Mohammed Moawalla

Mohammed Moawalla from Goldman Sachs asked about the implications of delayed and back-end loaded bookings on cloud revenue, and whether SAP still anticipates maintaining a mid-20s cloud revenue growth level into the next fiscal year.

Answer

CEO Christian Klein affirmed confidence in delivering a strong Q4 and picking up stalled pipeline from the first half, which supports the outlook for cloud revenue growth in the mid-20s for the next year.

Mohammed Moawalla from Goldman Sachs asked about the impact of delayed and back-end loaded deals on cloud revenue, and whether SAP still expects to maintain a mid-20s cloud revenue growth level into the next year.

Answer

Christian Klein, CEO of SAP, expressed confidence in delivering a strong Q4 and picking up stalled pipeline from the first half, which supports the cloud revenue guidance for the next year.

Mohammed Moawalla of Goldman Sachs asked what has changed in the macro environment recently to cause elongated deal cycles and whether this is related to mega-deals or customers breaking up projects.

Answer

CEO Christian Klein clarified that no deals are being lost, but cycles have lengthened due to stricter cost controls and additional top-level approvals at customer organizations. He stated the main challenge for H2 is the predictability of closing large deals on schedule, not the health of the pipeline itself, and noted total revenue growth would still accelerate even with slight CCB deceleration.

Mohammed Moawalla of Goldman Sachs asked about the sustainability of the increase in large deals (over €5 million) given the macro environment, and questioned the foreign exchange rate assumption used in the guidance.

Answer

CEO Christian Klein explained that large deal success is driven by a diligent planning process focused on quantified ROI and C-level engagement. CFO Dominik Asam clarified that the guidance's FX rate is based on the prior year's average for constant currency reporting and detailed the company's hedging strategy for free cash flow.

Mohammed Moawalla of Goldman Sachs asked for details on the specific domains and runway for cross-selling into the installed base, and whether any factors besides transactional revenue were creating headwinds for the Current Cloud Backlog (CCB).

Answer

CEO Christian Klein detailed a massive opportunity in cross-selling by breaking down internal silos to sell connected business processes and enabling partners to sell the full suite to the mid-market. CFO Dominik Asam noted that the main factor for Q4 CCB is a more difficult year-over-year comparison due to the LeanIX acquisition and a very strong Q4 last year, but that underlying development is normal.

Mohammed Moawalla requested details on working capital savings that are supporting the free cash flow outlook and asked how SAP balances reinvestment against letting savings drop to the bottom line.

Answer

CFO Dominik Asam confirmed that working capital improvements are ahead of schedule, helping to maintain the 2025 free cash flow ambition despite higher restructuring costs. He cautioned that cash conversion improvement will be harder beyond 2025 as certain tailwinds normalize. He explained that after the bulk of savings are realized in 2025, cost growth will become more gradual and aligned with revenue growth.