivables locally to assess
time period while the overall market environment remains rather whether there is objective evidence that our trade receivables and
stable. Such financial assets are written off either partially or in full if contract assets are credit-impaired. Evidence that trade receivables
the likelihood of recovery is considered remote, which might be and contract assets are credit-impaired include, among the trade
evidenced, for example, by the bankruptcy of a counterparty of such receivables being past due, information about significant financial
financial assets. difficulty of the customer or non-adherence to a payment plan. We
consider receivables to be in default when the counterparty is
Trade Receivables
unlikely to pay its obligations in full, However, a delay of payments
The default risk of our trade receivables is managed separately,
(for example, more than 90 days past due) in the normal course of
mainly based on assessing the creditworthiness of customers
business alone does not necessarily indicate a customer default. We
through external ratings and on our past experience with the
write off account balances either partially or in full if we judge that
customers concerned. Based on this assessment, individual credit
the likelihood of recovery is remote, which might be evidenced, for
limits are established for each customer and deviations from such
example, when bankruptcy proceedings for a customer are finalized
credit limits need to be approved by management.
or when all enforcement efforts have been exhausted.
We apply the simplified impairment approach using a provision
The impact of default on our trade receivables from individual
matrix for all trade receivables and contract assets to take into
customers is mitigated by our large customer base and its
account any lifetime expected credit losses already at initial
distribution across many different industries, company sizes, and
recognition. For the purpose of the provision matrix, customers are
countries worldwide. For more information about our trade
clustered into different risk classes, mainly based on market
receivables, see Note (A.2.).
information such as the country risk assessment of their country of
origin. Loss rates used to reflect lifetime expected credit losses are
determined using a roll-rate method based on the probability of a Credit Risk Exposure
receivable progressing through different stages of being overdue
Cash, Time Deposits, and Debt Securities
and on our actual credit loss experience over the past years. These
As at December 31, 2018, our exposure to credit risk from cash,
loss rates are enhanced by forward-looking information to reflect
time deposits and debt securities was as follows:
differences between economic conditions during the period over

Credit Risk Exposure from Cash, Time Deposits, and Debt Securities
Equivalent to Weighted Average Loss Gross Carrying Amount Gross Carrying Amount ECL Allowance
External Rating Rate Not Credit-Impaired Credit-Impaired

Risk class 1 - low risk AAA to BBB– –0.1% 7,406 0 –5

Risk class 2 - high BB to D 0.0% 34 0 0

risk

Risk class 3 - NA –3.3% 30 0 –1

unrated

Total –0.1% 7,470 0 –6

As at December 31, 2017, the major part of our time deposits, Trade Receivables and Contract Assets
other loans, and other financial receivables was concentrated in As at December 31, 2018, our exposure to credit risk from trade
Germany. There were no time deposits, loans, or other financial receivables was as follows:
receivables past due but not impaired and we had no indications of
impairments of such assets that were not past due and not impaired
as at that date.

F-54
Credit Risk Exposure from Trade Receivables and Contract Assets
Weighted Average Loss Gross Carrying Amount Not Gross Carrying Amount ECL Allowance
Rate Credit-Impaired Credit-Impaired

AR not due and due –0.3% 4,288 0 –13

AR overdue 1 to 30 days –0.3% 749 15 –2

AR overdue 30 to 90 days –0.5% 551 8 –3

AR overdue more than 90 days –13.0% 558 125 –89

Total –1.7% 6,146 148 –107

For 2018, the movement in the ECL allowance (2017: movement

Liquidity Risk Management
in bad debt allowance according IAS 39) for trade receivables and
contract assets is as follows: Our liquidity is managed by our global treasury department with
the primary aim of maintaining liquidity at a level that is adequate to
Movement in ECL Allowance for Trade Receivables meet our financial obligations.
and Contract Assets Generally, our primary source of liquidity is funds generated from
our business operations. Our global treasury department manages
2018 2017
liquidity centrally for all subsidiaries. Where possible, we pool their
ECL Allowance Bad Debt Allowance cash surplus so that we can use liquidity centrally for our business
Balance as at 01/01 under –74 –89 operations, for subsidiaries’ funding requirements, or to invest any
IAS 39 net surplus in the market. With this strategy, we seek to optimize
Adoption of IFRS 9 –25 0 yields, while ensuring liquidity, by investing only with counterparties
and issuers of high credit quality, as explained before. Hence, high
Balance as at 01/01 under –99 –89
IFRS 9 levels of liquid assets and marketable securities provide a strategic
reserve, helping keep SAP flexible, sound, and independent.
Net credit losses recognized –18 4
Apart from effective working capital and cash management, we
Amounts written off 10 11 have reduced the liquidity risk inherent in managing our day-to-day
Balance as at 12/31 –107 –74 operations and meeting our financing responsibilities by arranging
an adequate volume of available credit facilities with various
An analysis of trade receivables that were neither past due nor financial institutions on which we can draw if necessary.
impaired and their aging as at December 31, 2017, was as follows: In order to retain high financial flexibility, on November 20, 2017,
SAP SE entered into a €2.5 billion syndicated credit facility
Aging of Trade Receivables agreement with an initial term of five years plus two one-year
extension options. In 2018, the initial term of this facility was
€ millions 2017 extended for an additional period of one year until November 2023.
Not past due and not individually impaired 4,185 The use of the facility is not restricted by any financial covenants.
Borrowings under the facility bear interest of EURIBOR or LIBOR for
Past due but not individually impaired
the respective currency plus a margin of 17bps. We are also required
Past due 1 to 30 days 695 to pay a commitment fee of 5.95bps per annum on the unused
Past due 31 to 120 days 459 available credit. We have not drawn on the facility.
In financing the planned acquisition of Qualtrics, we arranged for
Past due 121 to 365 days 266
a €2.5 billion acquisition facility to partially finance the purchase
Past due over 365 days 95 price payment. The facility has a lifetime of three years and can be
Total past due but not individually impaired 1,515 flexibly repaid with SAP’s free cash flow or further refinancing
transactions on the capital markets. For more information about
Individually impaired, net of allowances 110
drawings under the facility, see Note (G.9.).
Carrying amount of trade receivables, net 5,810 Additionally, as at December 31, 2018, and 2017, we had available
lines of credit totaling €445 million and €510 million, respectively.
There were immaterial borrowings outstanding under these lines of
Liquidity Risk credit in all years presented.

Liquidity Risk Factors

We are exposed to liquidity risk from our obligations towards Liquidity Risk Exposure
suppliers, employees, and financial institutions. The table below is an analysis of the remaining contractual
maturities of all our financial liabilities held as at December 31, 2018.
Financial liabilities for which repayment can be requested by the
contract partner at any time are assigned to the earliest possible
period. Variable interest payments were calculated using the latest

F-55
relevant interest rate fixed as at December 31, 2018. As we generally whether or not the fair value of the derivative is negative. The cash
settle our derivative contracts gross, we show the pay and receive outflows for the currency derivatives are translated using the
legs separately for all our currency and interest rate derivatives, applicable spot rate.

Contractual Maturities of Non-Derivative Financial Liabilities

€ millions Carrying Contractual Cash Flows
Amount

12/31/2018 2019 2020 2021 2022 2023 Thereafter

Non-derivative financial liabilities

Trade payables –1,265 –1,265 0 0 0 0 0

Financial liabilities –11,602 –1,149 –1,585 –622 –1,410 –1,097 –6,689

Total of non-derivative financial liabilities –12,866 –2,414 –1,585 –622 –1,410 –1,097 –6,689

€ millions Carrying Contractual Cash Flows

Amount

12/31/2017 2018 2019 2020 2021 2022 Thereafter

Non-derivative financial liabilities

Trade payables –952 –952 0 0 0 0 0

Financial liabilities –6,508 –1,554 –834 –957 –58 –429 –3,102

Total of non-derivative financial liabilities –7,460 –2,506 –834 –957 –58 –429 –3,102

F-56
Contractual Maturities of Derivative Financial Liabilities and Financial Assets
€ millions Carrying Contractual Cash Flows Carrying Contractual Cash Flows
Amount Amount

12/31/2018 2019 Thereafter 12/31/2017 2018 Thereafter

Derivative financial liabilities and assets

Derivative financial liabilities

Currency derivatives not designated as hedging instruments –64 –84

Cash outflows –2,111 –11 –3,909 –309

Cash inflows 2,062 0 3,857 292

Currency derivatives designated as hedging instruments –9 –1

Cash outflows –340 0 –75 0

Cash inflows 330 0 74 0

Interest rate derivatives without designated hedge relationship 0 0

Cash outflows

Cash inflows

Interest rate derivatives designated as hedging instruments –3 –1

Cash outflows –15 –27 –8 –15

Cash inflows 13 26 8 14

Total of derivative financial liabilities –76 –61 –12 –86 –53 –18

Derivative financial assets

Currency derivatives not designated as hedging instruments 100 41

Cash outflows –4,025 0 –2,799 0

Cash inflows 4,076 0 2,831 0

Currency derivatives designated as hedging instruments 2 29

Cash outflows –203 0 –634 0

Cash inflows 202 0 654 0

Interest rate derivatives designated as hedging instruments 11 24

Cash outflows –8 –14 –12 –43

Cash inflows 19 15 25 56

Total of derivative financial assets 113 61 1 93 65 13

Total of derivative financial liabilities and assets 37 0 –11 8 12 –5

(F.2) Fair Value Disclosures on Financial Fair Value of Financial Instruments

Instruments We use various types of financial instruments in the ordinary
Accounting Policies course of business, which are classified as either amortized cost
It is our policy that transfers between the different levels of the fair (AC) or fair value through profit or loss (FVTPL) (2017: loans and
value hierarchy are deemed to have occurred at the beginning of the receivables (L&R), available-for-sale (AFS), held-for-trading (HFT),
period of the event or change in circumstances that caused the or amortized cost (AC)). For those financial instruments measured
transfer. at fair value or for which fair value must be disclosed, we have
categorized the financial instruments into a three-level fair value
hierarchy depending on the inputs used to determine fair value and
their significance for the valuation techniques.

F-57
Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
€ millions Category 12/31/2018

Carrying Amount Measurement Categories Fair Value

At At Fair Level 1 Level 2 Level 3 Total

Amortized Value
Cost
Assets

Cash and cash equivalents 8,627

1)
Cash at banks AC 2,918 2,918
1)
Time deposits AC 4,514 4,514

Money market and similar funds FVTPL 1,195 1,195 1,195

Trade and other receivables 6,480

1)
Trade receivables AC 6,188 6,188
2)
Other receivables － 293

Other financial assets 1,984

Debt securities AC 77 77 77 77

Equity securities FVTPL 1,248 1,248 52 0 1,196 1,248

Investments in associates2) － 26

Time deposits AC 134 134 134

Financial instruments related to employee － 165

benefit plans2)

Loans and other financial receivables AC 147 147 147 147

Derivative assets

Designated as hedging instrument

FX forward contracts － 2 2 2 2

Interest rate swaps － 11 11 11 11

Not designated as hedging instrument

FX forward contracts FVTPL 100 100 100 100

Call options for share-based payments FVTPL 68 68 68 68

Call option on equity shares FVTPL 5 5 5 5

F-58
Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
€ millions Category 12/31/2018

Carrying Amount Measurement Categories Fair Value

At At Fair Level 1 Level 2 Level 3 Total

Amortized Value
Cost
Liabilities

Trade and other payables –1,614

1)
Trade payables AC –1,265 –1,265
2)
Other payables － –350

Financial liabilities –11,678

Non-derivative financial liabilities

Loans AC –58 –58 –58 –58

Bonds AC –10,204 –10,204 –10,365 –10,365

Private placements AC –1,041 –1,041 –1,035 –1,035

Other non-derivative financial liabilities AC –298 –298 –298 –298

Derivatives

Designated as hedging instrument

FX forward contracts － –9 –9 –9 –9

Interest rate swaps － –3 –3 –3 –3

Not designated as hedging instrument

FX forward contracts FVTPL –65 –65 –65 –65

Total financial instruments, net 3,798 1,112 2,553 –9,041 –1,006 1,201 –10,175

F-59
Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
€ millions Category 12/31/2017

Carrying Amount Measurement Categories Fair Value

At At Fair Level 1 Level 2 Level 3 Total

Amortized Value
Cost

Assets

Cash and cash equivalents1) L&R 4,011 4,011

Trade and other receivables 6,017
Trade receivables1) L&R 5,810 5,810
Other receivables2) － 207
Other financial assets 2,145
Available-for-sale financial assets
Debt investments AFS 39 39 39 39
Equity investments AFS 827 827 87 8 732 827
Investments in associates2) － 32
Loans and other financial receivables
Financial instruments related to employee － 155
benefit plans2)

Loans and other financial receivables L&R 899 899 899 899
Derivative assets
Designated as hedging instrument
FX forward contracts － 29 29 29 29
Interest rate swaps － 24 24 24 24
Not designated as hedging instrument
FX forward contracts HFT 41 41 41 41
Call options for share-based payments HFT 90 90 90 90
Call option on equity shares HFT 11 11 11 11

Liabilities

Trade and other payables –1,270

Trade payables1) AC –952 –952
2)
Other payables － –318
Financial liabilities –6,595
Non-derivative financial liabilities
Loans AC –24 –24 –24 –24
Bonds AC –5,147 –5,147 –5,335 –5,335
Private placements AC –1,130 –1,130 –1,136 –1,136
Other non-derivative financial liabilities AC –208 –208 –208 –208
Derivatives
Designated as hedging instrument
FX forward contracts － –1 –1 –1 –1
Interest rate swaps － –1 –1 –1 –1
Not designated as hedging instrument
FX forward contracts HFT –84 –84 –84 –84
Total financial instruments, net 4,308 3,259 974 –5,209 –364 742 –4,830

1)
We do not separately disclose the fair value for cash and cash equivalents, trade receivables, and accounts payable as their carrying amounts are a reasonable
approximation of their fair values.
2)
Since the line items trade receivables, trade payables, and other financial assets contain both financial and non-financial assets or liabilities (such as other taxes or
advance payments), the carrying amounts of non-financial assets or liabilities are shown to allow a reconciliation to the corresponding line items in the Consolidated
Statements of Financial Position.

F-60
Fair Values of Financial Instruments by Instrument Classification
€ millions Category 12/31/2018

Carrying Amount At Amortized At Fair Value

Cost

Financial assets

At fair value through profit or loss FVTPL 2,617 2,617

At amortized cost AC 13,978 13,978

Financial liabilities

At fair value through profit or loss FVTPL –65 –65

At amortized cost AC –12,866 –12,866

Fair Values of Financial Instruments by Instrument Classification

€ millions Category 12/31/2017

Carrying Amount At Amortized At Fair Value

Cost

Financial assets

At fair value through profit or loss HFT 141 141

Available-for-sale AFS 865 865

At amortized cost L&R 10,719 10,719

Financial liabilities

At fair value through profit or loss HFT –84 –84

At amortized cost AC –7,460 –7,460

F-61
Determination of Fair Values
A description of the valuation techniques and the inputs used in the fair value measurement is given below:

Financial Instruments Measured at Fair Value on a Recurring Basis

Type Fair Value Determination of Fair Value/Valuation Technique Significant Unobservable Interrelationship Between
Hierarchy Inputs Significant Unobservable
Inputs and Fair Value
Measurement
Other financial assets

Money-market and Level 1 Quoted prices in an active market NA NA

similar funds

Debt securities Level 1 Quoted prices in an active market NA NA

Listed equity Level 1 Quoted prices in an active market NA NA

securities
Level 2 Quoted prices in an active market deducting a discount NA NA
for the disposal restriction derived from the premium
for a respective put option.

Unlisted equity Level 3 Market approach. Comparable company valuation Peer companies used The estimated fair value
securities using revenue multiples derived from companies (revenue multiples range would increase (decrease)
comparable to the investee. from 8.6 to 9.0) if:
Revenues of investees - The revenue multiples
Discounts for lack of were higher (lower)
marketability (10% to - The investees’ revenues
20%) were higher (lower)
- The liquidity discounts
were lower (higher).
Market approach. Venture capital method evaluating a NA NA
variety of quantitative and qualitative factors such as
actual and forecasted results, cash position, recent or
planned transactions, and market comparable
companies.
Last financing round valuations NA NA

Liquidation preferences NA NA

Net asset value/fair market value as reported by the NA NA

respective funds

Call options for Level 2 Monte Carlo model. Calculated considering risk-free NA NA
share-based interest rates, the remaining term of the derivatives, the
payment plans dividend yields, the share price, and the volatility of our
share.
Call option on Level 3 Market approach. Company valuation using revenue Revenue multiples (2017: The estimated fair value
equity shares multiples (2017: EBITDA multiples) based on actual EBITDA multiples) used would increase (decrease)
results derived from the investee. Revenue (2017: EBITDA) if:
of the investee - The revenue multiples
(2017: EBITDA multiples)
were higher (lower)
- The investees’ revenue
(2017: EBITDA) were
higher (lower)

Other financial assets/ Financial liabilities

FX forward Level 2 Discounted cash flow using par-method. Expected NA NA

contracts future cash flows based on forward exchange rates are
discounted over the respective remaining term of the
contracts using the respective deposit interest rates
and spot rates.
Interest rate swaps Level 2 Discounted cash flow. Expected future cash flows are NA NA
estimated based on forward interest rates from
observable yield curves and contract interest rates,
discounted at a rate that reflects the credit risk of the
counterparty.

F-62
Financial Instruments Not Measured at Fair Value
Type Fair Value Determination of Fair Value/Valuation Technique
Hierarchy

Financial liabilities

Fixed-rate bonds (financial liabilities) Level 1 Quoted prices in an active market

Fixed-rate private placements/ loans (financial Level 2 Discounted cash flows.

liabilities) Future cash outflows for fixed interest and principal are discounted over the term of
the respective contracts using the market interest rates as of the reporting date.

For other non-derivative financial assets/liabilities and variable €46 million in 2018 (2017: €360 million), while transfers from Level 1
rate financial debt, it is assumed that their carrying value reasonably to Level 2 did not occur at all.
approximates their fair values.
Level 3 Fair Value Disclosures
Transfers Between Levels 1 and 2
The following table shows the reconciliation of fair values from
Transfers of equity securities from Level 2 to Level 1, which the opening to the closing balances for our unlisted equity securities
occurred because disposal restrictions lapsed and deducting a and call options on equity shares classified as Level 3 fair values:
discount for such restriction was no longer necessary, were

Reconciliation of Level 3 Fair Values

€ millions 2018 2017

01/01 742 722

Transfers

Into Level 3 0 0

Out of Level 3 –12 –100

Purchases 409 257

Sales –143 –102

Gains/losses

Included in financial income, net in profit and loss 168 26

Included in available-for-sale financial assets in other comprehensive income 0 28

Included in exchange differences in other comprehensive income 38 –89

12/31 1,202 742

Change in unrealized gains/losses in profit and loss for equity investments held at the 0 0
end of the reporting period

Transfers out of Level 3 are due to initial public offerings of impairment rules, and the different treatment of cost of hedging
the respective investee. Changing the unobservable inputs to are recognized in retained earnings of the opening balance sheet
on January 1, 2018. Comparative figures have not been restated
reflect reasonably possible alternative assumptions would
but reflect the requirements of IAS 39.
not have a material impact on the fair values of our unlisted
Our new accounting policies are described in the specific
equity securities held as FVTPL (2017: available-for-sale) as notes covering financial instruments, see Notes (A.2), (D.4),
of the reporting date. (E.3), and (F.1).
The adoption of IFRS 9 resulted in an increase of opening
retained earnings of €135 million (net of tax) as of
January 1, 2018, which is mainly due to the following:
(F.3) Adoption of IFRS 9 – Implementation of the expected credit loss model for trade
Effective January 1, 2018, we started to apply IFRS 9 ‘Financial receivables and contract assets as well as investments into
Instruments’ using the exception from full retrospective time deposits and debt investment, leading to a decrease of
application. IFRS 9 replaces the provisions of IAS 39 relating to opening retained earnings by €31 million
the classification and measurement of financial instruments, the – Reclassification of amounts attributable to available-for-sale
impairment of financial assets, and hedge accounting. The financial assets accumulated in other comprehensive income
impact from a different classification of financial assets, the new

F-63
 to opening retained earnings, leading to an increase of to opening retained earnings, leading to a decrease of opening
opening retained earnings by €157 million other comprehensive income by €157 million

The adoption of IFRS 9 resulted in a decrease of opening other The following table reconciles the carrying amounts and
comprehensive income of €160 million (net of tax) as of measurement categories of financial assets and liabilities under
January 1, 2018, which is mainly due to the following: IAS 39 to the carrying amounts and measurement categories
– Reclassification of amounts attributable to available-for-sale under IFRS 9 for each class of our financial assets and liabilities
financial assets accumulated in other comprehensive income upon transition to IFRS 9 on January 1, 2018:

F-64
Reconciliation of Carrying Amounts and Measurement Categories Upon Transition to IFRS 9
€ millions Carrying Amount IAS 39 Transition to IFRS 9 Carrying Amount IFRS 9
12/31/2017 01/01/2018
L&R AFS HFT AC No Reclassifi- Re- AC FVTPL No
Measure- cation measure- Measure-
ment ment ment
Category Category
IAS 39 IFRS 9
Assets
Cash and cash equivalents
Cash at banks 2,558 2,558
Time deposits 314 –3 311
Money market and 1,139 0 1,139
similar funds
Trade receivables 5,810 207 –25 5,785 207
Other financial assets
Debt securities 39 0 39
Equity securities 827 0 827
Time deposits 736 –3 733
Loans and other 163 163
financial receivables
Derivative assets
Designated as
hedging instrument

FX forward 29 29
contracts
Interest rate 24 24
swaps

Not designated as
hedging instrument

FX forward 41 41
contracts
Call options for 90 90
share-based
payments

Call option on 11 11
equity shares
Liabilities

Trade payables –952 –318 –952 –318

Financial liabilities
Non-derivative financial
liabilities
Loans –24 –24

Bonds –5,147 –5,147

Private placements –1,130 –1,130

Other non-derivative –208 –208

financial liabilities
Derivatives
Designated as
hedging instrument
FX forward –1 –1
contracts
Interest rate –1 –1
swaps
Not designated as
hedging instrument
FX forward –84 –84
contracts

F-65
The reclassification adjustments result from the following:  Investments in money-market and similar funds were
– Reclassification from available-for-sale to FVTPL reclassified from amortized cost to FVTPL, as their
 Equity securities in listed and unlisted entities classified as contractual cash flows do not solely represent payments of
available-for-sale financial assets were classified as FVTPL principal and interest. As such funds have a stable net
on January 1, 2018. There is no difference between their asset value, there was no difference between amortized
carrying amounts based on IAS 39 compared to IFRS 9. cost and fair value and accordingly, no impact on our
However, as a result of the change in classification, we opening retained earnings for 2018.
have reclassified amounts accumulated in Other
components of equity attributable to these equity The remeasurement adjustments result from the following:
securities to our opening retained earnings for 2018. – Implementation of the expected credit loss model for trade
– Reclassification from available-for-sale to AC receivables and contact assets
 Debt securities consisting of bonds of mainly financial and  The application of the simplified approach recording
non-financial corporations and municipalities were lifetime expected credit losses on our trade receivables
reclassified from available-for-sale financial assets to and contract assets led to an increase of the loss allowance
amortized cost on January 1, 2018, as the cash flows from by €25 million with a corresponding impact on our opening
these assets consist solely of payment of principal and retained earnings for 2018.
interest and our business model is to hold to collect the – Implementation of the expected credit loss model for cash at
contractual cash flows. As there was no material difference banks, time deposits, and debt securities
between the fair value and the amortized cost of these  The application of the general impairment approach on
debt securities, there was no material impact on our cash at banks, time deposits, and debt securities led to an
opening retained earnings for 2018. increase of our expected credit loss allowance by
 There was no material difference between the fair value of €6 million with a corresponding impact on our opening
the debt securities at December 31, 2018 and their retained earnings for 2018.
amortized cost. Thus, the fair value loss we would have  The following table reconciles the ending impairment
recognized in Other components of equity in 2018, had the allowance under IAS 39 to the opening expected credit loss
debt securities not been reclassified to amortized cost, allowance under IFRS 9:
would not have been material.
– Reclassification from AC to FVTPL

Reconciliation of the Impairment to the Expected Credit Loss Allowance Upon Transition to IFRS 9
€ millions Loss Allowance as at 12/31/2017 Remeasurement Loss Allowance as at 01/01/2018
under IAS 39 under IFRS 9

Financial assets at amortized cost

Trade receivables and contract assets 74 25 99

Cash at banks, time deposits, debt securities 1 6 7

and loans and other receivables

F-66
Section G – Other Disclosures
This section provides additional disclosures on miscellaneous (G.1) Other Non-Financial Assets
topics, including information pertaining to the Executive Board,
Supervisory Board, related party transactions, and other corporate Accounting Policy
governance topics. Prepaid expenses are recorded at historical cost in the amount of
unexpired or unconsumed costs. They are charged to expense over
the applicable period.

Prepaid Expenses and Other Tax Assets

€ millions 2018 2017

Current Non-Current Total Current Non-Current Total

Prepaid expenses 305 131 436 264 123 387

Other tax assets 170 98 268 209 66 275

Total 475 229 704 472 189 662

Other non-financial assets 889 1,301 2,191 725 687 1,411

Prepaid expenses and other tax assets as % of 53 18 32 65 28 47

other non-financial assets

Prepaid expenses primarily consist of prepayments for operating leases, support services, and software royalties. Other tax assets
primarily consist of VAT.

(G.2) Other Tax Liabilities

€ millions 2018 2017

Current Non-Current Total Current Non-Current Total

Other tax liabilities 540 0 540 568 0 568

Other non-financial liabilities 4,120 501 4,621 3,982 514 4,496

Other tax liabilities as % of 13 0 12 14 0 13

other non-financial liabilities

(G.3) Financial Commitments – Our rental and operating lease expenses were €708 million,
€532 million, and €458 million for the years 2018, 2017, and 2016,
Operating Leases respectively.
€ millions 2018 2017

Operating leases 1,442 1,459 Maturities

€ millions 12/31/2018
Our operating leases relate primarily to the lease of office space,
Operating Leases
hardware, and vehicles, with remaining non-cancelable lease terms
Due 2019 351
between less than one year and 50 years. On a limited scale, the
operating lease contracts include escalation clauses (based, for Due 2020 to 2023 755
example, on the consumer price index) and renewal options. Due thereafter 336

Total 1,442

F-67
(G.4) Other Litigation, Claims, and Legal of the intellectual property-related litigation and claims tend to be
either dismissed in court or settled out of court for amounts
Contingencies significantly below the originally claimed amounts. We currently
This Note discloses information about intellectual property- believe that resolving the intellectual property-related claims and
related litigation and claims, tax-related litigation other than income lawsuits pending as at December 31, 2018, will neither individually
tax-related litigation (see Note (C.5)), and anti-bribery and export nor in the aggregate have a material adverse effect on our business,
control matters. financial position, profit, or cash flows.
Individual cases of intellectual property-related litigation and
Accounting Policies, Judgments, and Estimates claims include the following:
The policies outlined in Note (A.4) for customer-related provisions, In June 2018, Teradata Corporation, Teradata US, Inc. and
which include provisions for customer-related litigation cases and Teradata Operations, Inc. (collectively “Teradata”) filed a civil
claims, equally apply to our other litigation, claims, and legal lawsuit against SAP SE, SAP America, Inc. and SAP Labs, LLC in
contingencies disclosed in this Note. U.S. federal court in California. Teradata alleges that SAP
misappropriated trade secrets of Teradata, infringed Teradata’s
The outcome of litigation and claims is intrinsically subject to
copyrights, and violated U.S. antitrust laws. Teradata seeks
considerable uncertainty. Management’s view of these matters may
unspecified monetary damages and injunctive relief. Trial is not yet
also change in the future. Actual outcomes of litigation and claims
scheduled.
may differ from the assessments made by management in prior
In February 2010, United States-based TecSec, Inc. (TecSec)
periods, which could result in a material impact on our business,
instituted legal proceedings in the United States against SAP
financial position, profit, cash flows, or reputation. Most of the
(including its subsidiary Sybase) and many other defendants.
lawsuits and claims are of a very individual nature and claims are
TecSec alleged that SAP’s and Sybase’s products infringe one or
either not quantified by the claimants or the claim amounts
more of the claims in five patents held by TecSec. In its complaint,
quantified are, based on historical evidence, not expected to be a
TecSec seeks unspecified monetary damages and permanent
good proxy for the expenditure that would be required to resolve the
injunctive relief. The lawsuit is proceeding but only with respect to
case concerned. The specifics of the jurisdictions where most of the
one defendant. The trial for SAP (including its subsidiary Sybase)
claims are located further impair the predictability of the outcome of
has not yet been scheduled – the lawsuit for SAP (including its
the cases. Therefore, it is not practicable to reliably estimate the
subsidiary Sybase) remains stayed.
financial effect that these lawsuits and claims would have if SAP
were to incur expenditure for these cases. Tax-Related Litigation
Further, the expected timing of any resulting outflows of economic We are subject to ongoing audits by domestic and foreign tax
benefits from these lawsuits and claims is uncertain and not authorities. In respect of non-income taxes, we, like many other
estimable, as it depends generally on the duration of the legal companies operating in Brazil, are involved in various proceedings
proceedings and settlement negotiations required to resolve them. with Brazilian tax authorities regarding assessments and litigation
matters on intercompany royalty payments and intercompany
We are subject to a variety of claims and lawsuits that arise from services. The total potential amount in dispute related to these
time to time in the ordinary course of our business, including matters for all applicable years is approximately €95 million (2017:
proceedings and claims that relate to companies we have acquired. €102 million). We have not recorded a provision for these matters,
We will continue to vigorously defend against all claims and lawsuits as we believe that we will prevail.
against us. The provisions recorded for these claims and lawsuits as For information about income tax-related litigation, see
at December 31, 2018, are neither individually nor in the aggregate Note (C.5).
material to SAP.
Among the claims and lawsuits disclosed in this Note are the Anti-Bribery and Export Control Matters
following classes: SAP has received communications and whistleblower
information alleging conduct that may violate anti-bribery laws in
Intellectual Property-Related Litigation and South Africa, the United States (including the U.S. Foreign Corrupt
Claims Practices Act (FCPA)), and other countries. The Legal Compliance
Intellectual property-related litigation and claims are cases in and Integrity Office of SAP is conducting investigations with the
which third parties have threatened or initiated litigation claiming assistance of an external law firm and voluntarily advised local
that SAP violates one or more intellectual property rights that they authorities in South Africa as well as the U.S. Securities and
possess. Such intellectual property rights may include patents, Exchange Commission (U.S. SEC) and the U.S. Department of
copyrights, and other similar rights. Justice (U.S. DOJ). The investigations and dialogue with the local
Contingent liabilities exist from intellectual property-related authorities and the U.S. SEC and U.S. DOJ are ongoing. SAP is
litigation and claims for which no provision has been recognized. cooperating with both the external law firm engaged for the
Generally, it is not practicable to estimate the financial impact of investigations and the authorities.
these contingent liabilities due to the uncertainties around the The alleged conduct may result in monetary penalties or other
litigation and claims, as outlined above. The total amounts claimed sanctions under the FCPA and/or other anti-bribery laws. In
by plaintiffs in those intellectual property-related lawsuits or claims addition, SAP’s ability to conduct business in certain jurisdictions
in which a claim has been quantified were not material to us as at could be negatively impacted. The comprehensive and exhaustive
December 31, 2018 and 2017. Based on our past experience, most investigations and the corresponding remediation activities are still

F-68
ongoing, and considering the complexity of individual factors and the complexity of individual factors and the large number of open
the large number of open questions, it is impossible at this point in questions, it is impossible at this point in time to assess the risks.
time to assess the risks or financial impact. For the reasons outlined above, it is impossible at this point in
SAP has implemented substantial enhancements to its anti- time to determine whether the potential anti-bribery law violations
corruption compliance program, including additional policy changes and the potential export restriction violations represent present
and more robust internal controls. SAP has appointed new obligations of SAP and, if so, to reliably estimate the amount of
management in some business units and has increased its these obligations. As a consequence, no provisions have been
compliance staff. Moreover, SAP has banned the use of recognized for these potential violations in our consolidated
commissioned business development partners as well as certain financial statements 2018. It is also not practicable to estimate the
sales commission agents in high-risk markets and has undertaken a financial effect of any contingent liabilities that may result from
systematic review of all relationships with state-owned entities and these potential violations.
institutions in Africa. We remain fully committed to compliance with
all U.S., German, EU, and South African laws, as well as the laws and
regulations in every jurisdiction in which SAP operates. (G.5) Board of Directors
Furthermore, we continue to investigate separate allegations
regarding conduct that certain independent SAP partners violated Executive Board
SAP contractual terms and sold SAP products and services in
Memberships on supervisory boards and other comparable
embargoed countries. These SAP partners presumably did not
governing bodies of enterprises, other than subsidiaries of SAP on
adhere to SAP’s strict procedures for indirect business activities. To
December 31, 2018
the extent any company independent from SAP chooses not to
follow SAP’s licensing procedures, SAP is ultimately limited in its Bill McDermott
ability to stop their activities. SAP devotes considerable resources Chief Executive Officer
to prevent and mitigate such activities should they occur. We are Strategy, Governance, Digital Government, Business Development,
also investigating allegations regarding direct sales from SAP to Corporate Development, Global Corporate Affairs, Corporate Audit
certain customers, who may have engaged in unauthorized and Global Marketing
activities in embargoed countries. The investigations are being
conducted by SAP’s Legal Compliance and Integrity Office and Board of Directors, ANSYS, Inc., Canonsburg, PA, United States
SAP’s Export Controls Team, with the assistance of an external law Board of Directors, Under Armour, Inc., Baltimore, MD, United
firm and forensic advisors. States
In this context, SAP voluntarily self-disclosed potential export Board of Directors, Dell Secure Works, Atlanta, GA, United States
controls and economic sanctions violations to the U.S. DOJ and the
U.S. Department of Treasury’s Office of Foreign Assets Control
(OFAC) in September 2017. At the same time, SAP provided Robert Enslin
notification to the U.S. SEC and responded to an SEC comment Cloud Business Group
letter on export restriction matters in October 2017. SAP has also SAP Business Network Segment (including SAP Concur, SAP Ariba,
provided disclosure to the U.S. Department of Commerce’s Bureau and SAP Fieldglass), Customer and Experience Management
of Industry and Security (BIS) based on the same alleged facts. Segment (including Customer Experience and Qualtrics),
Finally, pursuant to Section 219 of the U.S. Iran Threat Reduction Development and Delivery of SAP SuccessFactors (as part of the
and Syria Human Rights Act of 2012 and Section 13(r) of the U.S. Applications, Technology & Services Segment)
Securities Exchange Act of 1934, SAP has filed the required Iran
Notice with the U.S. SEC. The alleged conduct may result in Board of Directors, Discovery Limited, Johannesburg, South Africa
monetary penalties or other sanctions under U.S. sanctions and Board of Directors, Docker, Inc., San Francisco, CA, United States
export control laws.
SAP has taken remedial actions to terminate access to SAP
Adaire Fox-Martin
products and services for certain end users and block additional
business activities with these end users through SAP or SAP Global Customer Operations (EMEA, MEE, and Greater China)
partners. We have implemented further enhancements to our Global Sales, Regional Field Organizations, Line of Business
export control compliance program, including new internal controls, Solutions Sales
and have increased the capacity of the Export Control Compliance
team with a particular focus on high-risk countries. SAP has also Christian Klein (from January 1, 2018)
required additional due diligence, conducted by independent third-
Chief Operating Officer
parties, for certain SAP partners based in high-risk regions. We are
Intelligent Enterprise Group
fully committed to compliance with all U.S., EU, and German laws
Global Development and Delivery of SAP’s Core Applications, Global
regarding economic sanctions and export controls, including laws
Business Operations, IT Services, Cloud Infrastructure
restricting the sale, export, and usage of SAP software and services
in Iran and in other embargoed countries.
The comprehensive and exhaustive investigations and the
corresponding remediation activities are ongoing, and considering

F-69
Michael Kleinemeier Supervisory Board
SAP Digital Business Services (Co-Lead with Bernd Leukert)
Global Services Delivery, Regional Field Services Memberships on supervisory boards and other comparable
governing bodies of enterprises, other than subsidiaries of SAP on
Supervisory Board, innogy SE, Essen, Germany December 31, 2018
Board of Partners, E. Merck KG, Darmstadt, Germany (from
January 27, 2019) Prof. Dr. h.c. mult. Hasso Plattner 2), 4), 6), 7), 8)
Chairman
Bernd Leukert
SAP Digital Business Services (Co-Lead with Michael Kleinemeier) Margret Klein-Magar 1), 2), 4),
Global Support Delivery, Global Innovation Services, Global Deputy Chairperson
Customer Success Group, Global User Groups, Digital Interconnect, Vice President, Head of SAP Alumni Relations
SAP HANA Enterprise Cloud, Application Innovation Services, SAP Chairperson of the Spokespersons’ Committee of Senior Managers
Innovative Business Solutions, SAP Secrecy of SAP SE

Supervisory Board, DFKI (Deutsches Forschungszentrum für

Künstliche Intelligenz GmbH), Kaiserslautern, Germany Pekka Ala-Pietilä 2), 4), 5), 6), 7)
Supervisory Board, Bertelsmann SE & Co. KGaA, Guetersloh, Chairman of the Board of Directors, Huhtamäki Oyj,
Germany Espoo, Finland
Supervisory Board TomTom N.V., Amsterdam, the Netherlands
Chairman of the Board of Directors, Sanoma Corporation, Helsinki,
Finland
Jennifer Morgan
Chairman of the Board of Directors, Netcompany A/S, Copenhagen,
Global Customer Operations (Americas and APJ)
Denmark
Global Sales, Regional Field Organizations, Line of Business
Solutions Sales
Panagiotis Bissiritsas 1), 3), 4), 5)
Board of Directors, Bank of New York Mellon, New York, NY, United Support Expert
States Member of Works Council SAP SE

Luka Mucic Martin Duffek 1), 3), 4), 8)

Chief Financial Officer Product Manager
Global Finance and Administration including Investor Relations and
Data Protection & Privacy, Global Security
Aicha Evans 2), 4), 8)
Senior Vice President and Chief Strategy Officer, Intel Corporation,
Jürgen Müller (from January 1, 2019) Santa Clara, CA, United States
Chief Innovation Officer
Technology & Innovation
Diane Greene (from May 17, 2018) 4)
Technology and Innovation Strategy, SAP HANA, SAP Cloud
Platform, SAP Leonardo, SAP Analytics Chief Executive Officer. Google Cloud, Google LLC, Mountain View,
CA, United States (until January 28, 2019)

Stefan Ries Board of Directors, Alphabet, Inc., Mountain View, CA, United States
Chief Human Resources Officer, Labor Relations Director Board of Directors, Stripe Inc., San Francisco, CA, United States
HR Strategy, Business Transformation, Leadership Development, (from January 31, 2019)
Talent Development

Andreas Hahn 1), 2), 4)

Supervisory Board, Rhein-Neckar Loewen GmbH, Kronau, Germany
Product Expert, IoT Standards,
Member of Works Council SAP SE

Prof. Dr. Gesche Joost 4), 8)

Professor for Design Research and Head of the Design Research
Lab, University of Arts Berlin

Supervisory Board, Ottobock SE & Co. KGaA, Duderstadt, Germany

Supervisory Board, ING-DiBa AG, Frankfurt, Germany

F-70
Lars Lamadé 1), 2), 7), 8) Supervisory Board, RWE AG, Essen, Germany
Head of Sponsorships Europe and Asia Chairman of the Supervisory Board, innogy SE, Essen, Germany

Supervisory Board, Rhein-Neckar Loewen GmbH, Kronau, Germany Robert Schuschnig-Fowler 1), 5), 8)
Account Manager, Senior Support Consultant
Bernard Liautaud 2), 4), 6) Deputy Chairman of SAP SE Works Council Europe (until
Managing Partner Balderton Capital, London, United Kingdom November 19, 2018)
Member of Works Council SAP SE
Board of Directors, nlyte Software Ltd., London, United Kingdom
Board of Directors, Wonga Group Ltd., London, United Kingdom Dr. Sebastian Sick 1), 2), 5), 7)
(until September 6, 2018)
Head of Company Law Unit, Hans Böckler Foundation, Duesseldorf,
Board of Directors, SCYTL Secure Electronic Voting SA, Barcelona,
Germany
Spain (until November 7, 2018)
Board of Directors, Vestiaire Collective SA, Levallois-Perret, France
Board of Directors, Dashlane, Inc., New York, NY, United States Pierre Thiollet 1), 4)
Board of Directors, Recorded Future, Inc., Cambridge, MA, United Webmaster (P&I)
States Member of the SAP France Works Council
Board of Directors, eWise Group, Inc., Redwood City, Secretary of CHSCT (Hygiene, Security and Work Conditions
CA, United States Committee)
Board of Directors, Qubit Digital Ltd., London, United Kingdom
Board of Directors, Stanford University, Stanford,
CA, United States (until March 31, 2018) Supervisory Board Members Who Left During 2018
Board of Directors, Aircall.io, New York City, NY, United States Prof. Anja Feldmann (until December 31, 2018)
Board of Directors, Virtuo Technologies, Paris, France
Prof. Dr. Wilhelm Haarmann (until May 17, 2018)
Board of Directors, The Hut Group, Manchester, United Kingdom
Prof. Dr.-Ing. Dr.-Ing. E. h. Klaus Wucherer (until May 17, 2018)
Board of Directors, Peakon Aps, Copenhagen, Denmark (from
February 5, 2018)
Board of Directors, Tim Talent SAS, Paris, France (from Information as at December 31, 2018
February 6, 2018)
Board of Directors, Citymapper Ltd., London, United Kingdom 1)
Elected by the employees
2)
Member of the Company’s General and Compensation Committee
3)
Member of the Company’s Audit Committee
Gerhard Oswald (from January 1, 2019), 4)
Member of the Company’s Technology and Strategy Committee
Managing Director of Oswald Consulting GmbH, Walldorf, Germany 5)
Member of the Company’s Finance and Investment Committee
6)
Member of the Company’s Nomination Committee
Advisory Board, TSG 1899 Hoffenheim Fußball-Spielbetriebs GmbH, 7)
Member of the Company’s Special Committee
Sinsheim, Germany 8)
Member of the Company’s People and Organization Committee

Christine Regitz 1), 4), 8)

(G.6) Executive and Supervisory Board
Vice President User Experience
Chief Product Expert
Compensation
Accounting Policy
The share-based payment amounts disclosed below in the table
Dr. Friederike Rotsch (from May 17, 2018) 3), 5), 7)
“Executive Board Compensation” are based on the grant date fair
Group General Counsel and Head of Group Legal & Compliance,
value of the restricted share units (RSUs) and performance share
Merck KGaA, Darmstadt, Germany
units (PSUs), respectively, issued to Executive Board members
during the year under the LTI 2016 Plan, effective January 1, 2016.
Dr. Erhard Schipporeit 3), 5), 7) In the table “Share-Based Payment for Executive Board Members”,
Independent Management Consultant the share-based payment expense is the amount recorded in profit
or loss under IFRS 2 (Share-Based Payment) in the respective
Supervisory Board, Talanx AG, Hanover, Germany period.
Supervisory Board, Deutsche Börse AG, Frankfurt am Main,
Germany (until May 16, 2018)
Supervisory Board, HDI V.a.G., Hanover, Germany
Supervisory Board, Hannover Rückversicherung SE, Hanover,
Germany
Supervisory Board, Fuchs Petrolub SE, Mannheim, Germany
Supervisory Board, BDO AG, Hamburg, Germany

F-71
 The total compensation of the Executive Board members for the Payments to/DBO for Former Executive Board
years 2018, 2017, and 2016 was as follows: Members
Executive Board Compensation € thousands 2018 2017 2016

Payments 2,054 1,997 1,667

€ thousands 2018 2017 2016
DBO 12/31 38,374 39,993 33,935
Short-term employee benefits 18,652 16,634 19,206

Share-based payment1) 23,646 25,723 23,942

SAP did not grant any compensation advance or credit to, or
Subtotal1) 42,298 42,357 43,148 enter into any commitment for the benefit of, any member of the
Executive Board or Supervisory Board in 2018, 2017, or 2016.
Post-employment benefits 1,106 1,312 2,398

Thereof defined-benefit 250 423 1,792 (G.7) Related Party Transactions Other
Thereof defined-contribution 856 889 606
Than Board Compensation
Total 1)
43,404 43,669 45,546 Certain Supervisory Board members of SAP SE currently hold, or
held within the last year, positions of significant responsibility with
1)
Portion of total executive compensation allocated to the respective year other entities. We have relationships with certain of these entities in
the ordinary course of business, whereby we buy and sell products,
assets, and services at prices believed to be consistent with those
Share-Based Payment for Executive Board negotiated at arm’s length between unrelated parties.
Members Companies controlled by Hasso Plattner, chairman of our
Supervisory Board and Chief Software Advisor of SAP, engaged in
2018 2017 2016
the following transactions with SAP: providing consulting services to
Number of RSUs granted 118,072 117,929 147,041 SAP, receiving sport sponsoring from SAP, making purchases of
Number of PSUs granted 177,106 176,886 220,561 SAP products and services, and selling a piece of land to SAP.
Wilhelm Haarmann, member of the Supervisory Board until
Total expense in € thousands 8,054 19,068 14,233
May 17, 2018, practices as a partner in the law firm Linklaters LLP in
Frankfurt am Main, Germany. SAP occasionally purchased and
The defined benefit obligation (DBO) for pensions to Executive purchases legal and similar services from Linklaters.
Board members and the annual pension entitlement of the Occasionally, members of the Executive Board of SAP SE obtain
members of the Executive Board on reaching age 62 based on services from SAP for which they pay a consideration consistent
entitlements from performance-based and salary-linked plans were with those negotiated at arm’s length between unrelated parties.
as follows: All amounts related to the abovementioned transactions were
immaterial to SAP in all periods presented.
Retirement Pension Plan for Executive Board
In total, we sold products and services to companies controlled
Members
by members of the Supervisory Board in the amount of €37 million
€ thousands 2018 2017 2016 (2017: €2 million), we bought products and services from such
DBO 12/31 3,441 3,191 10,739 companies in the amount of €3 million (2017: €5 million), and we
provided sponsoring and other financial support to such companies
Annual pension entitlement 192 148 470
in the amount of €4 million (2017: €4 million). Outstanding balances
at year end from transactions with such companies were €3 million
The total annual compensation of the Supervisory Board (2017: €0 million) for amounts owed to such companies and
members is as follows: €28 million (2017: €0 million) for amounts owed by such
companies. All of these balances are unsecured and interest-free
Supervisory Board Compensation
and settlement is expected to occur in cash. Commitments (the
€ thousands 2018 2017 2016 longest of which is for five years) made by us to purchase further
Total compensation 3,702 3,663 3,652 goods or services from these companies and to provide further
sponsoring and other financial support amount to €191 million as at
Thereof fixed compensation 3,162 3,135 3,135
December 31, 2018 (2017: €21 million).
Thereof committee 540 528 517 In total, we sold services to members of the Executive Board and
remuneration
the Supervisory Board in the amount of €0 million (2017:
€0 million), and we received services from members of the
The Supervisory Board members do not receive any share-based
Supervisory Board (including services from employee
payment for their services. As far as members who are employee
representatives on the Supervisory Board in their capacity as
representatives on the Supervisory Board receive share-based
employees of SAP) in the amount of €1 million (2017: €1 million).
payment, such compensation is for their services as employees only
Amounts owed, but not yet paid, to Supervisory Board members
and is unrelated to their status as members of the Supervisory
from these transactions were €0 million as at December 31, 2018
Board.
(2017: €0 million). All of these balances are unsecured and interest-
free and settlement is expected to occur in cash.

F-72
 For information about the compensation of our Executive Board Wirtschaftsprüfungsgesellschaft as SAP’s independent auditor for
and Supervisory Board members, see Note (G.6). 2018. KPMG AG Wirtschaftsprüfungsgesellschaft has been the
company’s principal auditor since the fiscal year 2002. KPMG AG
Wirtschaftsprüfungsgesellschaft and other firms in the global KPMG
(G.8) Principal Accountant Fees and network charged the following fees to SAP for audit and other
Services professional services related to 2018 and the previous years:

At the Annual General Meeting of Shareholders held on

May 17, 2018, our shareholders elected KPMG AG

€ millions 2018 2017 2016

KPMG AG Foreign Total KPMG AG Foreign Total KPMG AG Foreign Total

(Germany) KPMG (Germany) KPMG (Germany) KPMG
Firms Firms Firms

Audit fees 3 6 9 3 7 10 3 6 9

Audit-related fees 0 0 0 0 0 0 0 1 1

Tax fees 0 0 0 0 0 0 0 0 0

All other fees 0 0 0 0 0 0 0 0 0

Total 3 6 9 3 7 10 3 7 10

Audit fees are the aggregate fees charged by KPMG for auditing Qualtrics Acquisition: Consideration Transferred
our consolidated financial statements and the statutory financial (Provisional Amounts)
statements of SAP SE and its subsidiaries. Audit-related fees are
€ billions
fees charged by KPMG for assurance and related services that are
reasonably related to the performance of the audit or review of our Cash paid 6.2
financial statements and are not reported under audit fees.
Liabilities incurred 0.3

Total consideration transferred 6.5

(G.9) Events After the Reporting Period
The liabilities incurred (the amounts above are provisional as
Business Combinations – Acquisition of forfeiture rates and so on have not been finally determined) relate to
Qualtrics the earned portion of unvested share-based payment awards. These
On January 23, 2019, we concluded the acquisition of Qualtrics, liabilities were incurred by replacing, upon acquisition, equity-
following satisfaction of applicable regulatory and other approvals. settled share-based payment awards held by employees of
Qualtrics is a leading provider of customer relationship Qualtrics with cash-settled share-based payment awards, which are
management (CRM) solutions. By combining Qualtrics products subject to forfeiture. The liabilities represent the portion of the
and SAP products, we aim to deliver an end-to-end experience and replacement awards that relates to pre-acquisition services
operational management system to our customers. provided by the acquiree’s employees, and were measured at the
We acquired 100% of the Qualtrics shares for approx. US$35 per fair value determined under IFRS 2.
share, representing consideration transferred in cash of The following table summarizes the provisional values of
approximately US$7.1 billion. In addition to the cash payments, SAP identifiable assets acquired and liabilities assumed in connection
will also incur liabilities and post-closing expenses relating to with the acquisition of Qualtrics, as at the acquisition date.
assumed share-based payment awards amounting to approximately
US$0.9 billion.
The financial effects of this transaction have not been recognized
in the consolidated financial statements as at December 31, 2018.
The operating results and assets and liabilities of Qualtrics will be
reflected in our consolidated financial statements from
January 23, 2019, onward.

F-73
Qualtrics Acquisition: Provisional Amounts of – Cross-selling opportunities to existing SAP customers across all
Assets and Liabilities regions, using SAP’s sales organization
– Combining Qualtrics products and SAP products to deliver an
€ billions
end-to-end experience and operational management system to
Cash and cash equivalents 0.1 the customers
– Improved profitability in Qualtrics sales and operations
Trade and other receivables 0.1

Property, plant, and equipment 0.1 The allocation of the goodwill resulting from the Qualtrics
acquisition to our operating segments depends on how our
Intangible assets 2.0 operating segments actually benefit from the synergies of the
Qualtrics business combination. We have not yet completed the
Thereof acquired technology 0.5
identification of those benefits.
Thereof customer relationship and other 1.5
intangibles
Restructuring
Total identifiable assets 2.3
As we intensify our focus on our key strategic growth areas, we
Trade and other payables 0.1 will execute a company-wide restructuring program in 2019 to
further simplify company structures and processes and to ensure
Current and deferred tax liabilities 0.3 that our organizational setup, skills set, and resource allocation
Contract liabilities/deferred income 0.1 continue to meet evolving customer demand. The main features of
the restructuring plan were announced on January 29, 2019.
Other liabilities 0.1 Restructuring expenses are projected to be €800 million to
€950 million.
Total identifiable liabilities 0.6

Total identifiable net assets 1.7 (G.10) Scope of Consolidation,

Goodwill 4.8 Subsidiaries and Other Equity
Total consideration transferred 6.5
Investments
Entities Consolidated in the Financial Statements
We have not yet completed the accounting for the Qualtrics Total
acquisition. In particular, the fair values of the intangible assets and 12/31/2016 245
contract liabilities disclosed above have only been determined
Additions 10
provisionally (with the provisional values of the intangibles being
based on benchmarks), as the valuations have only just started. The Disposals –28
tax related assets and liabilities presented above might also vary 12/31/2017 227
significantly, as deferred taxes from investments in subsidiaries,
Additions 59
unused tax losses, and so on, could not be finally determined. It is
also not yet possible to provide detailed information about each Disposals –21
class of acquired receivables or contingent liabilities. 12/31/2018 265
In general, the goodwill arising from the acquisitions consists
largely of the synergies and the know-how and technical skills of the The additions relate to legal entities added in connection with
acquired businesses’ workforces. acquisitions and foundations. The disposals are mainly due to
mergers and liquidations of legal entities.
Qualtrics goodwill is attributed to expected synergies from the
acquisition, particularly in the following areas:

F-74
Subsidiaries
Major Subsidiaries
Name and Location of Company Ownership Total Revenue in Profit/Loss Total Equity Number of Foot-
20181) (–) After Tax as at Employees note
for 20181) 12/31/20181) as at
12/31/20182)
% € thousands € thousands € thousands

Ariba, Inc., Palo Alto, CA, United States 100.0 1,168,287 212,728 3,972,022 1,872
4)
Callidus Software Inc., Dublin, CA, United States 100.0 175,789 –52,016 2,053,873 810

Concur Technologies, Inc., Bellevue, WA, United States 100.0 1,545,720 1,787 7,340,513 3,569

LLC SAP CIS, Moscow, Russia 100.0 472,531 23,133 62,725 837

SAP (Schweiz) AG, Biel, Switzerland 100.0 822,547 68,029 84,935 767
10), 17)
SAP (UK) Limited, Feltham, United Kingdom 100.0 1,227,572 10,385 –47,515 1,794

SAP America, Inc., Newtown Square, PA, United States 100.0 5,363,074 –514,481 14,320,071 8,184

SAP Argentina S.A., Buenos Aires, Argentina 100.0 142,718 –25,540 –15,237 825 17)

SAP Asia Pte Ltd, Singapore, Singapore 100.0 458,919 –28,224 21,625 1,262 17)

SAP Australia Pty Ltd, Sydney, Australia 100.0 733,060 –18,774 42,366 1,322

SAP Brasil Ltda, São Paulo, Brazil 100.0 519,124 –33,903 –26,346 1,913

SAP Canada, Inc., Toronto, Canada 100.0 865,582 53,734 465,034 2,999

SAP China Co., Ltd., Shanghai, China 100.0 949,367 –67,883 –184,135 5,272 17)

7), 9)
SAP Deutschland SE & Co. KG, Walldorf, Germany 100.0 4,199,201 754,022 1,567,774 4,707

SAP España – Sistemas, Aplicaciones y Productos en la Informática,

100.0 491,270 24,691 336,419 652
S.A., Madrid, Spain

SAP France, Levallois Perret, France 100.0 1,051,242 156,005 1,606,922 1,564

SAP Hungary Rendszerek, Alkalmazások és Termékek az

100.0 112,448 1,775 21,073 956
Adatfeldolgozásban Informatikai Kft., Budapest, Hungary

SAP India Private Limited, Bangalore, India 100.0 621,942 72,674 344,218 2,028

SAP Industries, Inc., Newtown Square, PA, United States 100.0 638,394 118,321 691,709 338

SAP Italia Sistemi Applicazioni Prodotti in Data Processing S.p.A.,

100.0 563,346 39,332 427,184 710
Vimercate, Italy

SAP Japan Co., Ltd., Tokyo, Japan 100.0 980,832 82,902 192,939 1,210

SAP Labs India Private Limited, Bangalore, India 100.0 477,630 40,051 132,888 8,282

SAP Labs, LLC, Palo Alto, CA, United States 100.0 604,460 124,246 484,511 2,189
17)
SAP México S.A. de C.V., Mexico City, Mexico 100.0 386,079 10,984 20,172 869

SAP National Security Services, Inc., Newtown Square, PA, United

100.0 552,326 130,945 426,052 448
States

SAP Nederland B.V., 's-Hertogenbosch, the Netherlands 100.0 613,282 52,886 145,553 611 11)

SAP Service and Support Centre (Ireland) Limited, Dublin, Ireland 100.0 180,364 15,930 65,128 1,628

SuccessFactors, Inc., South San Francisco, CA, United States 100.0 867,910 203,903 3,609,046 999

F-75
 Name and Location of Company Owner- Foot-
Other Subsidiaries 3) ship note
Name and Location of Company Owner- Foot-
%
ship note

% CallidusCloud Mexico, S. de R.L. de C.V., Mexico City, 4)

100.0
Mexico
“SAP Kazakhstan“ LLP, Almaty, Kazakhstan 100.0
CallidusCloud Netherlands B.V., Rotterdam, the 4), 11)
100.0
Netherlands
110405, Inc., Newtown Square, PA, United States 100.0
CallidusCloud New Zealand Corp., Auckland, New 4)
10) 100.0
Abakus Europe Limited, London, United Kingdom 100.0 Zealand

CallidusCloud Pty. Ltd., Sydney, Australia 100.0 4)

Abakus Ukraine Limited Liability Company, Kiev, Ukraine 100.0
Christie Partners Holding C.V., 's-Hertogenbosch, the 11)
Ambin Properties Proprietary Limited, Johannesburg, 100.0
100.0 Netherlands
South Africa
C-Learning Pty. Ltd., Sydney, Australia 100.0 4)
Apex Expert Solutions LLC, Arlington, VA, United States 100.0 4)

ClearTrip Inc. (Mauritius), Ebene, Mauritius 57.0

Ariba Czech s.r.o., Prague, Czech Republic 100.0
ClearTrip Inc., George Town, Cayman Islands 57.0
Ariba India Private Limited, Gurgaon, India 100.0 Cleartrip MEA FZ LLC, Dubai, United Arab Emirates 57.0

Ariba International Holdings, Inc., Wilmington, DE, United Cleartrip Packages and Tours Private Limited, Mumbai, 4)
100.0 57.0
States India
Ariba International Singapore Pte Ltd, Singapore, ClearTrip Private Limited, Mumbai, India 57.0
100.0
Singapore
Clicktools Limited, Dorset, United Kingdom 100.0 4), 10)
Ariba International, Inc., Wilmington, DE, United States 100.0
CNQR Operations Mexico S. de. R.L. de. C.V., San Pedro
100.0
Garza Garcia, Mexico
Ariba Slovak Republic, s.r.o., Košice, Slovakia 100.0
Concur (Austria) GmbH, Vienna, Austria 100.0
Ariba Software Technology Services (Shanghai) Co., Ltd.,
100.0
Shanghai, China Concur (Canada), Inc., Toronto, Canada 100.0
Ariba Technologies India Private Limited, Bangalore,
100.0 Concur (France) SAS, Paris, France 100.0
India
8), 9)
Ariba Technologies Netherlands B.V., 's-Hertogenbosch, 11) Concur (Germany) GmbH, Frankfurt am Main, Germany 100.0
100.0
the Netherlands
Concur (Japan) Ltd., Tokyo, Japan 73.8
Beijing Zhang Zhong Hu Dong Information Technology 5)
0
Co., Ltd., Beijing, China Concur (New Zealand) Limited, Wellington, New Zealand 100.0 15)

b-process, Paris, France 100.0 14)

Concur (Philippines) Inc., Makati City, Philippines 100.0

Business Objects Holding B.V., 's-Hertogenbosch, the Concur (Switzerland) GmbH, Zurich, Switzerland 100.0 13)
100.0 11)
Netherlands
Concur Czech (s.r.o.), Prague, Czech Republic 100.0
Business Objects Option LLC, Wilmington, DE, United
100.0
States Concur Holdings (France) SAS, Paris, France 100.0
Business Objects Software Limited, Dublin, Ireland 100.0 Concur Holdings (Netherlands) B.V., Amsterdam, the 11)
100.0
Netherlands
4)
Callidus Software (Canada) Inc., Toronto, Canada 100.0 Concur Technologies (Australia) Pty. Limited, Sydney,
100.0
Australia
Callidus Software (Singapore) Pte. Ltd., Singapore, 4)
100.0
Singapore Concur Technologies (Hong Kong) Limited, Hong Kong,
100.0
China
Callidus Software GmbH, Munich, Germany 100.0 4), 8), 9)
Concur Technologies (India) Private Limited, Bangalore,
100.0
4)
India
Callidus Software Hong Kong Ltd., Hong Kong, China 100.0
Concur Technologies (Singapore) Pte Ltd, Singapore, 17)
100.0
4), 10) Singapore
Callidus Software Ltd., London, United Kingdom 100.0
Concur Technologies (UK) Limited, London, United 10)
100.0
Callidus Software Pty. Ltd., Sydney, Australia 100.0 4) Kingdom

Contextor SAS, Orsay, France 100.0 4)

CallidusCloud (India) Pvt. Ltd., Hyderabad, India 100.0 4)

ConTgo Consulting Limited, London, United Kingdom 100.0 10)

CallidusCloud (Malaysia) Sdn. Bhd., Kuala Lumpur, 4)
100.0 10)
Malaysia ConTgo Limited, London, United Kingdom 100.0

CallidusCloud Holdings Pty. Ltd., Sydney, Australia 100.0 4)

ConTgo Pty. Ltd., Sydney, Australia 100.0

Crystal Decisions (Ireland) Limited, Dublin, Ireland 100.0 12)

CallidusCloud K.K., Tokyo, Japan 100.0 4)

F-76
Name and Location of Company Owner- Foot- Name and Location of Company Owner- Foot-
ship note ship note

% %
12)
Crystal Decisions Holdings Limited, Dublin, Ireland 100.0 PT SAP Indonesia, Jakarta, Indonesia 99.0
10)
Crystal Decisions UK Limited, London, United Kingdom 100.0 Quadrem Africa Pty. Ltd., Johannesburg, South Africa 100.0

Datahug Limited, Dublin, Ireland 100.0 4) Quadrem Brazil Ltda., Rio de Janeiro, Brazil 100.0

Dorset Acquisition Corp., Dublin, CA, United States 100.0 4) Quadrem Chile Ltda., Santiago de Chile, Chile 100.0

Ebreez Egypt LLC, Cairo, Egypt 57.0 4) Quadrem International Ltd., Hamilton, Bermuda 100.0

EssCubed Procurement Pty. Ltd., Johannesburg, South Quadrem Netherlands B.V., Amsterdam, the Netherlands 100.0 11)
100.0
Africa
Quadrem Overseas Cooperatief U.A., Amsterdam, the 11)
Extended Systems, Inc., San Ramon, CA, United States 100.0 100.0
Netherlands

Fieldglass Europe Limited, London, United Kingdom 100.0 10) Quadrem Peru S.A.C., Lima, Peru 100.0
4)
Financial Fusion, Inc., San Ramon, CA, United States 100.0 RevSym Inc., Dublin, CA, United States 100.0
4) 4)
Flyin Holding Limited, Dubai, United Arab Emirates 57.0 RevSym Software India Private Limited, Bangalore, India 100.0

Flyin Travel and Tourism Private Limited, Hyderabad, 4) Ruan Lian Technologies (Beijing) Co., Ltd., Beijing, China 100.0
57.0
India
4)
SAP (Beijing) Software System Co., Ltd., Beijing, China 100.0
Flyin Travel Limited, Limassol, Cyprus 57.0
SAP Andina y de.Caribe VE, Caracas, Venezuela 100.0 17)
4)
Flyin Travel S.A.E, Cairo, Egypt 57.0
SAP AZ LLC, Baku, Azerbaijan 100.0
FreeMarkets Ltda., São Paulo, Brazil 100.0
SAP Belgium NV/SA, Brussels, Belgium 100.0
Gigya Australia Pty Ltd, Syndey, Australia 100.0
10)
SAP Beteiligungs GmbH, Walldorf, Germany 100.0
Gigya UK Ltd, London, United Kingdom 100.0
10)
SAP Bulgaria EOOD, Sofia, Bulgaria 100.0
GlobalExpense Limited, London, United Kingdom 100.0
SAP Business Compliance Services GmbH, Siegen,
Hipmunk, Inc., San Francisco, CA, United States 100.0 100.0
Germany

hybris (US) Corp., Wilmington, DE, United States 100.0 SAP Business Services Center Nederland B.V., 's- 11)
100.0
Hertogenbosch, the Netherlands
hybris GmbH, Munich, Germany 100.0 8), 9)
SAP Chile Limitada, Santiago, Chile 100.0 17)

Inxight Federal Systems Group, Inc., Wilmington, DE,

100.0 SAP China Holding Co., Ltd., Beijing, China 100.0
United States
4) 17)
LeadFormix, Inc., Dublin, CA, United States 100.0 SAP Colombia S.A.S., Bogotá, Colombia 100.0
4), 10) 17)
Learning Heroes Ltd., Cheshire, United Kingdom 100.0 SAP Commercial Services Ltd., Valletta, Malta 100.0

Learning Seat Borrowings Pty. Ltd., Sydney, Australia 100.0 4) SAP Costa Rica, S.A., San José, Costa Rica 100.0 17)

Learning Seat Group Pty. Ltd., Sydney, Australia 100.0 4) SAP ČR, spol. s r.o., Prague, Czech Republic 100.0

Learning Seat Holdings Pty. Ltd., Sydney, Australia 100.0 4) SAP Cyprus Limited, Nicosia, Cyprus 100.0

Learning Seat Pty. Ltd., Sydney, Australia 100.0 4) SAP d.o.o., Zagreb, Croatia 100.0

LLC “SAP Labs“, Moscow, Russia 100.0 SAP Danmark A/S, Copenhagen, Denmark 100.0

LLC “SAP Ukraine”, Kiev, Ukraine 100.0 17) SAP Dritte Beteiligungs- und Vermögensverwaltungs
100.0
GmbH, Walldorf, Germany
Merlin Systems Oy, Espoo, Finland 100.0 17)
SAP East Africa Limited, Nairobi, Kenya 100.0
Nihon Ariba K.K., Tokyo, Japan 100.0 17)
SAP Egypt LLC, Cairo, Egypt 100.0
Noteshark, LLC, Chantilly, VA, United States 51.0 4)
SAP EMEA Inside Sales S.L., Madrid, Spain 100.0
OrientDB Limited, London, United Kingdom 100.0 4), 10)
SAP Erste Beteiligungs- und Vermögensverwaltungs 8), 9)
100.0
Outerjoin, Inc., Dublin, CA, United States 100.0 4) GmbH, Walldorf, Germany

SAP Estonia OÜ, Tallinn, Estonia 100.0

OutlookSoft Deutschland GmbH, Walldorf, Germany 100.0
SAP Financial, Inc., Toronto, Canada 100.0
Plat.One Inc., Palo Alto, CA, United States 100.0
SAP Finland Oy, Espoo, Finland 100.0
Plat.One Lab Srl, Bogliasco, Italy 100.0

Plateau Systems LLC, South San Francisco, CA, United SAP Foreign Holdings GmbH, Walldorf, Germany 100.0
100.0
States

F-77
Name and Location of Company Owner- Foot- Name and Location of Company Owner- Foot-
ship note ship note

% %
8), 9), 17)
SAP France Holding, Levallois Perret, France 100.0 SAP Puerto Rico GmbH, Walldorf, Germany 100.0

SAP Global Marketing, Inc., New York, NY, United States 100.0 SAP Retail Solutions Beteiligungsgesellschaft mbH,
100.0
Walldorf, Germany
SAP Hellas S.A., Athens, Greece 100.0
SAP Romania SRL, Bucharest, Romania 100.0
SAP Hong Kong Co., Ltd., Hong Kong, China 100.0 17)
SAP Saudi Arabia Software Services Ltd, Riyadh,
100.0
SAP Hosting Beteiligungs GmbH, St. Leon-Rot, Germany 100.0 8), 9) Kingdom of Saudi Arabia
SAP Saudi Arabia Software Trading Ltd, Riyadh, Kingdom 17)
SAP India (Holding) Pte Ltd, Singapore, Singapore 100.0 75.0
of Saudi Arabia
SAP International Panama, S.A., Panama City, Panama 100.0 SAP Sechste Beteiligungs- und Vermögensverwaltungs 8), 9)
100.0
GmbH, Walldorf, Germany
SAP International, Inc., Miami, FL, United States 100.0
SAP Services s.r.o., Prague, Czech Republic 100.0
SAP Investments, Inc., Wilmington, DE, United States 100.0
SAP Siebte Beteiligungs- und Vermögensverwaltungs 8), 9)
100.0
SAP Ireland Limited, Dublin, Ireland 100.0 12) GmbH, Walldorf, Germany

SAP Ireland US - Financial Services Designated Activity SAP sistemi, aplikacije in produkti za obdelavo podatkov
100.0 100.0
Company, Dublin, Ireland d.o.o., Ljubljana, Slovenia

SAP Israel Ltd., Ra'anana, Israel 100.0 17) SAP Slovensko s.r.o., Bratislava, Slovakia 100.0

SAP Software and Services LLC, Doha, Qatar 49.0 5), 17)
SAP Korea Ltd., Seoul, South Korea 100.0
SAP Svenska Aktiebolag, Stockholm, Sweden 100.0 17)
SAP Labs Bulgaria EOOD, Sofia, Bulgaria 100.0
SAP System Application and Products Asia Myanmar
SAP Labs Finland Oy, Espoo, Finland 100.0 100.0
Limited, Yangon, Myanmar
SAP Labs France SAS, Mougins, France 100.0 SAP Systems, Applications and Products in Data
100.0
Processing (Thailand) Ltd., Bangkok, Thailand
SAP Labs Israel Ltd., Ra'anana, Israel 100.0
SAP Taiwan Co., Ltd., Taipei, Taiwan 100.0 17)
SAP Labs Korea, Inc., Seoul, South Korea 100.0
SAP Technologies Inc., Palo Alto, CA, United States 100.0
SAP Latvia SIA, Riga, Latvia 100.0
SAP Training and Development Institute FZCO, Dubai,
100.0
SAP Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia 100.0 United Arab Emirates

SAP Malta Investments Ltd., Valletta, Malta 100.0 17) SAP Türkiye Yazilim Üretim ve Ticaret A.Ş., Istanbul,
100.0
Turkey
SAP MENA FZ L.L.C., Dubai, United Arab Emirates 100.0
SAP UAB, Vilnius, Lithuania 100.0
SAP Middle East and North Africa L.L.C., Dubai, United 5), 17)
49.0 SAP Ventures Investment GmbH, Walldorf, Germany 100.0 8), 9)
Arab Emirates
SAP Nederland Holding B.V., 's-Hertogenbosch, the SAP Vierte Beteiligungs- und Vermögensverwaltungs
100.0 11) 100.0
Netherlands GmbH, Walldorf, Germany

SAP New Zealand Limited, Auckland, New Zealand 100.0 SAP Vietnam Company Limited, Ho Chi Minh City,
100.0
Vietnam
SAP Norge AS, Lysaker, Norway 100.0
SAP West Balkans d.o.o., Belgrade, Serbia 100.0
SAP North West Africa Ltd, Casablanca, Morocco 100.0
SAP Zweite Beteiligungs- und Vermögensverwaltungs 8), 9)
100.0
GmbH, Walldorf, Germany
SAP Österreich GmbH, Vienna, Austria 100.0
6)
17)
SAP.io Fund, L.P., San Francisco, CA, United States 0
SAP Perú S.A.C., Lima, Peru 100.0
Sapphire Fund Investments II, L.P., Palo Alto, CA, United 4), 6)
SAP Philippines, Inc., Makati, Philippines 100.0 0
Stated
SAP Polska Sp. z o.o., Warsaw, Poland 100.0 Sapphire Fund Investments III, L.P., Palo Alto, CA, United 4), 6)
0
States
SAP Portals Europe GmbH, Walldorf, Germany 100.0
Sapphire SAP HANA Fund of Funds, L.P., Palo Alto, CA, 6)
0
SAP Portals Holding Beteiligungs GmbH, Walldorf, United States
100.0
Germany
Sapphire Ventures Fund I, L.P., Palo Alto, CA, United 6)
0
SAP Portals Israel Ltd., Ra'anana, Israel 100.0 States
Sapphire Ventures Fund II, L.P., Palo Alto, CA, United 6)
SAP Portugal – Sistemas, Aplicações e Produtos 0
States
Informáticos, Sociedade Unipessoal, Lda., Porto Salvo, 100.0
Portugal Sapphire Ventures Fund III, L.P., Palo Alto, CA, United 6)
0
States
SAP Projektverwaltungs- und Beteiligungs GmbH,
100.0
Walldorf, Germany Sapphire Ventures Fund IV, L.P., Palo Alto, CA, United 4), 6)
0
States
SAP Public Services, Inc., Washington, DC, United States 100.0

F-78
 4)
Consolidated for the first time in 2018.
Name and Location of Company Owner- Foot-
5)
ship note Agreements with the other shareholders provide that SAP SE fully controls the
entity.
% 6)
SAP SE has the following structured entities: SAP.io Fund, L.P, Sapphire Fund
6) Investments II, L.P., Sapphire Fund Investments III, L.P., Sapphire SAP HANA Fund of
SAPV (Mauritius), Ebene, Mauritius 0 Funds, L.P., Sapphire Ventures Fund I, L.P., Sapphire Ventures Fund II, L.P., Sapphire
Ventures Fund III, L.P, Sapphire Ventures Fund IV, L.P., SAPV (Mauritius), and SFI II
Saudi Ebreez Company for Electronic Services LLC , 4)
57.0 Blocker, LLC. The results of operations of these entities are included in SAP’s
Riyadh, Kingdom of Saudi Arabia
consolidated financial statements in accordance with IFRS 10 (Consolidated
SFI II Blocker, LLC, Palo Alto, CA, United States 0 4), 6) Financial Statements).
7)
Entity whose personally liable partner is SAP SE.
SuccessFactors (Philippines), Inc., Pasig City, Philippines 100.0 8)
Entity with (profit and) loss transfer agreement.
9)
SuccessFactors Asia Pacific Limited, Hong Kong, China 100.0 Pursuant to HGB, section 264 (3) or section 264b, the subsidiary is exempt from
applying certain legal requirements to their statutory stand-alone financial
SuccessFactors Cayman, Ltd., Grand Cayman, Cayman statements including the requirement to prepare notes to the financial statements
100.0
Islands and a review of operations, the requirement of independent audit, and the
requirement of public disclosure.
Sybase 365 Ltd., Tortola, British Virgin Islands 100.0 10)
Pursuant to sections 479A to 479C of the UK Companies Act 2006, the entity is
exempt from having its financial statements audited on the basis that SAP SE has
Sybase 365, LLC, San Ramon, CA, United States 100.0
provided a guarantee of the entity's liabilities in respect of its financial year ended
16) December 31, 2018, or in respect of its financial year ended September 30, 2018,
Sybase Angola, LDA, Luanda, Angola 100.0
respectively.
11)
Sybase Iberia S.L., Madrid, Spain 100.0 Pursuant to article 2:403 of the Dutch Civil Code, the entity is exempt from applying
certain legal requirements to their statutory stand-alone financial statements
Sybase India Ltd., Mumbai, India 100.0 including the requirement to prepare the financial statements, the requirement of
independent audit, and the requirement of public disclosure, on the basis that SAP SE
Sybase International Holdings Corporation, LLC, San has provided a guarantee of the entity's liabilities in respect of its financial year ended
100.0
Ramon, CA, United States December 31, 2018, or in respect of its financial year ended September 30, 2018,
respectively.
Sybase Philippines, Inc., Makati City, Philippines 100.0 12)
Pursuant to Irish Companies Act 2014, chapter 16 of Part 6, section 365, the entity
is exempt from having its financial statements audited on the grounds that the entity
Sybase Software (India) Private Ltd., Mumbai, India 100.0
is entitled to the benefits from a dormant entity exemption in respect of its financial
year ended December 31, 2018.
Sybase, Inc., San Ramon, CA, United States 100.0
13)
Pursuant to article 727a, paragraph 2 of the Swiss Code of Obligations, the entity
Systems Applications Products (Africa Region) is exempt from having its financial statements audited in respect of its financial year
100.0
Proprietary Limited, Johannesburg, South Africa ended December 31, 2018, or in respect of its financial year ended
September 30, 2018, respectively.
Systems Applications Products (Africa) Proprietary
100.0 14)
The entity is exempt of preparation and audit of its financial statements on the
Limited, Johannesburg, South Africa
grounds of article L-123-12 of the French commercial code as the entity changed its
Systems Applications Products (South Africa) 17) financial year closing date to June 30, 2019 instead of December 31, 2018. The
70.0
Proprietary Limited, Johannesburg, South Africa obligation to prepare and audit the financial statements is due only at the closing date
of the financial year which is usually 12 months, but can be shorter or longer when the
Systems Applications Products Nigeria Limited, Victoria 17) entity changes its closing date.
100.0
Island, Nigeria 15)
Pursuant to section 211 (3) of the New Zealand Companies Act 1993 and section
Technology Management Associates Inc., Herndon, VA, 4) 45 (2) of the Financial Reporting Act 2013, the entity had approved exclusions and is
100.0
United States not required to lodge audited financial statements in respect of its financial year
ended September 30, 2018.
TomorrowNow, Inc., Bryan, TX, United States 100.0 16)
Pursuant to Angola Tax Law and Presidential Decree no. 147/13 of October 1, 2013,
10) the entity does not qualified as being a Large Taxpayer and therefore is exempt from
TRX Europe Limited, London, United Kingdom 100.0
having its financial statements audited in respect of its financial year ended
December 31, 2018.
TRX Luxembourg, S.a.r.l., Luxembourg City, Luxembourg 100.0
17)
Entity with support letter issued by SAP SE.
TRX Technologies India Private Limited, Raman Nagar,
100.0
India

TRX UK Limited, London, United Kingdom 100.0 10)

TRX, Inc., Bellevue, WA, United States 100.0

Volume Integration, Inc., VA, United States 100.0

4)
Webcom d.o.o., Belgrade, Serbia 100.0

Webcom, Inc., Dublin, CA, United States 100.0 4)

1)
These figures are based on our local IFRS financial statements prior to eliminations
resulting from consolidation and therefore do not reflect the contribution of these
companies included in the Consolidated Financial Statements. The translation of the
equity into Group currency is based on period-end closing exchange rates, and on
average exchange rates for revenue and net income/loss.
2)
As at December 31, 2018, including managing directors, in FTE.
3)
Figures for profit/loss after tax and total equity pursuant to HGB, section 285 and
section 313 are not disclosed if they are of minor significance for a fair presentation
of the profitability, liquidity, capital resources and financial position of SAP SE,
pursuant to HGB, section 313 (2) sentence 3 no. 4 and section 286 (3) sentence 1
no. 1.

F-79
Other Equity Investments Greater Pacific Capital (Cayman) L.P., Grand Cayman, Cayman Islands

Name and Location of Company Owner- IDG Ventures USA III, L.P., San Francisco, CA, United States
ship
IEX Group, Inc., New York, NY, United States
%
InfluxData, Inc., San Francisco, CA, United States
Joint Arrangements and Investments in Associates
InnovationLab GmbH, Heidelberg, Germany
China DataCom Corporation Limited, Guangzhou, China 28.30
innoWerft Technologie- und Gründerzentrum Walldorf Stiftung GmbH,
Convercent, Inc., Denver, CO, United States 37.32
Walldorf, Germany
Procurement Negócios Eletrônicos S/A, Rio de Janeiro, Brazil 17.00
JFrog, Ltd., Netanya, Israel
Visage Mobile, Inc., Milwaukee, WI, United States 4.50
Jibe, Inc., New York, NY, United States
Yapta, Inc., Seattle, WA, United States 45.71
Kaltura, Inc., New York, NY, United States

Name and Location of Company Kavacha TopCo LLC, New York, NY, United States

Landlog Limited, Tokyo, Japan

Equity Investments with Ownership of at Least 5%
LeanData, Inc., Sunnyvale, CA, United States
83North IV, L.P., Hertzalia, Israel
Livongo Health, Inc., Mountain View, CA, United States
Alation, Inc., Redwood City, CA, United States
Local Globe VII, L.P., St. Peter Port, Guernsey, Channel Islands
Alchemist Accelerator Fund I LLC, San Francisco, CA, United States
Local Globe VIII, L.P., St. Peter Port, Guernsey, Channel Islands
All Tax Platform - Solucoes Tributarias S.A., São Paulo, Brazil
Looker Data Sciences, Inc., Santa Cruz, CA, United States
Amplify Partners II L.P., Menlo Park, CA, United States
Matillion Ltd., Altrincham, United Kingdom
Amplify Partners III, L.P., Menlo Park, CA, United States
Mosaic Ventures I, L.P., London , United Kingdom
Amplify Partners, L.P., Menlo Park, CA, United States
MVP Strategic Partnership Fund GmbH & Co. KG, Munich, Germany
AP Opportunity Fund, LLC, Menlo Park, CA, United States
Narrative Science, Inc., Chicago, IL, United States
Auth0, Inc., Bellevue, WA, United States
Nor1, Inc., Santa Clara, CA, United States
Blue Yard Capital I GmbH & Co. KG, Berlin, Germany
Notation Capital II, L.P., Brooklyn, NY, United States
Catchpoint Systems, Inc., New York, NY, United States
Notation Capital, L.P., Brooklyn, NY, United States
Char Software, Inc., Boston, MA, United States
On Deck Capital, Inc., New York, NY, United States
Contentful GmbH, Berlin, Germany
OpenX Software Limited, Pasadena, CA, United States
Costanoa Venture Capital II L.P., Palo Alto, CA, United States
OpsRamp, Inc., San Jose, CA, United States
Costanoa Venture Capital III L.P., Palo Alto, CA, United States
Pendo.io, Inc., Raleigh, NC, United States
Costanoa Venture Capital QZ, LLC, Palo Alto, CA, United States
Pheonix Labs Canada, ULC, Burnaby, BC, Canada
Culture Amp, Inc., San Francisco, CA, United States
Point Nine Annex GmbH & Co. KG, Berlin, Germany
Data Collective II L.P., San Francisco, CA, United States
Point Nine Capital Fund II GmbH & Co. KG, Berlin, Germany
Data Collective III L.P., San Francisco, CA, United States
Point Nine Capital Fund III GmbH & Co. KG, Berlin, Germany
Data Collective IV, L.P., San Francisco, CA, United States
Point Nine Capital Fund IV GmbH & Co. KG, Berlin, Germany
DataRobot, Inc., Boston, MA, United States
Portworx Inc., Los Altos, CA , United States
Dharma Platform, Inc., Washington DC, United States
Post for Systems, Cairo, Egypt
Digital Hub Rhein-Neckar GmbH, Ludwigshafen, Germany
Project 44, Inc., Chicago, IL, United States
EIT ICT Labs Germany GmbH, Berlin, Germany
FeedZai S.A., Lisbon, Portugal PubNub, Inc., San Francisco, CA, United States

Felix Ventures II, L.P., London, United Kingdom Punchh, Inc., San Mateo, CA, United States
Follow Analytics, Inc., San Francisco, CA, United States Realize Corporation, Tokyo, Japan
GK Software AG, Schöneck, Germany Reltio, Inc., Redwood Shores, CA, United States

F-80
Return Path, Inc., New York, NY, United States

Ridge Ventures IV, L.P., San Francisco, CA, United States

Rome2rio Pty. Ltd., Richmond, Australia

Scryer, Inc., New York, NY, United States

Scytl, S.A., Barcelona, Spain

Smart City Planning, Inc., Tokyo, Japan

SportsTech Fund, L.P., Palo Alto, CA, United States

SportsTech Parallel Fund, L.P., Palo Alto, CA, United States

Spring Mobile Solutions, Inc., Salt Lake City, UT, United States

Storm Ventures V, L.P., Menlo Park, CA, United States

SumoLogic, Inc., Redwood City, CA, United States

SV Angel IV, L.P., San Francisco, CA, United States

T3C Inc., Mountain View, CA, United States

The Currency Cloud Group Limited, London, United Kingdom

The SaaStr Fund, L.P., Palo Alto, CA, United States

Upfront V, L.P., Santa Monica, CA, United States

Wandera, Inc., San Francisco, CA, United States

F-81