Exhibit 99.1

		SAP Integrated Report 2023

About This Report

Content

The SAP Integrated Report 2023 presents our annual financial, social, and environmental performance in a single integrated report (“SAP Integrated Report”) available at www.sapintegratedreport.com.

We report on our contribution to the UN Sustainable Development Goals (SDGs) and have embedded the recommended disclosures of the Task Force on Climate-Related Financial Disclosures (TCFD), of the Sustainability Accounting Standards Board (SASB) standards, and of the World Economic Forum (WEF) stakeholder capitalism metrics.

Basis of Presentation

Our combined management report is prepared in accordance with the German Commercial Code and the relevant German Accounting Standards.

The report encompasses SAP SE and all subsidiaries which we control and, hence, include in our consolidated financial statement according to IFRS. Joint arrangements and associates are not included in the sustainability reporting. Any further deviations for the sustainability reporting are specifically mentioned in the respective chapters. Our executive management has confirmed the effectiveness of our internal controls over financial reporting.

The social and environmental data and information included in the SAP Integrated Report is prepared in accordance with the Global Reporting Initiative (GRI) Standards, which require a report to provide a comprehensive picture of its material topics and related impacts and how these are managed. We apply the GRI principles (sustainability context, stakeholder inclusiveness, materiality, and completeness) for defining report content. We also report on SDGs identified as material to our strategy.

Greenhouse gas data is prepared based on the Greenhouse Gas Protocol.

Data

All financial and non-financial data and information for the reporting period is reported utilizing SAP software solutions and sourced from the responsible business units.

The reporting period is fiscal year 2023. The report encompasses SAP SE and all subsidiaries of the SAP Group. To make this report as current as possible, we have included relevant information available up to the auditor’s opinion dated February 21, 2024. The report is available in English and German.

Independent Audit and Assurance

BDO AG Wirtschaftsprüfungsgesellschaft (BDO) has audited our consolidated financial statements and our combined management report. Information relating to the non-financial statement included in SAP’s management report has been audited with limited assurance by BDO. Additionally, BDO has provided assurance on selected sustainability information in accordance with the International Standard on Assurance Engagements (ISAE) 3000, a pertinent standard for the assurance of sustainability reporting. The Independent Auditor’s Report and the Assurance Reports of BDO for the non-financial statement and selected sustainability information are available in the Independent Auditor’s Report section, in the Independent Auditor’s Report on a Limited Assurance Engagement of the Combined Non-Financial Statement, and in the Independent Auditor’s Report on a Limited Assurance Engagement on Sustainability Information section.

		SAP Integrated Report 2023

Concept and Realization

This report was designed by SAP and created with SAP S/4HANA software and the SAP Disclosure Management application.

Contents

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

To Our Stakeholders

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Letter from the CEO

Dear Fellow Shareholders,

2023 was another year of exponential developments around the globe. Looking at the geopolitical landscape, new crises surfaced as old ones had not yet settled, and conflicts in multiple regions kept the world on edge. Looking at the climate, record global temperatures and extreme weather events underlined the urgency to accelerate climate action. At the same time, change continued to be the only constant in the tech industry. The year saw incredible leaps especially in generative artificial intelligence (GenAI), and consumer applications rapidly captured the imagination of the global public. It also became clear, though, that the true value of this seminal technology lies in its application to the business world. GenAI will be a powerful tool to transform companies and to make the world economy more sustainable, resilient, and fair overall. At a time when humanity’s challenges become ever more complex, GenAI promises to drastically expand our capacity to find solutions – and to do more with less.

All these global developments have a direct relevance for SAP. Our solutions touch 87% of global commerce and help keep companies, economies, and global business resilient in volatile times. Our sustainability offering enables customers to systematically track key metrics, including carbon emissions, and to take effective action. Meanwhile, SAP is increasingly embedding business AI in all our solutions. We’re doing our part to make the technology a powerful, readily accessible tool for organizations to become more efficient, more sustainable, and more innovative.

Today, SAP is stronger and more relevant than ever. And this is also visible in our business results: In 2023, we met or exceeded our outlook in all key metrics. Current Cloud Backlog surpassed €13.7 billion, growing 27%1, while Cloud Revenue went up 23%1 to €13.7 billion.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Non-IFRS operating profit expanded by 13%1, exceeding our guidance range. What is more, Total Cloud Backlog increased 39%1 to €44 billion, fostering the Company’s resilience for the years to come.

Our strong portfolio, tightly integrated in both technological and commercial terms, is at the heart of our Company’s growth formula. Hundreds of leading global companies choose “RISE with SAP” every year to move their business processes to the cloud. In March 2023, we introduced “GROW with SAP,” an offering to support the cloud conversion of medium-sized companies. GROW with SAP, too, is proving to be a major success, with over 700 customers signing up in just nine months. In September, then, we launched Joule, SAP’s generative AI co-pilot, to the public. Joule will be infused throughout our cloud portfolio. It will deliver insights from across SAP solutions and beyond, and it will enable users and companies to quickly reach relevant, reliable outcomes in a fast and responsible manner. Strong partnerships and collaborations with leading AI companies – including Nvidia, Microsoft, and OpenAI, as well as Google – will help SAP to further expand the capabilities of our business AI solutions and to maximize their benefit for our customers.

With portfolio transactions, we additionally rounded out our offering. In June, we closed the sale of Qualtrics, aiming to focus our portfolio and to direct investments where they have the biggest impact. And in November, SAP finalized the acquisition of LeanIX, whose enterprise architecture management (EAM) solutions will help ensure that processes, systems, and data yield the right outcome for every SAP customer. In their combination, SAP LeanIX solutions, the SAP Signavio portfolio, and the SAP Cloud ALM solution for application life cycle management form a unique business transformation suite.

Driven by the Company’s excellent results and an overall positive market mood, particularly for tech companies, SAP’s stock soared in 2023. Towards the end of the year that also marked the 25th anniversary of our U.S. stock market listing, SAP stock reached a new all-time high at €148.18 per share. The share price increased 43.2% in total over the course of 2023 – more than double the development of the DAX, which gained 19.1%. The Nasdaq-100 appreciated by 54.9% in the same time frame. SAP also regained its position as the most valuable company among the DAX 40 in February 2023, and ended the year with a market capitalization of €171 billion on December 31, 2023.

Shareholders will additionally profit from SAP’s strong performance by means of an attractive dividend. Based on the Company’s strong performance in 2023, SAP intends to propose a dividend of €2.202 per share at the annual general meeting in May – up approximately 7% compared to the preceding year. What is more, we announced a €5 billion share repurchase program to be conducted through the end of 2025. In addition to returning capital to shareholders, the program will help to balance out dilution related to employee share programs.

Beyond the convincing financial performance, SAP also met its non-financial goals. In 2023, SAP achieved carbon neutrality in its own operations and continues to focus on achieving net zero by 2030 along our value chain. Further, we intend to make an even bigger contribution to sustainability by helping our customers accelerate their respective journeys. Roughly 1,000 new customers chose SAP’s sustainability solutions in 2023 alone.

Our Customer Net Promoter Score (NPS) improved 2 points year over year to 9 in 2023, reflecting that customers are increasingly satisfied with our solutions. Meanwhile, our Employee Engagement Index remained stable at 80% and came in at the upper end of our target range, indicating high levels of employee motivation, affinity towards SAP, and excitement about the Company’s future. The proportion of women in management roles increased to 29.7% (2022: 29.4%) and reached 35.2% in the workforce overall.

On behalf of the entire Executive Board, I would like to thank all SAP colleagues for these excellent achievements in a challenging environment. We had promised to quickly turn SAP into a cloud company – a company with double-digit profit growth – and we can comfortably say: we delivered.

As we move into the future, we’re determined to keep leading the way as a top Enterprise Application company and we’re determined to become the #1 Business AI company as well. This is

1 At constant currencies

2 Pending approval of Annual General Meeting of Shareholders

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

why, out of a very strong position, we are accelerating SAP’s development. Over the next two years, we’re going to invest almost €1 billion to develop powerful AI use cases for our customers. And, with a dedicated transformation program, we intend to further intensify the shift of resources to business AI, in line with the significant growth potential we see for SAP. The planned program will also include a restructuring component focusing on reskilling and voluntary exits. A decision affecting colleagues this way is never easy – but we truly believe it is the right next step for the company. We’re setting up SAP for a strong, competitive future that all stakeholders will benefit from.

I would like to thank you, dear fellow shareholders, for your trust in SAP in 2023 – and I am excited about the great opportunities and promising future that lie ahead.

Sincerely,

Christian Klein

CEO, SAP SE

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

SAP Executive Board

Christian Klein Chief Executive Officer (CEO)   Joined SAP: 1999 Appointed to the Executive Board: 2018 Current Executive Board term expires: 2025 Nationality: German Year of Birth: 1980   Other board memberships: Supervisory Board, adidas AG, Herzogenaurach, Germany

Dominik Asam Chief Financial Officer   Joined SAP: 2023 Appointed to the Executive Board: 2023 Current Executive Board term expires: 2026 Nationality: German Year of Birth: 1969   Other board memberships: Supervisory Board, Bertelsmann Management SE and Bertelsmann SE & Co. KGaA, Gütersloh, Germany (not publicly listed)

Dr.-Ing. Juergen Mueller Chief Technology Officer   Joined SAP: 2013 Appointed to the Executive Board: 2019 Current Executive Board term expires: 2024 Nationality: German Year of Birth: 1982

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Scott Russell Customer Success   Joined SAP: 2010 Appointed to the Executive Board: 2021 Current Executive Board term expires: 2027 Nationality: Australian Year of Birth: 1973   Other board memberships: Board of Directors, Qualtrics International Inc, Provo, UT, USA

Thomas Saueressig SAP Product Engineering   Joined SAP: 2004 Appointed to the Executive Board: 2019 Current Executive Board term expires: 2025 Nationality: German Year of Birth: 1985   Other board memberships: Board of Directors, Nokia Corporation, Espoo, Finland

Gina Vargiu-Breuer Chief People Officer, Labor Relations Director   Joined SAP: 2024 Appointed to the Executive Board: 2024 Current Executive Board term expired: 2027 Nationality: German Year of Birth: 1975

Julia White Chief Marketing & Solutions Officer   Joined SAP: 2021 Appointed to the Executive Board: 2021 Current Executive Board term expires: 2024 Nationality: U.S. citizen Year of Birth: 1973

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Investor Relations

Global Economy Without Momentum but Inflationary Pressure Easing Slowly

According to a statement by the German Federal Ministry of Economics and Climate Protection (BMWK), there are increasing signs that the global economy is facing a prolonged phase of below-average growth. The medium-term prospects for economic growth are lower than they have been for decades. After a strong start to 2023, the global economy showed a significant slowdown over the summer. This was mainly due to weak industrial production and the sharp rise in interest rates in most regions of the world. Another dampening factor was the subdued development in China. The economic situation is assessed very similarly by international organizations such as the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).

Inflation, however, has fallen from last year’s multiyear high. The IMF expects inflation rates to fall from 6.9% in 2023 to 5.8% in 2024, with most countries not coming close to their central banks’ targets before 2025. The OECD expects an average inflation rate of at least 2% in 2024 for both the United States and the euro area and is even forecasting 2.1% for Japan.

Stock Markets Stimulated by Falling Interest Rates

The stock market year 2023 was nevertheless more successful than many had expected in advance: The German blue-chip index DAX ended the year with a rise of over 19% and most stock markets worldwide were also up. The recent slowdown in inflation raised hopes of a looser monetary policy, which had a price-driving effect. The S&P500 index rose 22.8% and the Nasdaq-100 technology index exceeded all expectations with a gain of 53.8%.

SAP Stock Reaches New All-Time High

The SAP share price continued to improve throughout 2023. Shortly after SAP announced its good results for financial year 2022 at the end of January, the SAP share price rose more than 7% in a single week to €112.58. The successful execution of SAP’s cloud transformation and the resulting improvement in profitability sent clear signals to the market. The positive sentiment solidified over the course of the following months, lifting SAP stock to €115.60 by the time the results for the first quarter were announced. The Q1 numbers and outlook for the full year were once again convincing and pushed the share a further 7% higher to €123.62 within a week. The market already had high expectations for the half-year results at the end of July due to SAP’s performance in the previous quarters, and these expectations were met with the announcement, albeit without providing any further strong stimulus.

With the results for the crucial third quarter, which once again confirmed the successful execution of SAP’s strategy in terms of order entry, sales revenue, and operating profit, SAP stock began a remarkable upward trend. Within six weeks, the share price climbed to a new all-time high of €148.18 on December 8, 2023, in a supportive market environment. The share ended the trading year on December 29 at a closing price of €139.48, representing an increase of 43.1% compared to the previous year’s closing price. SAP’s market capitalization at the end of December was €171.3 billion, making it once again the most valuable company in the German share index. With our intensified Investor Relations activities in North America, we could drive a strong increase in trading volume of the SAP ADR at the New York Stock Exchange. Additionally, SAP was ranked 61st among the 100 most valuable companies in the world according to a study by the management consulting firm EY.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

SAP Stock Versus Major Indices (January 2, 2023, to December 29, 2023)

Continuous Engagement with the Investment Community

SAP continued its strong engagement with the investment community in 2023. Throughout the year, members of the Executive Board of SAP SE and the Investor Relations (IR) team discussed our latest strategy, its execution and business development, and how SAP was helping customers meet the many challenges faced by companies today, with institutional investors, analysts, and private investors worldwide.

Our event analysis showed that most of the conferences attended consisted of participants with longer investment time horizon and high purchase potential. 85% of the SAP engagements were with asset managers with an investment horizon of 1+ years. The number of days SAP engaged with the buy-side exceeded the industry benchmark and SAP IR interacted with 75% of the Top 100 shareholders throughout the year.

In summary, the IR team, together with senior management, held more than 300 meetings in 2023 to maintain the dialogue with investors and analysts, including one-on-one phone calls, video conferences, and road shows. Members of the Executive Board and the IR team attended more than 20 conferences across an expanded geographical mix. In May, we hosted the Financial Analyst Conference as a part of our SAP® Sapphire® event in Orlando, Florida, United States. In 2023, for the first time since 2020, SAP held the Annual General Meeting of Shareholders (AGM) with physical presence again in Mannheim, Germany.

We continued our dialogue with investors, focusing on environmental, social, and governance (ESG) topics and providing them with insights into our sustainability policies and products. SAP’s leadership in this area has been recognized by leading sustainability rating organizations.

SAP representatives engaged with retail shareholders at virtual and physical events. The IR team and the Treasury team also maintained regular communication with the debt investor community.

We provide a wide range of information online about SAP and its stock. Our communications channels include the LinkedIn channel SAP Investor Relations and the SAP INVESTOR magazine.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Shareholders can reach the IR team directly by telephone hotline and by e-mail at investor@sap.com. We also publish an overview of the latest analyst consensus on the Investor Relations Web site.

In addition, we provide a Webcast for all key investor events at which members of our Executive Board speak, and we post all relevant presentations on the Investor Relations Web site.

Key Facts About SAP Stock/SAP ADRs

Return on SAP Common Stock — WKN 716460/ISIN DE007164600

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Return on SAP ADRs — 803054204 (CUSIP)

Dividend of €2.20 Proposed

It is our policy to pay a dividend totaling 40% or more of IFRS profit after tax.

At the 2024 Annual General Meeting of Shareholders, the Executive Board and the Supervisory Board of SAP SE will recommend a total dividend for fiscal year 2023 of €2.20 (2022: €2.05) representing an increase of €0.15, or 7.3% compared to the dividend paid for fiscal year 2022. The payout ratio would be 43.1%.

Capital Stock Unchanged

SAP’s capital stock as at December 31, 2023, was €1,228,504,232 (2022: €1,228,504,232). It is issued as 1,228,504,232 no-par shares, each with an attribute value of €1 in relation to capital stock.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Shareholder Structure

Applying the definition accepted on the Frankfurt Stock Exchange, which excludes treasury stock from the free float, as at December 31, 2023, the free float stood at 83.6% (December 31, 2022: 83.3%).

41% of institutional investors are classified as ESG investors.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Report by the Supervisory Board

Dear Shareholders,

In the following, we would like to inform you about the work of the Supervisory Board in the fiscal year 2023.

Collaboration Between the Supervisory Board and the Executive Board

In the past fiscal year, the Supervisory Board of SAP SE discharged the duties imposed on it by the law and by the Company’s Articles of Incorporation. It advised the Executive Board on an ongoing basis with regard to the running of the Company and it scrutinized and monitored the work of management.

The Supervisory Board received regular, full, and timely reports from the Executive Board, both from members in person and in written documents. The Supervisory Board was also in regular exchange with senior internal officers through its various committees. This ensured that we were always up to date, even between meetings, on the Company’s strategy, planning, business performance, risks, risk management, compliance (in other words, adherence to laws, to the Company’s Articles of Incorporation, and to internal policies), and on transactions of special significance for SAP. In its reports, the Executive Board also informed us in particular where business deviated from plan or target, and why. We questioned and probed the Executive Board’s reports to satisfy ourselves that the information it gave us was plausible. The Executive Board fully met our requirements when it came to providing information.

In addition, the Supervisory Board chairperson and the CEO were in continuous contact, which meant the Supervisory Board chairperson was always apprised without delay of all important events that were significant for assessing SAP’s situation and progress or for the management and governance of the Company. Moreover, the chairperson of the Supervisory Board and the CEO regularly discussed matters related to SAP’s strategy, business performance, risk position, risk management, and compliance. In preparation for the upcoming handover of the Supervisory Board chair position, the deputy chairperson representing the shareholder representatives was increasingly included in these discussions.

Transactions that were submitted to us because they required the approval of the Supervisory Board whether by law, the Articles of Incorporation, or the Supervisory Board’s list of transactions requiring its consent, were approved by us after detailed examination and discussion with the Executive Board.

Supervisory Board Meetings and Resolutions

In the past fiscal year, the Supervisory Board of SAP SE held four ordinary meetings and three extraordinary meetings at which we deliberated and resolved on all matters of relevance to the Company. Our plenary meetings and committee meetings were held as physical meetings, as video or telephone conferences, or as hybrid sessions, where some members attended physically and the remainder online. We also adopted 15resolutions by correspondence vote. The following table provides an overview of the individual members’ attendance at the Supervisory Board’s plenary sessions and committee meetings in the year under review. This report also contains a table that shows which meetings of the Supervisory Board and its committees were held as a physical meeting, as a video or telephone conference, or as a hybrid session.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Meeting Participation of SAP Supervisory Board Members During Fiscal Year 2023

1 Currently not a member of any Supervisory Board committee

The Supervisory Board and its committees also regularly convened wholly or partly without the Executive Board as necessary to deliberate on matters that pertained to the Executive Board, required internal discussion among Supervisory Board members alone or did not require the Executive Board’s presence, or to facilitate discussion between the Supervisory Board or its respective committee and the auditor without the Executive Board present. This was the case in three of the plenary sessions and in eight committee meetings in 2023. In addition, the shareholder representatives and the employee representatives independently discussed, at times with the CEO, the topics on the respective agenda before each ordinary meeting. Said deliberations similarly took place as required prior to the extraordinary meetings or prior to circular correspondence votes. The Supervisory Board addressed the following key topics during the year:

Artificial intelligence

One of the main focuses of our discussions with the Executive Board was the topic of artificial intelligence (“AI”). SAP is working intensively to integrate AI in its software solutions to allow customers to reap the enormous potential of using AI. The Supervisory Board supports and continually monitors this process and the measures associated with it. At our meeting on February 22, 2023, for example, the Technology and Strategy Committee reported on how the Executive Board had explained SAP’s AI strategy and its bearing on SAP’s product portfolio to it. When the Supervisory Board met on April 13, 2023, the Executive Board presented the Company’s innovation plans in the field of AI and outlined how SAP would integrate certain AI applications into its products. Our plenary session and committee meetings in July 2023 were held in San Martin, California, USA. These sessions and the supporting program likewise dealt with AI, and included expert presentations covering various aspects of this technology. When the Technology and Strategy Committee met in July 2023, it reviewed the implementation of SAP’s enterprise AI strategy and examined the framework conditions for data consumption by AI applications.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

SAP’s AI strategy was also the subject of intense debate at the plenary meeting in July 2023. Among other things, our discussions focused on the go-to-market strategy and SAP’s current and future investments to expand its AI portfolio. In addition, management explained to us its plans for building up additional AI expertise among SAP’s workforce. The Go-to-Market and Operations Committee analyzed the success of the go-to-market measures for AI at its October meeting.

Cloud Transformation

SAP’s transformation to a cloud company continued to be the subject of ongoing dialog between the Executive Board and Supervisory Board in 2023. We consulted in-depth with the Executive Board on the key initiatives and measures in the Company’s cloud transformation strategy and monitored its implementation. In our April meeting, we examined the challenges in public cloud. When it met in October, the Finance and Investment Committee reviewed SAP’s strategy to realign the product and service portfolio and discussed the cloud gross margin with the Executive Board. The Go-To-Market and Operations Committee likewise dealt with the cloud transformation in the reporting year, specifically the go-to-market strategy and related sales model. In our plenary session on October 26, 2023, the full Supervisory Board and the Executive Board reviewed in-depth the planned second phase of the cloud transformation, including the related goals and implementation measures. In this connection, we also discussed with the Executive Board its proposals for a new Executive Board structure, which it deemed necessary to ensure the successful implementation of the next phase of the transformation and the proposed efficiency measures. The Supervisory Board places great importance on being fully informed about the further cloud transformation, so that it can constructively support its implementation.

New Government Security Committee

The rise in legal requirements in the context of national security and geopolitical developments are becoming increasingly important for SAP as a software provider for the public sector and as an operator of critical infrastructures. The Supervisory Board discussed, on several occasions in 2023, matters relating to the national security of states in which SAP is subject to corresponding regulations. From the Supervisory Board’s perspective, it was essential that a committee on government security be set up to reflect SAP’s business activities in these security-sensitive areas. The Supervisory Board will therefore, in accordance with the legal framework, accompany and monitor these specific Company activities by means of a dedicated committee going forward. The Personnel and Governance Committee discussed the formation of and rules of procedure for this committee at its April 12 and July 26, 2023, meetings and thereafter reported on its deliberations to the full Supervisory Board. The new six-member Government Security Committee was subsequently established, its rules of procedure adopted, and its members elected during the October meeting of the Supervisory Board. The Committee began its work in January 2024.

Sustainability

Due to the comprehensive strategic importance that sustainability has for SAP and its customers, the Supervisory Board addressed the sustainability aspects that are relevant to SAP numerous times throughout the fiscal year 2023. It is important to note here that SAP promotes sustainability in two different ways: by offering solutions that empower SAP customers to become more sustainable enterprises, and by aligning its own business activities with ESG (environmental, social, and governance) goals and targets. The entire spectrum of SAP’s sustainability efforts and sustainability solutions is a cross topic that is monitored and covered by several committees. That is why the Supervisory Board has not formed a pure ESG or sustainability committee. By continuously addressing sustainability issues both in plenary sessions and in the committees, we have been able to build extensive expertise in this area: specifically, the Audit and Compliance Committee monitored the sustainability reporting and the way the reports are created and managed, and the Personnel and Governance Committee dealt with sustainability targets relevant to Executive Board compensation. The Technology and Strategy Committee, meanwhile, concerned itself with sustainability-related products and software as well as IT security, whereas the People and Culture Committee addressed sustainability as it relates to social issues.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

On top of this, the full Supervisory Board was updated on SAP’s current sustainability portfolio and the planned expansion of this product range at its meeting in April. As part of the October meeting, the Supervisory Board had the opportunity to examine the topic of sustainability at SAP based on a detailed meeting document that highlighted, in particular, SAP’s goal to emit zero greenhouse gas emissions from 2030 onwards, general human rights topics, the German Supply Chain Due Diligence Act, and best practices for responsible AI.

Other key topics addressed at our meetings in 2023 notably included the following:

Meeting in February (Meeting to Discuss the Financial Statements)

At our ordinary Supervisory Board meeting on February 22, 2023, we adopted the resolutions required under the current Executive Board compensation package for fiscal 2022 and 2023. To this end, we first determined performance against the defined target for the short-term incentive (STI) 2022, and then set the performance targets for the STI 2023. In addition, we resolved the individual allocation amount for the 2023 tranche of the long-term incentive (LTI) 2020. Finally, we evaluated the appropriateness of the Executive Board members’ compensation for 2022, and in each case found it to be appropriate in terms of amount, structure, objective criteria, and reasonable and appropriate in relation to the Company’s circumstances, also in regard to its profit and outlook. We referred in this regard to a certificate obtained beforehand from an independent compensation consultant. For more information about the STI 2022 and 2023, the LTI 2020, and the other compensation elements for Executive Board members, see the Compensation Report.

We also discussed the upcoming reappointments of, and thus renewals of the contracts with, Julia White, Sabine Bendiek, and Scott Russell at this meeting. In this connection, the Supervisory Board chairperson reported that Sabine Bendiek would not be standing for a further term of office. We thereafter resolved to offer both Scott Russell and Julia White reappointment and renewal of their Executive Board contracts by a further three years until 2027, and to negotiate new contracts with them. We also concerned ourselves with succession planning for Sabine Bendiek.

Next, we passed the proposed resolutions for the SAP SE Annual General Meeting of Shareholders on May 11, 2023. In particular, these proposals included the proposed election of Punit Renjen as a new Supervisory Board member with the intention of establishing him as a successor to the Supervisory Board chair, and the re-election of Jennifer Li and Qi Lu. The auditor for the 2023 financial year had already been elected by the Annual General Meeting of Shareholders on May 18, 2022, in view of the upcoming change of auditor, which is why there was no proposal for a resolution in this regard. Further, we received an Executive Board report on business in 2022 and adopted the budget for 2023 after discussing same extensively with the Executive Board. In addition, the Supervisory Board turned its attention to the SAP SE financial statements and the consolidated financial statements for 2022. On recommendation of the Audit and Compliance Committee, we approved the audit and gave our consent to the financial statements and the consolidated financial statements for 2022.,In addition, we endorsed the Executive Board’s proposal concerning the appropriation of retained earnings for 2022, and approved the compensation report for fiscal 2022. Beyond this, the Executive Board gave us an overview of SAP’s equity investments and donation activities in 2022.

Extraordinary Meeting in March

We held an extraordinary meeting on March 12, 2023, to discuss the sale already underway of SAP’s interest in Qualtrics International Inc. (“Qualtrics”), a U.S.-listed company. The Executive Board and the Finance and Investment Committee explained the economic background of this move to us. In preparation for this meeting, we obtained written answers to questions the Supervisory Board members had submitted in advance regarding the sale of Qualtrics. We ultimately approved the divestiture on recommendation of the Finance and Investment Committee.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Meeting in April

On April 13, 2023, we discussed the aforementioned key topics as well as business in the first quarter, the Executive Board reporting particularly on SAP’s competitive position and on the current tasks in the individual Executive Board portfolios.

Extraordinary Meeting in May

The Supervisory Board held an extraordinary meeting following the Annual General Meeting of Shareholders on May 11, 2023. After welcoming the newly-elected member Punit Renjen, we appointed him as second deputy chairperson of the Supervisory Board and, due to the new election or re-election of the Supervisory Board members concerned, approved the proposed changes to the composition of the committees. The Executive Board then explained to us the planned adjustments to the Company’s 2025 financial ambition, which was announced at the SAP Sapphire customer event in Orlando, and the expectations of investors in this regard. Next, the Executive Board presented its proposal to establish a €5 billion share buyback program that would run until the end of 2025. According to the proposal, the program would be carried out on the basis of the appropriate authorization by the Annual General Meeting, and various intra-group financing measures would be undertaken to implement it. After joint deliberation, we approved the Executive Board’s proposal. As the last item on the agenda, we discussed how to deal with potential fines against SAP in connection with ongoing compliance investigations, when it came to the compensation of the Executive Board members currently in office. We particularly took into account that the compliance incidents in question had occurred before the current members of the Executive Board were appointed. The Supervisory Board’s investigations into these compliance incidents therefore do not pertain to current Executive Board members.

Meeting in July

As previously mentioned above, AI was a key topic in our July meeting. The Executive Board also reported on business in the second quarter, and we discussed with management potential markets to focus on in future and various marketing-related matters. Next, an analyst from a U.S. investment management company explained the difference between SAP and other major software companies from his perspective as an analyst and the main criteria he used to arrive at this opinion. Based on this information, the Supervisory Board and the Executive Board then discussed the strategic direction of the Company with the goal of better meeting the capital markets’ expectations. In addition, the Audit and Compliance Committee and the law firm tasked by the Supervisory Board updated us on the ongoing compliance matters, particularly the negotiations with the U.S. Department of Justice and the U.S. Securities and Exchange Commission (SEC), and informed us on how to proceed. We also approved an amendment of the Rules of Procedure of the Supervisory Board to include rules on dealing with conflicts of interests, and passed two resolutions on Executive Board compensation serving to neutralize the impact of the Qualtrics sale on the key performance indicators (KPIs) for the STI 2023 and for the 2021, 2022, and 2023 tranches of the LTI 2020.

Meeting in October

At our meeting on October 26, 2023, the individual Executive Board members first reported on business performance in the third quarter for their respective Board area. Next, we took an in-depth look at SAP’s transformation, focusing on the goals, the measures planned by the Executive Board to improve the process, and the new structure of responsibilities at Executive Board level. The Supervisory Board thereafter discussed various HR and compensation matters without the Executive Board being present. Topics notably included the adjustment of Executive Board service contracts to the new compensation system, and the adoption of a clawback policy, which standardizes the cases in which the Company can reclaim variable compensation already paid out to certain top executives, including members of the Executive Board. SAP was required to adopt and implement this directive by December 31, 2023, due to new regulations of the SEC and the New York Stock Exchange (NYSE). Going forward, the new clawback policy will complement the clawback provisions that already exist in the Executive Board contracts. We then dealt with the regular review of the independence of the shareholder representatives on the Supervisory Board.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Based on the findings from our own examination, we determined that all shareholder representatives were independent in the meaning of the German Corporate Governance Code (GCGC) and were therefore to be named as such in the Corporate Governance Statement. We also ascertained –in accordance with the recommendations in the GCGC – that more than half of the shareholder representatives are independent from the Company and the Executive Board. Thereafter, we resolved on what we believe to be the appropriate number of independent shareholder representative members, and determined that the Supervisory Board has an appropriate number of independent members in the meaning of the GCGC, also when the shareholder structure is taken into account. Lastly, the Supervisory Board adopted the regular declaration of compliance and approved an amendment to the non-IFRS definition for the financial year 2024.

Extraordinary Meeting in December

An extraordinary Supervisory Board meeting was held on December 10, 2023, during which the Supervisory Board focused on the forthcoming settlement agreements with the U.S. Department of Justice (U.S. DOJ), the SEC, and the South Africa National Prosecution Authority in relation to the compliance violations in South Africa and other countries. The Supervisory Board gave its consent to the detailed content of the settlement agreements negotiated with the said authorities at the meeting.

Resolutions by Correspondence Vote

We adopted, besides the above resolutions, several resolutions by correspondence which the relevant Committees had deliberated on in advance and recommended to us, as follows:

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Format of Meetings in Fiscal 2023

1 Thereof two joint meetings between the Technology and Strategy Committee and the Audit and Compliance Committee

2 Thereof two joint meetings between the Finance and Investment Committee and the Audit and Compliance Committee

The Work of the Supervisory Board Committees

The committees made a key contribution to the work of the Supervisory Board in 2023, notably by preparing relevant agenda items and resolutions for Supervisory Board meetings, by approving resolution proposals, and by regularly reporting on their deliberations and on their decisions taken. The following committees were in place in the year under review:

Personnel and Governance Committee, Audit and Compliance Committee, Finance and Investment Committee, Technology and Strategy Committee, People and Culture Committee, Nomination Committee, Go-To-Market and Operations Committee

Each of the aforementioned committees was active in 2023. For more information about the Supervisory Board committees, particularly their respective composition, tasks, and responsibilities, see the Corporate Governance Statement and the Corporate Governance section of SAP’s Web site.

Besides the matters described above, the committees focused primarily on the following topics in 2023:

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

The work of the committees and their regular reports in the plenary sessions ensured that we were kept fully informed of all matters covered by the committees and were able to discuss them thoroughly.

Conflicts of Interest

Members of the Supervisory Board and of the Executive Board had no conflicts of interest that recommendations E.1 and E.2 of the CGCG require to be disclosed to the Supervisory Board. Rather, they were avoided by the Supervisory Board member concerned not taking part in the relevant discussions or voting on the matter in question in the event of a possible, selective conflict of interest. Insofar as Supervisory Board members hold executive positions in companies or have material equity in companies that currently have business dealings with SAP, we do not see any impairment of their independence. The scope of the business relationships in question is relatively small and, moreover, the transactions take place at arm’s length.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Training and Professional Development

The members of the Supervisory Board were once again offered various training and professional development opportunities throughout the year, with appropriate support from the Company. Where it made sense, presentations and training offerings were recorded and placed on a specially configured training platform to enable the remaining Supervisory Board members to take part in them as well. The members of the Audit and Compliance Committee were invited to a short seminar in April 2023 on “Current aspects of non-financial reporting.” In May 2023, a course on “Innovation at SAP” was offered that focused on AI, large language models (models that are trained on huge data volumes), and on the metaverse, a digital space that is created by interacting with virtual, augmented, and physical reality. In November, several Supervisory Board members took part in a virtual deep dive on Customer Experience at SAP. On-boarding courses and leaflets are available for new Supervisory Board members to familiarize themselves with their tasks and responsibilities when they assume office. New members also have the opportunity to meet individually with members of the Executive Board to discuss the topics relevant to their new portfolio.

SAP SE and Consolidated Financial Reports for 2023

BDO audited the SAP SE and consolidated financial reports for 2023. The Annual General Meeting of Shareholders on May 18, 2022, elected BDO as the SAP SE and SAP Group auditor for fiscal year 2023. The Supervisory Board had proposed the appointment of BDO on the recommendation of the Audit and Compliance Committee. Prior to the proposed resolution being put to the Annual General Meeting of Shareholders, BDO had confirmed to the chairperson of the Supervisory Board and the Audit and Compliance Committee that circumstances did not exist that might prejudice or raise any doubt concerning its independence as the Company’s auditor. In that connection, BDO informed us of the volume of the services that were not part of the audit which it had either provided to the Group in the past year or was engaged to provide in the year to come. The Supervisory Board has agreed with BDO that the auditor should report to the Supervisory Board and record in the auditor’s report any fact found during the audit that is inconsistent with the declaration given by the Executive Board and the Supervisory Board concerning implementation of the German Corporate Governance Code. BDO examined the SAP SE financial statements prepared in accordance with the German Commercial Code, the consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRSs) as required by the German Commercial Code, section 315e, and the combined SAP Group and SAP SE management report prepared in accordance with the German Commercial Code, and certified them without qualification. The auditor thus confirmed that, in its opinion and based on its audit in accordance with the applicable accounting principles, the SAP SE and consolidated financial statements give a true and fair view of the net assets, financial position, and results of operations of SAP SE and the SAP Group. The auditor also confirmed that the combined SAP SE and SAP Group management report is consistent with the corresponding financial statements and as a whole gives a suitable view of the position of SAP SE and the SAP Group and of foreseeable opportunities and risks. In accordance with section 317 (3a) of the German Commercial Code, the auditor also examined and confirmed that the renderings of the financial statements, the management report, the consolidated financial statements, and the combined management report contained in the files submitted on an electronic data carrier, which can be accessed by the issuer on the secure client portal, and prepared for the purposes of disclosure comply in all material respects with the requirements of section 328 (1) of the German Commercial Code regarding the electronic reporting format (“ESEF format”). BDO had completed its audit of SAP’s internal control over financial reporting and certified without qualification that it complies with the applicable U.S. standards. The auditor stated in its opinion that it considers SAP’s internal controls with respect to the consolidated financial statements to be effective in all material respects. Additionally, it provided assurance on the non-financial declaration and the disclosures contained therein on the topics identified as material – namely, the environment, employees, human rights, corruption and bribery, customer loyalty, and data privacy and data security – in the combined management report, and on the separate examination of the compensation report and review of selected qualitative and quantitative sustainability disclosures outside of the financial statements and management report. All Audit and Compliance Committee members and Supervisory Board members received – initially in the form of drafts that were identical to the final documents – the documents concerning the financial statements mentioned above, the audit reports prepared by BDO, and the Executive Board’s proposal concerning the appropriation of retained earnings in good time.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

On February 21, 2024, the Executive Board prepared the financial accounts of SAP SE and the SAP Group for 2023, comprising the SAP SE financial statements, the consolidated financial statements, and the combined management report, and submitted them without delay to the Supervisory Board.

The Executive Board explained the financial statements of SAP SE and the SAP Group and its proposal concerning the appropriation of retained earnings at the meeting of the Audit and Compliance Committee on February 21, 2024 (based on the drafts identical to the final documents) and at the meeting of the Supervisory Board on February 21, 2024. Members of the Executive Board answered questions from the Committee and the Supervisory Board. At the Audit and Compliance Committee meeting, they also explained the compensation report and the Annual Report on Form 20-F prepared in accordance with the applicable U.S. standards.

After the Executive Board had explained them, the Audit and Compliance Committee and the Supervisory Board reviewed the financial statement documents (based on drafts identical to the final documents), taking BDO’s audit reports (or the drafts identical to the final documents) into account. The Audit and Compliance Committee then passed the compensation report on to the Supervisory Board for release. The representative of the auditor who attended presented full reports on the audit and the results of the audit to the Audit and Compliance Committee and Supervisory Board meetings and explained its audit reports (or final drafts thereof). The auditor also reported that it had not identified any material weaknesses in SAP’s internal control and risk-management systems for financial reporting. Both the Audit and Compliance Committee and the Supervisory Board asked detailed questions about the form, scope, and results of the audit. The Audit and Compliance Committee reported to the Supervisory Board on its own review of the financial statements of SAP SE and the SAP Group, its discussions with the Executive Board and with the auditor, and its supervision of the financial reporting process. It confirmed that, as part of its supervisory work, it had addressed the SAP Group’s internal control, risk management, and internal auditing systems, and found the systems to be effective.

The Committee also reported that BDO had told it that no circumstances had arisen that might give cause for concern about BDO’s impartiality, and informed us about the services BDO had provided that were not part of the audit. The Committee reported that it had examined the auditor’s independence, taking the non-audit services it had rendered into consideration, and stated that, in the Committee’s opinion, the auditor possessed the required degree of independence and professional qualification.

The Audit and Compliance Committee and the Supervisory Board satisfied themselves that BDO had conducted the audit properly. In particular, they concluded that both the audit reports and the audit itself fulfilled the legal requirements. Based on the report and the Audit and Compliance Committee’s recommendation, the Supervisory Board approved the results of the audit and, since there were no findings from our own examination, we gave our consent to the SAP SE financial statements, the consolidated financial statements, the combined Group management report, and adopted the compensation report pursuant to the German Stock Corporation Act, section 162. The financial statements and combined management report were thus formally adopted upon approval by the Supervisory Board. The Supervisory Board’s opinion of the Company and the Group coincided with that of the Executive Board as set out in the combined management report. The Supervisory Board considered the proposal presented by the Executive Board concerning the appropriation of retained earnings. We had regard to the requirements of dividends policy, the effects on the liquidity of SAP SE and the SAP Group, and the interests of the shareholders. We also discussed these matters with the auditor. We then endorsed the Executive Board’s proposal concerning the appropriation of retained earnings, in accordance with the Audit and Compliance Committee’s recommendation. The corporate governance statement pursuant to the German Commercial Code, sections 315d and 289f was approved for publication by the Supervisory Board by way of correspondence vote prior to the meeting to discuss the financial statements. Finally, we approved this present Report.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Changes on the Executive Board and Supervisory Board in 2023

Dominik Asam took office as SAP’s new CFO on March 7, 2023, succeeding Luka Mucic who retired from the SAP Executive Board at the end of March 2023. The Supervisory Board would like to thank Luka Mucic for his invaluable contribution for the benefit of the Company. Sabine Bendiek’s Executive Board post was not renewed at her own request and ended on December 31, 2023. The Supervisory Board thanks Sabine Bendiek for her outstanding work and her remarkable contribution to the transformation of SAP.

The Supervisory Board bade farewell in 2023 to Gesche Joost, whose term of office on the Supervisory Board ended at the close of the Annual General Meeting of Shareholders on May 11, 2023. We thank Gesche Joost for her commitment to SAP. On May 11, 2023, the Annual General Meeting of Shareholders elected Punit Renjen to the Supervisory Board as her successor. In addition, the Annual General Meeting of Shareholders elected to extend the Supervisory Board mandates of Jennifer Li and Qi Lu for a further four years.

The Supervisory Board thanks the members of the Executive Board and all SAP employees for their great commitment and dedication to SAP.

For the Supervisory Board

Professor Hasso Plattner

(Chairperson)

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Responsibility Statement

To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial Statements give a true and fair view of the assets, finances, and operating results of the SAP Group, and the management report of the Group and SAP SE includes a fair review of the development and performance of the business and the position of the Group and SAP SE, together with a description of the principal opportunities and risks associated with the expected development of the Group and SAP SE.

Walldorf, February 21, 2024

SAP SE

Walldorf, Germany

Executive Board of SAP SE

Julia White

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Independent Auditor’s Report

To SAP SE, Walldorf

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE COMBINED GROUP MANAGEMENT REPORT

AUDIT OPINIONS

We have audited the consolidated financial statements of SAP SE, Walldorf, and its subsidiaries (the Group), which comprise the consolidated statements of financial position as at December 31, 2023, and the consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the financial year from January 1, 2023 to December 31, 2023, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In addition, we have audited the combined group management report (report on the position of the company and of the group) of SAP SE for the financial year January 1, 2023 to December 31, 2023. In accordance with the German legal requirements, we have not audited the content of those parts of the combined group management report listed in section “OTHER INFORMATION”.

In our opinion, on the basis of the knowledge obtained in the audit,

Pursuant to § 322 (3) sentence 1 HGB (German Commercial Code), we declare that our audit has not led to any reservations relating to the legal compliance of the consolidated financial statements and of the combined group management report.

BASIS FOR THE AUDIT OPINIONS

We conducted our audit of the consolidated financial statements and of the combined group management report in accordance with § 317 HGB and the EU Audit Regulation (No. 537/2014, referred to subsequently as “EU Audit Regulation”) and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). We conducted our audit of the consolidated financial statements in supplementary compliance with the International Standards on Auditing (ISAs). Our responsibilities under those requirements, principles and standards are further described in the “AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE COMBINED GROUP MANAGEMENT REPORT” section of our auditor’s report.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

We are independent of the group entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements.

In addition, in accordance with Article 10 (2) letter (f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions on the consolidated financial statements and on the combined group management report.

KEY AUDIT MATTERS IN THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the financial year from January 1, 2023 to December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our audit opinion thereon; we do not provide a separate audit opinion on these matters.

We have identified the following matters as key audit matters to be disclosed in our auditor’s report:

CLOUD REVENUE RECOGNITION

Matter

The Group generated revenue in 2023 of EUR 31,207 million, of which EUR 13,664 million relate to cloud revenues from fees earned from providing customers a cloud offering with software as a service, platform as a service, infrastructure as a service and/or premium cloud support through subscriptions for use of the Group’s cloud solutions. For most of the Group’s cloud offerings, measured both in volume and number, the customer is entitled to continuously access and use one or more cloud solutions for a specified term, therefore cloud revenue is recognized based on time elapsed and thus ratably over the term of access. However, some cloud business models are provisioned on a consumption basis where a customer commits to a fixed value of spend on cloud services throughout the contract term, but with the discretion to call off cloud services on an as needed basis. For those arrangements cloud revenue is recognized based on consumption as it best reflects the measure towards satisfaction of the performance obligation(s).

The evaluation of cloud revenue contracts bears an inherent risk of errors due to the complex nature of certain contracts. SAP defined detailed accounting policy guidelines in line with the applicable accounting standards and has established uniform processes throughout the group to manage the accounting for its cloud contracts. Applying them often requires significant management judgement, in particular with respect to whether certain agreements with the same customer are economically linked and need to be combined, whether the various services that are owed by the Group according to the contract qualify as separate performance obligations, the allocation of the transaction price of a customer contract to the performance obligations in the contract based on standalone-selling prices and the point in time at which the provision of services by the Group for the specific performance obligation commences.

Cloud revenue recognition is a key audit matter due to the significance of the cloud revenue and the high degree of complex judgement required.

The respective cloud revenue disclosures of the Group are contained in section “A.1 Revenue” of the notes to the consolidated financial statements.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Auditor’s Response and Observations

We evaluated the design and we tested the operating effectiveness of certain internal controls related to the revenue process, including controls related to the identification of certain economically linked agreements and separate performance obligations, the allocation of the transaction price to the performance obligations in certain contracts, and the point in time at which the provisioning of service commenced. We tested a sample of underlying contractual agreements and other related documents to evaluate the Group’s assessment of whether certain agreements were economically linked, the identified performance obligations, the allocation of the transaction price and the point in time at which the provision of service for the performance obligations identified commenced. We tested key contractual terms and conditions from the respective contracts to evaluate the identified performance obligations and the point in time at which the provision of service for the identified performance obligations commenced.

Based on the audit procedures we performed, we have found management’s judgements used for revenue recognition of cloud contracts, particularly in the area of assessing whether certain contracts are economically linked and need to be combined, identifying separate performance obligations, allocating the transaction price to the performance obligation, and assessing the point in time at which the provision of services commenced, acceptable.

ASSESSMENT OF THE GROUP’S UNCERTAIN TAX TREATMENTS

Matter

The Group disclosed contingent liabilities relating to tax uncertainties of EUR 1,815 million. The Group operates in multiple tax jurisdictions which continually revise, change, and implement tax laws with complexities and uncertainties due to different interpretations of these tax laws, especially relating to transfer pricing and intercompany transactions for the use of intellectual property. The identification, recognition, measurement and disclosure of certain income tax risks specifically from transfer pricing and intercompany transactions for the use of intellectual property requires significant management judgement in determining key assumptions to be applied to the interpretation of tax laws, related regulations, case laws and mutual agreement procedures across multiple jurisdictions. Significant management judgement is also required to determine whether a transfer pricing tax position is more-likely-than-not to be sustained and to assess whether intercompany transactions are based on the arm’s length principle. These management judgements demand a high degree of expertise, for which the Group regularly engages external experts to provide tax opinions to support their own risk assessment.

The respective disclosures regarding uncertain tax positions of the Group are contained in section “C.5 Income Taxes” of the notes to the consolidated financial statements.

Auditor’s Response and Observations

We involved internal experts with specialized skills and knowledge in taxation to evaluate the appropriateness of management’s methods and key assumptions used to estimate certain uncertain tax positions. We verified our understanding of the relevant facts by evaluating certain of the Group’s transfer pricing documentation and we assessed whether the Group’s processes and guidelines in connection with certain intercompany transactions support an arm’s length position. For certain group business activities, we evaluated the reasonableness and consistency of management’s judgments (including application of tax regulations and interpretations), key assumptions and processes. We assessed the overall reasonableness of conclusions reached regarding the identification, recognition, measurement and disclosure of certain uncertain tax positions from transfer pricing and intercompany transactions for the use of intellectual property.

Based on the audit procedures we performed, we have found management’s judgements related to the estimation of uncertain tax positions, specifically from transfer pricing and intercompany transactions for the use of intellectual property, acceptable.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

MEASUREMENT OF UNLISTED EQUITY SECURITIES

Matter

The Group holds unlisted equity securities held at fair value of EUR 4,811 million as of December 31, 2023, primarily relating to Sapphire Ventures investments. These investments in unlisted equity securities are classified as financial instruments at fair value through profit and loss requiring a recurring fair value measurement using significant unobservable inputs. The measurement of the fair value of certain investments is complex and, with regard to the assumptions made, highly dependent on management’s estimates and judgments. This applies particularly to the significant measurement uncertainty associated with the fair value of such investments relating to significant unobservable inputs used, such as the selection of appropriate comparable company data, in deriving revenue multiples as well as forecasted performance of the investees.

The respective disclosures regarding the fair value measurement of unlisted equity securities of the Group are contained in sections “D.6 Equity Investments” and “F.2 Fair Value Disclosures on Financial Instruments” of the notes to the consolidated financial statements.

Auditor’s Response and Observations

We involved internal experts with specialized skills and knowledge in valuation to assist in assessing and evaluating the appropriateness of the valuation technique used for a selection of certain investments in unlisted equity securities relating to Sapphire Ventures investments. We tested the appropriateness of the valuation technique selected by comparing it to our expectation based on industry experience and knowledge of the investment. We assessed the source, reliability and relevance of evidence used in determining significant unobservable inputs and we evaluated the significant unobservable inputs considered in the recurring measurement of fair value by comparing them to historical and market information. In addition, we developed an independent range of acceptable fair value estimates utilizing available market information from third party sources to assess whether managements estimates are reasonable.

Based on the audit procedures we performed, we have found management’s judgements related to the fair value measurement of unlisted equity securities acceptable.

OTHER INFORMATION

The Executive Board and the Supervisory Board are responsible for the other information. The other information comprises:

Our audit opinions on the consolidated financial statements and on the combined group management report do not cover the other information, and consequently we do not express an opinion or any other form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the other information and thereby acknowledge whether the other information

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

In addition, we were engaged to perform an independent assurance engagement on selected qualitative and quantitative sustainability disclosures, which is also other information of the integrated report 2023. In regard to the nature, extent and conclusions of this independent assurance engagement for specific other information we refer to our independent assurance report dated February 21, 2024.

RESPONSIBILITIES OF THE EXECUTIVE BOARD AND THE SUPERVISORY BOARD FOR THE CONSOLIDATED FINANCIAL STATEMENTS AND THE COMBINED GROUP MANAGEMENT REPORT

The Executive Board is responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to § 315e (1) HGB as well as the IFRSs as issued by the International Accounting Standards Board and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of the assets, liabilities, financial position and financial performance of the group. In addition, the Executive Board is responsible for such internal control as the Executive Board has determined necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud (i.e. fraudulent financial reporting and misappropriation of assets) or error.

In preparing the consolidated financial statements, the Executive Board is responsible for assessing the group’s ability to continue as a going concern. The Executive Board also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, the Executive Board is responsible for financial reporting based on the going concern basis of accounting unless there is an intention to liquidate the group or to cease operations, or there is no realistic alternative but to do so.

Furthermore, the Executive Board is responsible for the preparation of the combined group management report that, as a whole, provides an appropriate view of the group’s position and is, in all material respects, consistent with the consolidated financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the Executive Board is responsible for such arrangements and measures (systems) as the Executive Board has considered necessary to enable the preparation of a combined group management report that is in accordance with the applicable German legal requirements, the German Accounting Standard number 20 (GAS 20) and the IFRS Practice Statement Management Commentary and to be able to provide sufficient appropriate evidence for the assertions in the combined group management report.

The Supervisory Board is responsible for overseeing the group’s financial reporting process for the preparation of the consolidated financial statements and of the combined group management report.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND OF THE COMBINED GROUP MANAGEMENT REPORT

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and whether the combined group management report as a whole provides an appropriate view of the group’s position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor’s report that includes our opinions on the consolidated financial statements and on the combined group management report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with § 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) and supplementary compliance with the ISAs and standards of the PCAOB will always detect a material misstatement.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and this combined group management report.

We exercise professional judgment and maintain professional skepticism throughout the audit. We also

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with the relevant independence requirements and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and, where applicable, the actions taken or safeguards applied to eliminate independence threats.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

OTHER LEGAL AND REGULATORY REQUIREMENTS

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING IN THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO PCAOB

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

We have audited SAP SE’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, SAP SE maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

Executive Board’s and Supervisory Board’s Responsibility for the Internal Control over Financial Reporting in the Consolidated Financial Statements

The Executive Board is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting in the Consolidated Financial Statements.

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.

The Supervisory Board is responsible for overseeing SAP SE’s internal control over financial reporting in the consolidated financial statements.

Auditor’s Responsibility for the Internal Control over Financial Reporting in the Consolidated Financial Statements

Our responsibility is to express an opinion on SAP SE’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit 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 audit also included performing such other procedures as we considered necessary in the circumstances.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

We believe that our audit provides a reasonable basis for our opinion.

REPORT ON THE ASSURANCE ON THE ELECTRONIC RENDERING OF THE CONSOLIDATED FINANCIAL STATEMENTS AND THE COMBINED GROUP MANAGEMENT REPORT, PREPARED FOR PUBLICATION PURPOSES IN ACCORDANCE WITH § 317 (3A) HGB

Assurance Opinion

We have performed assurance work in accordance with § 317 (3a) HGB to obtain reasonable assurance as to whether the rendering of the consolidated financial statements and the combined group management report (hereinafter the “ESEF documents”) contained in the electronic file “sap-2023-12-31-DE.zip” and prepared for publication purposes complies in all material respects with the requirements of § 328 (1) HGB for the electronic reporting format (“ESEF format”). In accordance with German legal requirements, this assurance work extends only to the conversion of the information contained in the consolidated financial statements and the combined group management report into the ESEF format and therefore relates neither to the information contained within these renderings nor to any other information contained in the file identified above.

In our opinion, the rendering of the consolidated financial statements and the combined group management report contained in the electronic file identified above and prepared for publication purposes complies in all material respects with the requirements of § 328 (1) HGB for the electronic reporting format. Beyond this assurance opinion and our audit opinion on the accompanying consolidated financial statements and the accompanying combined group management report for the financial year from January 1, 2023 to December 31, 2023, contained in the “Report on the audit of the consolidated financial statements and of the combined group management report” above, we do not express any assurance opinion on the information contained within these renderings or on the other information contained in the file identified above.

Basis for the Assurance Opinion

We conducted our assurance work on the rendering of the consolidated financial statements and the combined group management report contained in the file identified above in accordance with § 317 (3a) HGB and the IDW Assurance Standard: Assurance Work on the Electronic Rendering of Financial Statements and Management Reports, Prepared for Publication Purposes in Accordance with § 317 (3a) HGB (IDW AsS 410 (06.2022). Our responsibility in accordance therewith is further described in the “Auditor’s Responsibilities for the Assurance Work on the ESEF Documents” section. Our audit firm has applied the requirements of the IDW Quality Management Standards, which implement the IAASB’s International Standards on Quality Management.

Responsibilities of the Executive Board and the Supervisory Board for the ESEF Documents

The Executive Board of the company is responsible for the preparation of the ESEF documents with the electronic renderings of the consolidated financial statements and the combined group management report in accordance with § 328 (1) sentence 4 No. 1 HGB and for the tagging of the consolidated financial statements in accordance with § 328 (1) sentence 4 No. 2 HGB.

In addition, the Executive Board of the company is responsible for such internal controls that they have considered necessary to enable the preparation of ESEF documents that are free from material intentional or unintentional non-compliance with the requirements of § 328 (1) HGB for the electronic reporting format.

The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.

Auditor’s Responsibilities for the Assurance Work on the ESEF documents

Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional non-compliance with the requirements of § 328 (1) HGB. We exercise professional judgment and maintain professional skepticism throughout the assurance work. We also

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

FURTHER INFORMATION PURSUANT TO ARTICLE 10 OF THE EU AUDIT REGULATION

We were elected as group auditor by the annual general meeting on May 18, 2022. We were engaged by the chairperson of the Audit and Compliance Committee on November 30, 2023. We have been the group auditor of SAP SE without interruption since the financial year 2023.

We declare that the audit opinions expressed in this auditor’s report are consistent with the additional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).

In addition to the financial statement audit of SAP SE, we have performed various financial statement audits at subsidiaries and have provided to group entities the following services that are not disclosed in the consolidated financial statements or in the combined group management report for the audited entity or its controlled entities:

OTHER MATTER — USE OF THE AUDITOR’S REPORT

Our auditor’s report must always be read together with the audited consolidated financial statements and the audited combined group management report as well as the assured ESEF documents. The consolidated financial statements and the combined group management report converted to the ESEF format — including the versions to be published in the German Federal Gazette — are merely electronic renderings of the audited consolidated financial statements and the audited combined group management report and do not take their place. In particular, the ESEF report and our assurance opinion contained therein are to be used solely together with the assured ESEF documents provided in electronic form.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

German Public Auditor Responsible for the Engagement

The German Public Auditor responsible for the engagement is Dr. Jens Freiberg.

Frankfurt am Main, February 21, 2024

BDO AG
Wirtschaftsprüfungsgesellschaft

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Independent Auditor’s Report on a Limited Assurance Engagement of the Combined Non-Financial Statement

To the Supervisory Board of SAP SE, Walldorf

We have performed a limited assurance engagement on the combined non-financial statement published in the Combined Group Management Report (hereinafter referred to as the “combined non-financial statement”) published by SAP SE, Walldorf, (hereinafter referred to as “SAP” or the “Group”) for the period from January 1 to December 31, 2023.

Responsibility of the Executive Directors

The executive directors of the Group are responsible for the preparation of the combined non-financial statement in accordance with §§ 315c in conjunction with 289c to 289e HGB [“Handelsgesetzbuch”: German Commercial Code] and Article 8 of REGULATION (EU) 2020/852 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 18 June 2020 on establishing a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088 (hereinafter the “EU Taxonomy Regulation”) and the Delegated Acts adopted thereunder, as well as for making their own interpretation of the wording and terms contained in the EU Taxonomy Regulation and the Delegated Acts adopted thereunder, as set out in section “Sustainable Finance: EU Taxonomy Disclosures” of the combined non-financial statement.

This responsibility of the executive directors includes the selection and application of appropriate non-financial reporting methods and making assumptions and estimates about individual non-financial disclosures of the group that are reasonable in the circumstances. Furthermore, the executive directors are responsible for such internal control as the executive directors consider necessary to enable the preparation of a combined non-financial statement that is free from material misstatement, whether due to fraud or error.

The EU Taxonomy Regulation and the Delegated Acts issued thereunder contain wording and terms that are still subject to considerable interpretation uncertainties and for which clarifications have not yet been published in every case. Therefore, the executive directors have disclosed their interpretation of the EU Taxonomy Regulation and the Delegated Acts adopted thereunder in section “Sustainable Finance: EU Taxonomy Disclosures” of the combined non-financial statement. They are responsible for the defensibility of this interpretation. Due to the immanent risk that indeterminate legal terms may be interpreted differently, the legal conformity of the interpretation is subject to uncertainties.

Independence and Quality Assurance of the Assurance Practitioner’s Firm

We have complied with the German professional requirements on independence as well as other professional conduct requirements.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Our audit firm applies the national legal requirements and professional pronouncements - in particular the By-laws Regulating the Rights and Duties of Wirtschaftsprüfer and vereidigte Buchprüfer in the exercise of their Profession and the Standards on Quality Management issued by the Institute of Public Auditors in Germany (IDW), and accordingly maintains a comprehensive quality management system that includes documented policies and procedures with regard to compliance with professional ethical requirements, professional standards as well as relevant statutory and other legal requirements.

Responsibility of the Assurance Practitioner

Our responsibility is to express a conclusion with limited assurance on the combined non-financial statement based on our assurance engagement.

We conducted our assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000 (Revised): “Assurance Engagements other than Audits or Reviews of Historical Financial Information” issued by the IAASB. This standard requires that we plan and perform the assurance engagement to obtain limited assurance about whether any matters have come to our attention that cause us to believe that the combined non-financial financial statement for the period of January 1 to December 31, 2023, is not prepared, in all material respects, in accordance with §§ 315c in conjunction with 289c to 289e HGB and the EU Taxonomy Regulation and the Delegated Acts issued thereunder as well as the interpretation by the executive directors disclosed in section “Sustainable Finance: EU Taxonomy Disclosures” of the combined non-financial statement.

In a limited assurance engagement, the procedures performed are less extensive than in a reasonable assurance engagement, and accordingly, a substantially lower level of assurance is obtained. The selection of the assurance procedures is subject to the professional judgment of the assurance practitioner.

In the course of our assurance engagement we have, among other things, performed the following assurance procedures and other activities:Gain an understanding of the structure of the sustainability organization and stakeholder engagement

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

In determining the disclosures in accordance with Article 8 of the EU Taxonomy Regulation, the executive directors are required to interpret undefined legal terms. Due to the immanent risk that undefined legal terms may be interpreted differently, the legal conformity of their interpretation and, accordingly, our assurance engagement thereon are subject to uncertainties.

Assurance Opinion

Based on the assurance procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe that the combined non-financial statement of SAP SE, Walldorf for the period from January 1 to December 31, 2023 is not prepared, in all material respects, in accordance with §§ 315c in conjunction with 289c to 289e HGB and the EU Taxonomy Regulation and the Delegated Acts issued thereunder as well as the interpretation by the executive directors as disclosed in section “Sustainable Finance: EU Taxonomy Disclosures” of the combined non-financial statement.

Restriction of Use

We draw attention to the fact that the assurance engagement was conducted for the Group’s purposes and that the report is intended solely to inform the Group about the result of the assurance engagement. Consequently, it may not be suitable for any other purpose than the aforementioned. Accordingly, the report is not intended to be used by third parties for making (financial) decisions based on it. Our responsibility is to the Group alone. We do not accept any responsibility to third parties. Our assurance opinion is not modified in this respect.

General Engagement Terms

This engagement is based on the “Special Engagement Terms and Conditions of BDO AG Wirtschaftsprüfungsgesellschaft” of March 1, 2021, agreed with the Group as well as the “General Engagement Terms and Conditions for Auditors and Auditing Firms” of January 1, 2017, issued by the IDW (www.bdo.de/auftragsbedingungen).

February 21, 2024

BDO AG Wirtschaftsprüfungsgesellschaft

Wirtschaftsprüfer

(German Public Auditor)

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Independent Auditor’s Report on a Limited Assurance Engagement on Sustainability Information

To the Executive Board of SAP SE, Walldorf

We have performed an independent assurance engagement on selected qualitative and quantitative sustainability disclosures as well as on selected quantitative sustainability indicators included in the Integrated Report 2023 (hereinafter referred to as “Report”) for the period from January 1 to December 31, 2023 of SAP SE, Walldorf (hereinafter referred to as “SAP” or the “Group”).

For the selected quantitative sustainability indicators Business Health Culture Index, Employee Engagement Index, Employee Retention Rate, Ratio of Women in Management, Ratio of Women in Executive Roles, Total Gross and Net Greenhouse Gas Emissions (Scope 1, Scope 2 and selected Scope 3 emissions), Renewable Energy Certificates (Energy Attribute Certificates), Total Energy Consumption and Customer Net Promoter Score including the explanatory notes supplementing these indicators (hereinafter referred to as “sustainability indicators”) a reasonable assurance engagement was performed.

For selected qualitative and quantitative sustainability disclosures included in “Further Information on Economic, Environmental, and Social Performance” (sections: About This Further Information on Economic, Environmental, and Social Performance; Sustainability Management; Stakeholder Engagement; Materiality; Social Investments; Sustainable Procurement; Waste and Water; Public Policy; Non-Financial Notes: Environmental Performance; and GRI Content Index excluding quantitative and qualitative information in relation to GRI 207 Tax) and the chapter “About This Report” (hereinafter referred to as “sustainability disclosures”) a limited assurance engagement was performed.

Responsibility of the Executive Directors

The executive directors of the Group are responsible for the preparation of the Report in accordance with the principles stated in the Sustainability Reporting Standards of the Global Reporting Initiative and in accordance with the Corporate Accounting and Reporting Standard, the Greenhouse Gas Protocol Scope 2 Guidance and the Corporate Value Chain (Scope 3) Accounting and Reporting Standard of the Greenhouse Gas Protocol Initiative by the World Resources Institute and the World Business Council for Sustainable Development in combination with internal guidelines as described in the “Non-Financial Notes: Environmental Performance” (hereinafter: “Reporting Criteria”) and for the selection of the disclosures to be assessed.

This responsibility of the executive directors includes the selection and application of appropriate sustainability reporting methods and making assumptions and estimates about individual non-financial disclosures that are reasonable in the circumstances. Furthermore, the executive directors are responsible for such internal controls as executive directors determine to enable the preparation of the Report that is free from material misstatement, whether due to fraud or error.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Independence and Quality Assurance of the Assurance Practitioner’s Firm

We have complied with the German professional regulations on independence as well as other professional conduct requirements.

Our audit firm applies the national legal requirements and professional pronouncements - in particular the By-laws Regulating the Rights and Duties of Wirtschaftsprüfer and vereidigte Buchprüfer in the exercise of their Profession and the Standards on Quality Management issued by the Institute of Public Auditors in Germany (IDW), and accordingly maintains a comprehensive quality management system that includes documented policies and procedures with regard to compliance with professional ethical requirements, professional standards as well as relevant statutory and other legal requirements.

Practitioner’s Responsibility

Our responsibility is to express a conclusion based on our work performed within the assurance engagement on the sustainability indicators and the sustainability disclosures described above. We conducted our work in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised): “Assurance Engagements other than Audits or Reviews of Historical Financial Information”, published by IAASB.

Accordingly, we have to comply with our professional duties and to plan and perform the assurance engagement in such a way that we, respecting the principle of materiality, reach our conclusion with a reasonable level of assurance on the above-mentioned sustainability indicators. The assurance of the sustainability indicators encompasses the performance of assurance procedures to obtain evidence for the information included in the Report. The choice of assurance procedures is subject to the professional judgement of the assurance practitioner.

This Standard requires that we plan and perform the assurance engagement to obtain limited assurance about whether any matters have come to our attention that cause us to believe that the above-mentioned sustainability disclosures in the Report of the Group for the period from January 1 to December 31, 2023 are not prepared, in all material respects, in accordance with the relevant Reporting Criteria. This does not imply that a separate conclusion is expressed on each of the disclosures. In a limited assurance engagement, the procedures performed are less extensive than in a reasonable assurance engagement, and accordingly, a significantly lower level of assurance is obtained. The procedures selected depend on the assurance practitioner’s professional judgment.

In the course of our assurance engagement we have, among other things, performed the following assurance procedures and other activities:Gain an understanding of the structure of the sustainability organization and stakeholder engagement

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

In addition, we conducted the following procedures to obtain reasonable assurance:

Assurance Opinion

In our opinion the above-mentioned selected quantitative sustainability indicators in the Report, including the explanatory notes supplementing these indicators, of SAP SE, Walldorf for the business year from January 1 to December 31, 2023 are presented, in all material respects, in accordance with the Reporting Criteria.

Based on the assurance procedures performed and the evidence obtained for the limited assurance, nothing has come to our attention that causes us to believe that the above-mentioned selected qualitative and quantitative sustainability disclosures in the Report of SAP SE, Walldorf for the period from January 1 to December 31, 2023 are not prepared, in all material respects, in accordance with the Reporting Criteria.

Restriction of Use

We draw attention to the fact that the assurance engagement was conducted for the Group’s purposes and that the report is intended solely to inform the Group about the result of the assurance engagement. Consequently, it may not be suitable for any other purpose than the aforementioned. Accordingly, the report is not intended to be used by third parties for making (financial) decisions based on it. Our responsibility is to the Group alone. We do not accept any responsibility to third parties. Our assurance opinion is not modified in this respect.

General Engagement Terms

This engagement is based on the “Special Engagement Terms and Conditions of BDO AG Wirtschaftsprüfungsgesellschaft” of March 1, 2021, agreed with the Group as well as the “General Engagement Terms and Conditions for Auditors and Auditing Firms” of January 1, 2017, issued by the IDW (www.bdo.de/auftragsbedingungen).

February 21, 2024

BDO AG Wirtschaftsprüfungsgesellschaft

Wirtschaftsprüfer

(German Public Auditor)

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Combined Management Report

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

General Information About This Combined Management Report

Basis of Presentation

This combined management report by the SAP Group (collectively, “we,” “us,” “our,” “SAP,” “Group,” or “Company”) and the management report of SAP SE have been prepared in accordance with sections 289, 289a, 289b, 289f, 298, 315, 315a, 315b, and 315d of the German Commercial Code and German Accounting Standard (GAS) No. 20.

For more information about SAP SE and its results of operations, financial position, and net assets, see the Report on the Economic Position of SAP SE.

Our auditor, BDO AG Wirtschaftsprüfungsgesellschaft (BDO), audited SAP’s combined management report, except for some information that relates to the Non-Financial Statement Including Information About Sustainable Activities that was not subject to the statutory audit of our combined management report, but on which a limited assurance engagement was performed. The Security, Data Protection, and Privacy, Employees;  Energy and Emissions;  Business Conduct; and Human Rights sections comprising the Non-Financial Statement also include information that was not subject to the statutory audit of our combined management report, but on which a limited assurance engagement was performed. These sections contain further explanations about the audit scope in an info box at the end of the respective section, marked by the symbol .

For more information about the scope of the assurance and the underlying reporting criteria, see BDO’s Independent Auditor’s Report, the Limited Assurance Report of the Independent Auditor Regarding the Combined Non-Financial Statement, and the Assurance Report of the Independent Auditor Regarding Sustainability Information.

Unless otherwise stated, all of the information in this report relates to the situation as at December 31, 2023, or the fiscal year ended on that date. Furthermore, all financial numbers in this combined management report are based on continuing operations (unless otherwise noted). Non-financial information has not been adjusted. For more information, including the results from discontinued operations, see the Notes to the Consolidated Financial Statements, Note (D.1).

Because the numbers presented throughout this report are rounded, they may not add up exactly to the totals we provide, and percentages may not precisely reflect the absolute amounts.

Forward-Looking Statements

This combined management report contains forward-looking statements and information based on the beliefs of, and assumptions made by, SAP management using information currently available to them. Any statements contained in this report that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations, assumptions, and projections about future conditions and events. As a result, our forward-looking statements and information are subject to uncertainties and risks, many of which are beyond our control. 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. We describe these risks and uncertainties in the Risk Management and Risks section.

The words “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “counting on,” “is confident,” “development,” “estimate,” “expect,” “forecast,” “future trends,” “guidance,” “intend,” “may,” “might,”

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

“outlook,” “plan,” “predict,” “project,” “seek,” “should,” “strategy,” “want,” “will,” “would,” and similar expressions as they relate to us are intended to identify such forward-looking statements. Such statements include, for example, those made in the Operating Results subsection; our quantitative and qualitative disclosures about market risk pursuant to the International Financial Reporting Standards (IFRS), namely IFRS 7 and related statements in our Notes to the Consolidated Financial Statements; Expected Developments and Opportunities and Risk Management and Risks sections; and other forward-looking information appearing in other parts of this report.

To fully consider the factors that could affect our future financial results, both this report and our Annual Report on Form 20-F should be considered, as well as all of our other filings with the U.S. Securities and Exchange Commission (SEC). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date specified or the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information that we receive about conditions that existed upon issuance of this report, future events, or otherwise, unless we are required to do so by law.

This report includes statistical data about the IT industry and global economic trends that comes from information published by sources including International Data Corporation (IDC), Gartner, the European Central Bank (ECB), and the International Monetary Fund (IMF). This type of data represents only the estimates of IDC, Gartner, the ECB, the IMF, and other sources of industry data. SAP does not adopt or endorse any of the statistical information provided by sources such as IDC, Gartner, the ECB, the IMF, or other similar sources that is contained in this report. The data from these sources is subject to risks and uncertainties, and subject to change based on various factors, including those described above, in the Risk Management and Risks section, and elsewhere in this report. These and other factors could cause our results to differ materially from those expressed in the estimates made by third parties and SAP. We caution readers not to place undue reliance on this data.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Strategy and Business Model

Overview of SAP

Founded in 1972, SAP is a global company headquartered in Walldorf, Germany. Our legal corporate name is SAP SE. SAP has been recognized as a market share leader in the following areas worldwide: enterprise applications software,3 enterprise resource management applications,4 supply chain management applications,5 procurement applications software,6 travel and expense management software,7 and enterprise resource planning software,8 among others. SAP Business Technology Platform comprises market-leading capabilities in key platform areas such as integration,9 planning10 and analytics,11 data quality,12 and process automation.13 The SAP Group has a global presence and employed more than 107,000 people as at December 31, 2023.

Our ordinary shares are listed on the Frankfurt Stock Exchange. American Depositary Receipts (ADRs) representing SAP SE ordinary shares are listed on the New York Stock Exchange (NYSE). SAP is a member of Germany’s DAX and TecDAX, the Dow Jones EURO STOXX 50, the Dow Jones Sustainability Index World, and the Dow Jones Sustainability Index Europe. As at December 31, 2023, SAP was the most valuable company in the DAX based on market capitalization and has been ranked under the top 5% of S&P Global ESG Scores in the S&P Global Corporate Sustainability Assessment.

Our Purpose

Our purpose at SAP remains steadfast: to “help the world run better and improve people’s lives.” We strive to achieve this by focusing on the challenges of current markets, the global environment, and by using the transformative power of artificial intelligence (AI) in business. SAP combines generative AI with business data. We are committed to providing AI solutions that are integral to our customers’ critical business processes, and ensuring that they are embedded in our portfolio, relevant, reliable, and responsible. Our products and services aim to help our customers meet the challenges as well as take advantage of the opportunities presented by today’s rapidly changing world.

In addition, we want our own business operations and practices to be sustainable and inclusive. SAP is committed to the goal set by the Paris Agreement of limiting global warming to 1.5 degrees Celsius in comparison to preindustrial levels. SAP has committed to achieve net-zero emissions along our entire value chain by 2030. We also support the United Nations Sustainable Development Goals (UN SDGs). Together with our customers and partners, we engage in several initiatives across the UN SDGs.

3 IDC, Worldwide Enterprise Applications Software Market Shares, 2022: Cloud Is the Digital World Foundational Choice, Doc #US51040223, July 2023

4 IDC, Worldwide Semiannual Software Tracker, 2023H1, October 2023

5 IDC, Worldwide Semiannual Software Tracker, 2023H1, October 2023

6 IDC, Worldwide Semiannual Software Tracker, 2023H1, October 2023

7 IDC, Worldwide Travel and Expense Management Software Market Shares, 2022: Evolving Travel Models Pushing Digital Transformation, Doc #US49194223, September 2023

8 IDC, Worldwide Semiannual Software Tracker, 2023H1, October 2023

9 Gartner, Inc., Magic Quadrant for Data Integration Tools, Doc G00777860, December 2023

10 Gartner, Inc., Magic Quadrant for Financial Planning Software, Doc G00784792, December 2023

11 Gartner, Inc., Magic Quadrant for Analytics and Business Intelligence Platforms, Doc G00768632, April 2023

12 Gartner, Inc., Magic Quadrant for Data Quality Solutions, Doc G00759931, November 2022

13 Gartner, Inc., Magic Quadrant for Process Mining Tools, Doc G00774746, March 2023

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Our Vision

SAP’s vision is to bring out the best in every business. In our pursuit of this vision, we focus on three areas:

Agility at Scale

In a rapidly changing landscape, the need for business agility is paramount to maintaining competitiveness. We facilitate this through data insights that help organizations adapt to market conditions. Our cloud ERP solutions and SAP Business AI capabilities are integrated, providing agility and empowering organizations to pivot, whether to strategic shifts or unexpected market scenarios.

Achieve More Across the Value Chain

We help organizations leverage the collective intelligence that SAP provides to optimize performance across their value chain. By connecting core processes – from finance to supply chains and human resources to customer relations – we support efficient growth throughout businesses. Our solutions go beyond internal systems, linking businesses across enterprises and digitalizing transactions to foster transparent, resilient, and sustainable value chains.

Sustainability at Your Core

We have evolved beyond mere sustainability aspirations to actionable, sustainable outcomes. SAP’s green ledger initiative provides auditable sustainability practices as an extension of business operations. This approach enables organizations to record real impacts, report audit-ready ESG metrics, and act with ESG principles integrated into business processes, supporting data-driven sustainability management.

At SAP, our journey is one of continuous innovation and transformation, and we are committed to delivering solutions that are not only relevant and reliable but also responsible.

Our Business Model

Our business model, through which we implement our vision and strategy, can be summarized as follows:

We create value by first identifying the business needs of our customers and then developing and delivering cloud solutions, software, services, and support that address these needs. By proactively obtaining customer feedback on a regular basis, we strive to continuously improve our solutions, identify further business needs, and deliver enhanced value to our customers across the entire lifecycle – and thus continually improve the customer experience.

We derive revenue from fees charged to our customers for subscriptions to use our cloud solutions. Software licenses, on-premise support, consulting, development, training, and other services also contribute significant revenue.

For an overview of our product portfolio, see the Our Product Strategy section.

Subsidiaries, Acquisitions, and Joint Ventures

Subsidiaries

SAP SE is the parent company of the SAP Group. As at December 31, 2023, the SAP Group comprised 236 companies.

For a list of our subsidiaries, associates, and other equity investments, see the Notes to the Consolidated Financial Statements, Note (G.9).

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Material Acquisitions

We continue to focus on organic investments in technology and innovations that should ensure sustainable growth of our product portfolio. Additionally, we may make targeted acquisitions to complement our solution offerings and improve coverage in key strategic markets.

The acquisition of LeanIX closed on November 7, 2023. LeanIX is a market leader in enterprise architecture management (EAM) software that drives the modernization of IT landscapes and continuous business transformation. The combined offering with SAP can provide a foundation for process optimization enabled by AI.

For more information about LeanIX, see the Notes to the Consolidated Financial Statements, Note (D.1).

Divestitures

Qualtrics

On March 13, resulting from a process that was initiated on January 26, 2023, SAP announced it had agreed to sell all of its 423 million shares in Qualtrics International Inc. as part of the acquisition of Qualtrics by funds affiliated with Silver Lake and Canada Pension Plan Investment Board at a purchase price of US$18.15 in cash per share. The sale closed on June 28, 2023. SAP remains a close go-to-market and technology partner with Qualtrics.

For more information about Qualtrics, see the Notes to the Consolidated Financial Statements, Note (D.1).

Sapphire Ventures

In addition to our investments in organic growth and acquisitions, SAP also supports entrepreneurs that aspire to build industry-leading businesses through venture capital funds managed by Sapphire Ventures. Sapphire Ventures manages more than US$10 billion (over €9 billion) and has invested in more than 200 companies. It pursues opportunities in which it can help fuel enterprise growth by adding expertise, relationships, geographic reach, and capital. It places a particular focus on companies in Europe, Israel, the United Kingdom, and the United States. Sapphire Ventures has committed to investing more than US$1 billion in the next generation of AI-powered enterprise technology startups.

Our Product Strategy

SAP’s product portfolio allows enterprises to manage their resources, spend, employees, and customer relationships. SAP Business Technology Platform (SAP BTP) is the platform for SAP, our customers, and our ecosystem to build, integrate, and extend solutions, and to manage enterprise data. It also serves as a central place for SAP Business AI technology.

SAP Business AI refers to artificial intelligence (AI) capabilities available across SAP’s suite of enterprise applications and SAP BTP. SAP offers a range of AI-powered use cases built into core business processes across finance, supply chain, procurement, sales, marketing, human resources, and IT. By using these AI capabilities, customers can benefit from automation, recommendations, forecasting, and natural human-machine interaction. In addition, SAP BTP provides business-specific AI services that empower our partners and customers to implement AI into their SAP applications and extensions while reducing data science effort, integration, and operational complexity.

In September 2023, we launched Joule, a copilot built directly into our solutions.

In November 2023, we introduced the new AI Foundation on SAP BTP group of technologies, new vector capabilities on SAP HANA to leverage AI, and SAP Build Code, an AI-powered solution set to make professional coders more productive.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

In December 2023, we introduced Cloud ERP Suite as a clustering of our strategic cloud solutions. The following offerings are currently part of our Cloud ERP Suite: SAP S/4HANA Cloud as part of Cloud ERP, SAP BTP, core solutions for HR and payroll, spend management, commerce, customer data solutions, business process transformation, and working capital management. With SAP S/4HANA Cloud and SAP BTP as key elements and foundation of those offerings, we strive for an expansion of our commercial models, with increased focus on packaged suite deals and flexible consumption models, such as RISE Premium Plus. Further, we aim to drive the adoption of multi-cloud solutions across the mentioned offerings.

Further, SAP strives to help customers grow their businesses profitably, while at the same time minimizing the risks. To this end, SAP has two offerings, RISE with SAP and GROW with SAP, which cater to different customer objectives and requirements.

RISE with SAP is a business transformation solution aimed at helping customers migrate their ERP system to the cloud and accelerate their digital transformation. It is a tailored offering that targets SAP’s existing customer base running on other SAP solutions, or net-new customers with large or complex business requirements. RISE with SAP aims to provide enhanced productivity by means of automated processes, with the option of running technology operations as a service with SAP or in the customer’s own data center.

GROW with SAP is a commercial offering designed specifically to help grow midmarket companies that do not yet use an ERP system from SAP and aspire to go live within a short period of time without extensive customization. With GROW with SAP, customers can use predefined best-practice processes that are available for different industries, and can benefit from predictable costs, the continuous provision of technical innovations, and scalability. It is designed so that companies can grow according to their needs, without significantly increasing the complexity for business processes and management.

As the IT landscape continues to rapidly evolve, SAP is seeing a clear shift in customer preferences together with a growing demand for flexibility, agility, scalability, and cost-effectiveness. Understanding the importance of helping customers embrace digital technologies to thrive in today’s dynamic business environment, SAP has committed to a forward-thinking cloud strategy. SAP acknowledges that every organization’s experience with the cloud can be unique and can therefore be challenging, yet many customers who have made the shift to a cloud strategy can use the benefits that today’s business environments require, such as the ability to redistribute resources previously required for managing internal IT teams, and remote global accessibility from any location through an Internet connection regardless of where teams are located around the world. This strategy-shift to the cloud allows SAP to address these new market opportunities and requirements.

The strategic pillars of SAP’s product strategy and our development and innovations are presented below.

Cloud ERP

SAP S/4HANA Cloud provides software capabilities mainly for finance, risk management, project management, procurement, manufacturing, supply chain management, asset management, and research and development. It also includes platform capabilities such as a database (SAP HANA), data management, AI, and application lifecycle management, as well as cloud ERP solutions, which our customers consume as part of their transformation to SAP S/4HANA Cloud. These cloud ERP solutions help customers adopt new business models, such as subscription.

Human Capital Management

SAP SuccessFactors solutions for human experience management aim to empower organizations to create an agile and future-ready workforce in a rapidly changing workplace. Customers can use new offers such as skills ontology, personal growth framework for employees, and dynamic teams to work across traditional organizational structures. The portfolio includes core HR and payroll, talent management, employee experience management, and people and workforce analytics.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Spend Management

SAP’s spend management solutions aim to provide a more unified view of a customer’s spending to reduce costs, mitigate risks, improve collaboration, and make sure every spend decision is aligned with the business strategy. They cover direct and indirect spend, travel and expense, and external workforce management. Our SAP Ariba solutions combine industry-leading cloud-based applications to help companies discover and collaborate with a global network of partners. Our SAP Concur portfolio contains the world’s leading solutions for integrated travel, expense, and invoice management.

Customer Experience

SAP Customer Experience solutions aim to deliver a personalized view across customers and business partners, connecting the front- and back office with solutions spanning from point-of-sale to manufacturing, logistics, customer experience, and returns management.

SAP Business Technology Platform

SAP Business Technology Platform (SAP BTP) is our business-centric, and open platform consisting of market-leading technologies infused with AI that enables SAP development, customers, and the partner ecosystem to unlock innovation across the enterprise. SAP BTP enables customers and partners to build, integrate, and automate applications while leveraging insights from business data on a trusted enterprise-grade environment.

Key capabilities of SAP BTP include: SAP Build and SAP Build Code tools, and the ABAP Cloud development model, which provides an intuitive, modern development environment for IT and citizen developers; SAP HANA Cloud, SAP Datasphere, and SAP Analytics Cloud solutions which offer database, data management, analysis, and planning capabilities that utilize the value of data; SAP Integration Suite for enterprise iPaaS and API management to connect and automate business processes; and AI Foundation on SAP BTP, which has a rich toolset including access to a broad range of large language models (LLMs) from third-party providers and vector database capabilities to enable developers to create AI- and generative-AI-powered extensions and applications.

Industry Cloud

SAP’s industry cloud solutions offer SAP and our partners the opportunity to extend our core of business software with modular solutions addressing industry-specific functions built on SAP BTP.

Business Network

SAP Business Network is a business-to-business collaboration platform trusted by companies in 190 countries. The network helps digitalize key business processes across the supply chain and enables communication between trading partners beyond the four walls of an organization. This enables buyers and suppliers to find each other and execute end-to-end transactions, and helps businesses be transparent, resilient, and sustainable.

Business Process Transformation

Our SAP Signavio solutions help enable our customers to discover, analyze, and understand their business process operations. By benchmarking current process landscapes against best practices and allowing them to act on change recommendations, customers can define a target state and adapt as-is processes accordingly, while measuring whether realized outcomes match strategic goals.

In November 2023, SAP acquired LeanIX, a market leader in enterprise architecture management (EAM) which is designed to enable customers to visualize, assess, and manage the transition towards their target IT architectures. LeanIX solutions can help customers drive updates to their IT landscapes and, together with the SAP Signavio portfolio, enable continuous business transformation.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Working Capital Management

Taulia solutions for working capital management help enable customers to mitigate the effects of inflation by providing visibility into working capital and access to liquidity. The Taulia Cash Flow Acceleration Platform is designed to accelerate cash flow and create supply chain resilience. Taulia also embeds sustainability functions into core processes by offering financing to stimulate the supply base to impact its ESG (environmental, social, and governance) credentials.

Sustainability Management

SAP offers sustainability solutions and services that can help customers drive sustainable practices not only inside their organization but across the entire value chain. SAP Cloud for Sustainable Enterprises is a flexible solution portfolio that aims to enable businesses to manage sustainability holistically. The portfolio includes the following offerings: SAP Sustainability Control Tower for holistic steering and reporting across ESG metrics and SAP Sustainability Data Exchange for sharing standardized sustainability data across supply chains.

Partners and Ecosystem

Our worldwide ecosystem of more than 25,000 partners delivers not only services and support for our customers but also partner innovations that extend our solutions and ideally are built on SAP BTP.

Services and Support

We have reimagined our cloud services and support portfolio to focus on customer adoption and consumption.

The Services and Support portfolio includes SAP Enterprise Support, which provides foundational tools and services, curated content, and mission-critical support. It can be enhanced with incremental success plans such as SAP Preferred Success and SAP Cloud Application Services as well as success services and consulting services to address specific objectives, timelines, and plans. When customers pursue enterprise-wide transformational change, SAP offers SAP MaxAttention and SAP ActiveAttention plans for tailored, long-term strategic engagement.

Our Customers

Vision and Strategy

Focusing on Customer Success

We aim to maximize the value our customers derive from their investment in, and relationship with, SAP at every touchpoint in their experience with us over the engagement lifecycle. Our customer-facing teams – across solutions, sales, services, customer engagement, ecosystem, and others – work together along an operating model that aims to harmonize internal processes with the goal of delivering improved outcomes for our customers.

Company-Wide Global Experience Program

To further address and improve customer feedback, we have a Company-Wide Global Experience (XM) Program in place. This program aims to achieve a consistent end-to-end experience for our customers by standardizing experience initiatives and methodologies to help identify and close experience gaps across SAP.

Due Diligence

Governance

The head of Customer Success leads all customer-facing functions across sales, services, partner, and cloud engagements for SAP’s businesses globally. The Chief Marketing and Solutions Officer leads the development of our solution value propositions to provide clarity on SAP’s core differentiators.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

The People & Operations Board area is responsible for the Company-Wide XM Program, including conducting the Customer Net Promoter Score (NPS) survey.

Customer NPS is a KPI in the short-term incentive component of Executive Board remuneration. For more information about the Customer NPS, see the Performance Management System section.

Guidelines and Policies

Policies such as the Global Code of Ethics and Business Conduct for Employees and applicable General Terms and Conditions for our product govern our relationships with our customers.

How We Measure and Manage Our Performance

We use the Customer NPS as a feedback mechanism to measure customer loyalty. This and other results from the customer survey allow us to directly understand the customer experience and identify key pain points for action. Because of the importance of our customers to SAP, Customer NPS is one of our main non-financial KPIs.

In 2023, our Customer NPS increased 2 points year over year to 9 (2022: 714), which is within our target range of 8 to 12. The increase was driven by feedback regarding our comprehensive and robust SAP solutions, established value to customers’ business, and relationships with account teams. The Company-Wide XM Program ensures that the feedback received is heard by the responsible organizations within SAP so they can act to continually improve the customer experience.

For 2024, we expect a Customer NPS of 9 to 13. Further, we aim to see continuous improvements and to increase the score steadily in the medium term.

Related Risks for SAP

For related financial risks, see Sales and Services in the Risk Management and Risks section.

Our Investments in Innovation

SAP’s strong commitment to research and development (R&D) is reflected in our expenditures:

Research & Development (IFRS)1,2

€ millions | change since previous year

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.
2 In 2023, SAP updated its cost allocation policy. R&D numbers for 2020 and 2019 have not been retrospectively adjusted. For more information, see the Notes to the Consolidated Financial Statements, Note (IN.1).

In 2023, our IFRS R&D ratio, reflecting R&D expenses as a portion of total revenue, decreased 0.3 percentage points (pp) to 20.3% (2022: 20.6%). Our non-IFRS R&D ratio decreased 1.1 pp to

14 Recalculated score according to 2023 methodology. Reported number for 2022 based on prior methodology was 3. Guidance for 2023 was based on the recalculated score of 7. For more information about Customer NPS calculation methodology, see Performance Management System.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

18.0% year over year (2022: 19.1%). At the end of 2023, our total full-time equivalent (FTE) headcount in development was 36,444 (2022: 35,280). Measured in FTEs, our R&D headcount increased 1 pp to 34% of total headcount (2022: 33%).

Total R&D expense not only includes our own personnel costs but also the external costs of work and services from the providers and cooperation partners we work with to deliver and enhance our products. We also incur external costs for the following:

Patents

Our investment in R&D has resulted in numerous patents. As at December 31, 2023, SAP held a total of close to 13,000 (2022: close to 13,000) validated patents worldwide. Of these, more than 650 (2022: more than 800) were granted and validated in 2023.

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.

Competitive Intangibles

The majority of (intangible) resources that are the basis for our current as well as future success does not appear in the book value of equity in our Consolidated Financial Statements. This is apparent from a comparison of the market capitalization of SAP SE (based on all issued shares), which was €171.4 billion at the end of 2023 (2022: €118.4 billion), with the book value of our equity in the Consolidated Financial Statements, which was €43.4 billion (2022: €42.8 billion). This means that the market capitalization of our equity is more than three times higher than the book value.

Measuring Our Success

We use the following financial and non-financial objectives to steer our company:

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Outlook and Results for 2023

* The 2023 outlook was communicated in January 2023. It was updated twice during the year: in April to reflect the divestiture of Qualtrics, and again in July 2023. The 2023 outlook numbers above reflect the updated outlook from July 2023.

1 Non-IFRS.

2 At constant currencies.

Note: For a reconciliation of non-IFRS results to IFRS equivalents, see the Performance Management System section.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Outlook for 2024

1 Non-IFRS. The outlook for 2024 has been prepared in accordance with our updated non-IFRS definition applicable from 2024. For more information, see the Performance Management System section.

2 At constant currencies.

3 Based on the updated non-IFRS operating profit definition and excluding gains and losses from less material divestitures.

Note: For a reconciliation of non-IFRS results to IFRS equivalents, see the Performance Management System section.

4 GET: Global Executive Teams; SET: Senior Executive Teams; ET: Executive Teams.

Ambition for 2025

1 Non-IFRS. Our Ambition for 2025 has been adjusted in accordance with our updated non-IFRS definition applicable from 2024. For more information, see the Performance Management System section.

Note: For a reconciliation of non-IFRS results to IFRS equivalents, see the Performance Management System section.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Performance Management System15

In the reporting year, we used various performance measures to manage our performance with regard to our primary financial objectives, which are growth and profitability, and our primary non-financial objectives, which are customer loyalty, employee engagement, and carbon impact. We view growth and profitability as indicators of our current performance, while we see customer loyalty, employee engagement, and carbon impact as indicators of our future performance.

Measures to Manage Our Financial Performance

Measures to Manage Our Operating Financial Performance

In the reporting year, we used cloud revenue, cloud and software revenue, share of more predictable revenue, current cloud backlog, and operating profit (non-IFRS) as our key measures to manage our operating financial performance. In addition to these, we used several supporting measures to provide further insight into our financial performance:

Cloud revenue: This revenue driver comprises the main revenues of our cloud business. Revenue from cloud is derived from fees earned from providing customers with software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS). We measure cloud revenue at actual and constant currencies.

For more information about the composition of cloud revenue, and for a description of these services, see the Notes to the Consolidated Financial Statements, Note (A.1).

Cloud and software revenue: We use cloud and software revenue expressed in both actual currencies and constant currencies to measure our product growth. Our cloud and software revenue includes cloud revenue plus software license revenue and software support revenue. Cloud revenue and software support revenue are our two largest revenue streams. Customers that purchase software licenses also enter into related support contracts that generate recurring support revenue after the software sale.

SAP S/4HANA Cloud revenue: We used SAP S/4HANA Cloud revenue expressed in both actual currencies and constant currencies as an additional metric to measure our cloud core ERP growth. SAP offers a choice of SAP S/4HANA Cloud deployments – as a public cloud or private cloud SaaS offering.

Starting in 2024, SAP S/4HANA Cloud revenue will be replaced by the Cloud ERP Suite revenue metric.

Cloud ERP Suite revenue: We use Cloud ERP Suite revenue expressed in both actual currencies and constant currencies as a metric to measure the growth of our portfolio of strategic cloud solutions. Cloud ERP Suite references those offerings that are tightly integrated with our core ERP solutions and are included in key commercial packages, such as RISE with SAP. The following offerings currently contribute to Cloud ERP Suite revenue: SAP S/4HANA Cloud, SAP Business Technology Platform, and core solutions for HR and payroll, spend management, commerce, customer data solutions, business process transformation, and working capital management.

Total revenue: We use total revenue to measure our growth at both actual currencies and constant currencies.

15 Unless otherwise stated, all performance measures are based on our continuing operations.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Share of more predictable revenue: We use share of more predictable revenue as a measure to provide additional insight into our sustained business success. The total of cloud revenue and support revenue divided by total revenue is the share of more predictable revenue.

Cloud backlog: We use the following measures, in both actual and at constant currencies, to measure our forward-looking cloud performance:

As of a specific key date, the TCB is the total contractually committed cloud revenue we expect to recognize and the CCB is the contractually committed cloud revenue we expect to recognize over the upcoming 12 months. Thus, they are subcomponents of our overall remaining performance obligations following IFRS 15.120. For our committed cloud business, we believe the TCB and the CCB are valuable indicators of our go-to-market success, as they reflect both new contracts won and existing contracts renewed. For more information on how we calculate these numbers, see the Notes to the Consolidated Financial Statements, Note (A.1).

As an additional metric, we used SAP S/4HANA CCB to measure the contractually committed cloud core ERP revenue we expect to recognize over the upcoming 12 months as of a specific key date. Starting in 2024, we will no longer disclose SAP S/4HANA CCB.

Cloud gross profit (non-IFRS): We use cloud gross profit (non-IFRS) expressed in both actual currencies and constant currencies to measure the process efficiency and performance of our cloud business.

Operating profit (non-IFRS): We use operating profit (non-IFRS) expressed in both actual currencies and constant currencies to measure our overall operational process efficiency and overall business performance.

Cloud gross margin (non-IFRS): We use our cloud gross margin (non-IFRS) to measure our process efficiency in our cloud business. Cloud gross margin (non-IFRS) is the ratio of our cloud gross profit (non-IFRS) to cloud revenue, expressed as a percentage.

Operating margin (non-IFRS): We use operating margin (non-IFRS) to measure our overall operational process efficiency. Operating margin (non-IFRS) is the ratio of our operating profit (non-IFRS) to total revenue, expressed as a percentage.

Measures to Manage Our Non-Operating Financial Performance

We used the following supporting measure to provide insight into our non-operating financial performance:

Financial income, net (IFRS and non-IFRS): This measure provides insight into the return on liquid assets and capital investments, and the cost of borrowed funds. To manage our financial income, net, we focus on cash flow, the composition of our liquid assets and capital investment portfolio, and the average rate of interest at which liquid assets and capital investments are invested. We also monitor average outstanding borrowings and associated finance costs.

Measures to Manage Overall Financial Performance

We used free cash flow as the key measure to manage our overall financial performance. In addition to that, we used several supporting measures to provide further insight into our overall financial performance:

Earnings per share (EPS) (IFRS and non-IFRS)16: EPS (basic and diluted) measures our overall performance because it captures all operating and non-operating elements of profit as well as income tax expense. It represents the portion of profit after tax attributable to equity holders of

16 We report earnings per share for our continuing operations, and total earnings per share for our continuing and discontinued operations.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

SAP SE allocable to each SAP share outstanding. EPS is influenced not only by our operating and non-operating business and income taxes but also by the number of shares outstanding.

Effective tax rate (IFRS and non-IFRS): We define our effective tax rate as the ratio of income tax expense to profit before tax, expressed as a percentage.

Operating, investing, and financing cash flows and free cash flow: Our consolidated statements of cash flows provide insight into how we generated and used cash and cash equivalents. When applied in conjunction with the other primary financial statements, it provides information that helps us evaluate the changes in our net assets, our financial structure (including our liquidity and solvency), and our ability to affect the amounts and timing of cash flows to adapt to changing circumstances and opportunities. We use our free cash flow measure to determine the cash flow remaining after all expenditures required to maintain or expand our organic business have been paid off. This measure provides management with supplemental information to assess our liquidity needs. We calculate free cash flow as net cash from operating activities minus purchases (other than purchases made in connection with business combinations) of intangible assets and property, plant, and equipment, as well as payments of lease liabilities.

Measures to Manage Our Non-Financial Performance

In the reporting year, we used the Customer Net Promoter Score (NPS), Employee Engagement Index, and net carbon emissions as our key measures to manage our non-financial performance. In addition to these, we used the Leadership Trust NPS as a supporting measure to provide further insight into our non-financial performance:

Customer NPS: The annual assessment of customer loyalty is based on a survey that includes the Customer NPS metric. The Customer NPS score is calculated based on the “Likelihood to Recommend” question with its proprietary scoring, identified on a scale of 0–10. We use this measure because we believe that we can only achieve our financial goals when our customers are loyal to, and satisfied with, SAP and our solutions. To derive the Customer NPS, we start with the percentage of “promoters” of SAP, that is, those giving us a score of 9 or 10 on a scale of 0–10. We then subtract the percentage of “detractors,” that is, those giving us a score of 0–6. The method ignores “passives,” that is, those giving us a score of 7 or 8. Consequently, the range of achievable scores is –100 to +100, with the latter being the best achievable score for customer loyalty as measured by the Customer NPS methodology. Starting in 2023, we made adjustments to the survey to further improve data quality and to align the sample more closely with SAP’s business priorities. We have excluded incomplete responses and responses from respondents who report that they have no influence over purchasing decisions, and we have restricted the number of eligible responses from Concur.

We determine the Employee Engagement Index and the Leadership Trust NPS as the average of the scores retrieved in each of the surveys we run within a fiscal year. Our engagement survey program “#Unfiltered” runs according to a “continuously listening” approach that includes multiple data collections throughout the year. The average scores provide an assessment, for the full year, of our employees’ engagement and trust level.

We measure both the Employee Engagement Index and the Leadership Trust NPS to get insights on the following:

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Women in Executive Roles (WiER): Starting in 2024, we will use this KPI to measure the ratio of women to all genders in the three executive levels below the SAP Executive Board, namely the Global Executive Team, the Senior Executive Team, and the Executive Team.

SAP is dedicated to promoting gender equality in the workplace and is working toward achieving gender balance at all levels of the organization.

Our priority, with the help of this KPI, is to monitor how the Company is progressing on this commitment, especially at the most senior levels of the organization.

Greenhouse gas emissions: We use the following metrics to measure our progress toward our ambitious short-term and long-term climate targets (in kilotons of CO2 equivalents, rounded to the nearest kiloton). We define, measure, and report our greenhouse gas emissions according to the Greenhouse Gas (GHG) Protocol.

Value-Based Management

Our holistic view of the performance measures described above, and the associated analyses, are together the foundation of our value-based management. We use planning and control processes to manage the compilation of these key measures and their availability to our decision-makers across various management levels.

SAP’s long-term strategic plans are the point of reference for our short- and medium-term planning and controlling processes. We initially identify future growth and profitability drivers at a highly aggregated level for the entire SAP Group. In a first step, the financial plan’s growth ambition is determined by its comprehensive product portfolio which is grouped into solution areas, with profitability drivers allocated to functions such as development, marketing, sales, delivery, and administration. In a second step, the planned total revenues and total expenses are generally allocated to the operating segments and the areas of functional responsibility of the individual members of the Executive Board (“Board area”). If a Board area represents not only a functional department but also has responsibility for operating segments within this Board area, the allocation is done at the lower segment level. Budget adjustments may be applied during the year to reflect changes in priorities, to achieve efficiency targets, and to reflect endogenous and exogenous factors. Such budget adjustments, and the assessment of performance, are handled at Board area level if the Board area is part of a segment, or at segment level if the Board area comprises several segments. It is then the individual Executive Board member’s responsibility to break down the allocated budget adjustments within the segment budget boundary. Based on an integrated portfolio process running in parallel to the budgeting process, we ensure aligned investment behavior across Board areas with regard to specific solution and/or subsolution areas. In a final step, customer-facing revenue targets and cost-of-sales and marketing targets are broken down into sales regions and market units.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Based on our detailed annual plans, we determine the budget for the respective fiscal year. We also have processes in place to forecast revenue and profit on a quarterly basis, to quantify whether we expect to realize our financial targets, and to identify any deviations from plan. We continuously monitor the affected operating segments and Board areas in the SAP Group to analyze their developments and define any appropriate actions. Our entire network of planning, control, and reporting processes is implemented in integrated planning and information systems, based on SAP software, across all organizational units so that we can conduct the evaluations and analyses needed to make informed decisions.

Non-IFRS Financial Measures Cited in This Report

Explanation of Non-IFRS Measures

We disclose certain financial measures that are not prepared in accordance with IFRS and are therefore considered non-IFRS financial measures. Our non-IFRS financial measures may not correspond to non-IFRS financial measures that other companies report. The non-IFRS financial measures that we report should only be considered in addition to, and not as substitutes for, nor as superior to, our IFRS financial measures.

We believe that the disclosed supplemental historical and prospective non-IFRS financial information provides useful information to investors, because management uses this information, in addition to financial data prepared in accordance with IFRS, to attain a more transparent understanding of our past performance and our anticipated future results.

We use these non-IFRS measures consistently in our internal planning and forecasting, reporting, and compensation, as well as in our external communications, as follows:

Our non-IFRS financial measures reflect adjustments based on the items below, as well as adjustments for the related income tax effects.

Operating Expense (Non-IFRS)

Numbers that are identified as operating expenses (non-IFRS) have been adjusted by excluding the following expenses:

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

We exclude certain acquisition-related expenses for the purpose of calculating operating profit (non-IFRS) and operating margin (non-IFRS) when evaluating SAP’s continuing operational performance, because these expenses generally cannot be changed or influenced by management after the relevant acquisition other than by disposing of the acquired assets. Since management at levels below the Executive Board does not influence these expenses, we generally do not consider these expenses for the purpose of evaluating the performance of management units. For similar reasons, until 2023 we excluded share-based payment expenses, as these costs are impacted by share price developments and other factors beyond our control. We also exclude restructuring expenses because they are volatile and generally cannot be influenced by management at levels below the Executive Board. We exclude expenses related to regulatory compliance matters, as these expenses are non-recurring and relate to conduct that took place in prior performance periods, and so that users of our consolidated financial statements and the combined management report can see the information that our management uses to manage the business.

In recent years, SAP has replaced many of its cash-settled share-based compensation plans with equity-settled plans. Having most of these plans as equity-settled reduces the impact of share price fluctuations and of other factors outside of our control. For these reasons, SAP has decided that, from 2024, it will no longer exclude share-based payment expenses from its operating profit (non-IFRS).

Financial Income, Net (Non-IFRS)

Starting in 2024, numbers that are identified as financial income, net (non-IFRS) will be adjusted by excluding the following gains and losses:

Excluding gains and losses from equity securities, net, improves the period-over-period comparability, because there is less volatility caused by share price fluctuation, market developments, and other factors beyond our control.

Constant Currencies Information

We believe it is important for investors to have information that provides insight into the development of our sales. Revenue measures determined under IFRS provide information that is useful in this regard. However, both sales volume and currency effects impact period-over-period changes in sales revenue. We do not sell standardized units of products and services so we cannot provide relevant information on sales volume by providing data on the changes in product and service units sold. To provide additional information that may be useful to investors in breaking down and evaluating changes in sales volume, we present information about our revenue and various values and components relating to operating profit that are adjusted for foreign currency effects. We calculate constant currency measures by translating foreign currencies using the average exchange rates from the comparative period instead of the current period. Constant currency measures on CCB use the closing exchange rate from the previous year’s corresponding key date instead of the average exchange rate.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Free Cash Flow

Among other measures, we use free cash flow to manage our overall financial performance. We define free cash flow as net cash from operating activities minus purchases of intangible assets and property, plant and equipment, and payments of lease liabilities.

Reconciliation of Operating Cash Flow from Continuing Operations to Free Cash Flow

Usefulness of Non-IFRS Measures

We believe that our non-IFRS measures are useful to investors for the following reasons:

Limitations of Non-IFRS Measures

Without being analyzed in conjunction with the corresponding IFRS measures, the non-IFRS measures are not indicative of our present and future performance primarily for the following reasons:

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

We believe that constant currency measures have limitations, particularly as the currency effects that are eliminated constitute a significant element of our revenue and expenses and could materially impact our performance. Therefore, we limit our use of constant currency measures to the analysis of changes in volume as one element of the full change in a financial measure. We do not evaluate our results and performance without considering operating profit (non-IFRS) at both nominal and constant currencies on the one hand, and changes in operating expenses, operating profit, or other measures of financial performance prepared in accordance with IFRS on the other. We caution the readers of our financial reports to follow a similar approach by considering actual and constant currency non-IFRS measures only in addition to, and not as a substitute for or superior to, changes in revenue, operating expenses, operating profit, or other measures of financial performance prepared in accordance with IFRS.

Despite these limitations, we believe that the presentation of our non-IFRS measures and the corresponding IFRS measures, together with the relevant reconciliations, provide useful information to management and investors regarding present and future business trends relating to our financial condition and results of operations.

Reconciliation of IFRS to Non-IFRS Financial Measures for 2023 and 2022

Reconciliation of Non-IFRS Revenue

Reconciliation of Non-IFRS Operating Expenses

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Reconciliation of Non-IFRS Profit Numbers, Income Tax, and Key Ratios

1 From continuing and discontinued operations

Non-IFRS Adjustments by Functional Areas

1 Share-based payments 2 Regulatory compliance matters The global economy expanded at a moderate but steady pace in 2023, describes the European Central Bank (ECB) in its most recent Economic Bulletin.1 It attributes this development to strong private consumption and the support of resilient labor markets.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Financial Performance: Review and Analysis

Economy and the Market

Concerning the EMEA (Europe, Middle East, Africa) region, the euro area economy grew minimally over the first half of 2023, reports the ECB. In the second half of the year, real GDP contracted slightly, mostly due to a decline in inventories but also because of subdued confidence, low competitiveness, renewed geopolitical tensions, and tighter financing conditions. However, services activity grew modestly and contributed positively to growth in the second half of the year.

In the Americas region, U.S. economic growth showed more resilience than previously anticipated. Despite significant tightening of monetary policy, the United States showed a solid domestic demand and a strong labor market and, with significant government spending, reached a robust growth, states the ECB.

As for the APJ (Asia Pacific Japan) region, Chinese economic activity stabilized in 2023, driven by stronger consumer spending. The lifting of COVID-19 restrictions at the beginning of the year and a broader recovery in private consumption compensated for weakness in the Chinese residential sector. In Japan, however, real GDP growth contracted in 2023, as high inflation weighed on activity and consumption. However, growth returned to a slightly positive yet modest territory in the fourth quarter, states the ECB.

The IT Market

“The digital business era has arrived. Spending on digital technologies is growing while traditional, nondigital spending is stagnating or even slightly dropping. The demand for digital experiences from customers, employees, partners, and suppliers has shifted to an expectation. Companies looking to sustain and grow are seeking digital revenue streams while looking to digitize operations to reduce costs and increase efficiency.”2 This is how International Data Corporation (IDC), a U.S.-based market research firm, summarizes the current IT market situation. Therefore, reports IDC, “in the post-pandemic environment, digital-first strategies have moved from being a competitive advantage to being the basic standard needed for survival. Legacy systems are increasingly proving to be bottlenecks, hindering real-time data access and agile response mechanisms. In contrast, businesses that have embraced digital transformation are reaping the benefits of adaptability and more insightful data-driven decision-making.”3

In particular, IDC finds that “the technology within a digital business platform is essential for driving the innovation and new revenue streams that companies are looking for in the digital business era” and that “more digitally mature organizations with established digital business platforms are better able to compete in an increasingly digital world.”2 That is because these “autonomous business processes evolve the nature of information from intelligence to insights to immediate decisive actions. These advances, when utilized, give organizations a competitive advantage in speed, scale, and agility and will transform them into truly digital businesses.”3

“Today’s SaaS and cloud-enabled applications are packed with generative AI (GenAI), artificial intelligence, machine learning (ML), microservices, APIs, and automated workflows,”3 explains IDC, and elaborates: “The convergence of AI, automation, and analytics signals a transformative era in digital business. As these technologies have matured, they offer organizations unprecedented capabilities to drive innovation, optimize processes, and uncover actionable insights. This isn’t just about adopting new tools; it’s a major shift toward ‘deep intelligence’ and automation, bringing agility and an insight-driven approach to the center of digital enterprises.”4

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

A major topic, according to IDC, is sustainability: “ESG factors are swiftly emerging as critical determinants of a company’s long-term value. In today’s business climate, ESG considerations are no longer just a checklist. […] These are factoring in and becoming integral components to a company’s strategic plans.”4 In IDC’s view, therefore, “sustainability is increasingly linked to digital business […]. Digital technology spending can be both directly and indirectly dedicated to sustainability initiatives, either by specifically addressing corporate-sponsored endeavors or by establishing the platform necessary to eventually carry out sustainability goals.”2 IDC assesses that “organizations are increasingly turning to applications that can help them meticulously monitor and report their activities as well as achieve real-world sustainability milestones.”3

1 European Central Bank, Economic Bulletin, Issue 8/2023, Publication Date: January 11, 2024.

2 IDC FutureScape: Worldwide Digital Business Strategies 2024 Predictions, Doc #US50120323, October 2023.

3 IDC FutureScape: Worldwide Intelligent ERP 2024 Predictions, Doc #US51300923, October 2023.

4 IDC FutureScape: Worldwide CIO Agenda 2024 Predictions, Doc #US51294523, October 2023.

Impact on SAP

Despite macroeconomic uncertainties and geopolitical tensions, SAP again showed high resilience and all regions contributed positively to the results. The wind-down of business operations in Russia and Belarus was nearly completed in the first quarter of 2023 and remaining contract obligations were reduced to a non-material volume by the end of the year.

After two years of significant investments to accelerate SAP’s transition to the cloud (the so-called phase one), the second phase of our cloud transformation started in January 2023 with the publication of our results for the fourth quarter and full year 2022. At that time, SAP showed the passing of the tipping point towards positive profitability (non-IFRS), as planned and predicted in the strategy update that was communicated in October 2020.

Continuous execution along the midterm ambition and forthcoming positive results over the remaining quarters in 2023 underpinned SAP’s commitment to the corporate strategy. The focus on efficiencies and disciplined spending resulted in a significant expansion of its cloud gross margins (non-IFRS) throughout the year.

SAP has been an early adopter of AI technology. During the SAP Sapphire conference in May, the Company showcased the use of AI in various products. At the beginning of the second half of 2023, the Company announced strategic direct investments in three leading generative AI companies. The investments underscore SAP’s open ecosystem approach to AI, which is aimed at leveraging the best technology to embed AI across SAP’s portfolio. The Company anticipates significant possibilities for market expansion through these technologies and new premium offerings.

Overall Financial Position

Executive Board’s Assessment

Given the macroeconomic environment outlined above, the course of business was again favorable for SAP in 2023.

Noteworthy is the strong momentum in our cloud business: cloud revenue was up 20%, reaching €13.7 billion. SAP’s current cloud backlog (CCB) exceeded €13.7 billion, an increase of 25%. Total revenue increased 6% to €31.2 billion, and IFRS operating profit decreased slightly to €5.8 billion. Non-IFRS operating profit increased 9% to €8.7 billion. Free cash flow increased 16% to €5.1 billion.

Regarding SAP’s non-financial performance, we met our initial outlook ranges for all three of our most important non-financial performance indicators: the Customer Net Promoter Score increased 6 points to 9 (initial outlook: 8 to 12), the Employee Engagement Index remained unchanged at 80% (initial outlook: 76% to 80%), and our net carbon emissions continued to decrease, dropping 85 kt to 0 kt (initial outlook: 0 kt).

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

On this basis, we are confident we can deliver on our financial and non-financial outlook for 2024 and on our updated 2025 ambition.

Performance Against Our Outlook for 2023 (Non-IFRS)

As in previous years, our 2023 operating profit-related goals and published outlook were based on our non-IFRS financial measures at constant currencies. For this reason, in the following section we discuss performance against our outlook in terms of non-IFRS numbers, unless otherwise stated, (at constant currencies) derived from IFRS measures. The subsequent section about International Financial Reporting Standards (IFRS) operating results discusses numbers only in terms of IFRS, so the numbers in that section are not expressly identified as IFRS numbers.

Outlook for 2023 (Non-IFRS)

The initial outlook for 2023, including Qualtrics (for more information, see the table Comparison of Outlook and Results for 2023), expected full-year cloud revenue to range between €15.3 billion and €15.7 billion, and cloud and software revenue to range between €28.2 billion and €28.7 billion, with more predictable revenue anticipated to make up 83% of this result. Furthermore, we expected operating profit (non-IFRS) to range between €8.8 billion and €9.1 billion and a free cash flow of approximately €5.0 billion. We expected a full-year 2023 effective tax rate (IFRS) of 28.0% to 32.0% (2022: 32.0%) and an effective tax rate (non-IFRS) of 26.0% to 28.0% (2022: 29.6%), strongly depending on the development of Sapphire Ventures’ investments. This initial outlook reflected SAP executing on its cloud strategy, which is driving the accelerated cloud growth through both new business and cloud adoption by existing customers, scaling SAP’s cloud momentum towards its midterm ambition.

In April 2023, we adjusted our outlook for continuing operations, reflecting the expected Qualtrics divestiture. We thereafter expected cloud revenue to range between €14.0 billion and €14.4 billion, cloud and software revenue to range between €26.9 billion and €27.4 billion, and operating profit (non-IFRS) to range between €8.6 billion and €8.9 billion. Furthermore, we adjusted the anticipated share of more predictable revenue to 82% and thereafter expected a free cash flow of approximately €4.9 billion.

In July 2023, to reflect then-current market development, we updated and tightened our ranges slightly. We lowered our expectations for cloud revenue to a range between €14.0 billion and €14.2 billion, and for cloud and software revenue to a range between €27.0 billion and €27.4 billion, but increased the range slightly for our expected operating profit (non-IFRS) to between €8.65 billion and €8.95 billion.

In October 2023, SAP reaffirmed its July 2023 outlook.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

2023 Actual Revenue and Profit Performance Compared to Outlook (Non-IFRS)

Cloud revenue is within the range of our revised 2023 outlook, with the combined cloud and software and operating profit exceeding the upper end of our outlook range.

Comparison of Outlook and Results for 2023

1 Results for 2022 have been adjusted for continuing operations to reflect the divestiture of Qualtrics.

In the current global economic climate shaped by continuously high asset prices and disrupted by international conflicts, coupled with an increasing demand for artificial intelligence and data warehousing, the demand for our cloud solutions and services confirms our revised expectations, reflecting the strong business performance which is expected to continue to accelerate cloud revenue growth.

Our current cloud backlog (contractually committed cloud revenue that we expect to recognize over the upcoming 12 months) reached €13.75 billion at actual currencies (€14.04 billion at constant currencies; 2022: €11.73 billion at constant currencies). This was an increase of 25% (27% on a constant currency basis; 2022: 24%). The growth rate of our current cloud backlog is in line with our guidance from the year before to achieve a growth rate similar to 2022, while at a larger scale.

On December 31, 2023, total cloud backlog was up 37% to €44.25 billion (up 39% to €45.09 billion at constant currencies).

At constant currencies, the resulting cloud revenue grew from €10.67 billion in 2022 to €14.06 billion in 2023, in line with our guidance range of €14.0 billion to €14.2 billion. That represented an increase of 23% at constant currencies.

Cloud and software revenue grew 9% at constant currencies to €27.64 billion (2022: €24.01 billion), and thus ended higher than our revised outlook range forecasted for 2023 of €27.0 billion to €27.4 billion.

Thanks to the strong increase in cloud business, we were able to increase the share of more predictable revenue 2pp to 81% (2022: 79%), which is 1pp below our revised outlook.

Total revenue on a constant currency basis grew 9% in 2023 to €32.03 billion (2022: €27.90 billion).

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Operating expenses (non-IFRS) on a constant currency basis increased 7% in 2023 to €22.99 billion (2022: €20.23 billion).

Our expense base in 2023 was impacted by our transformation to a fast-growing cloud business. The cloud gross margin (non-IFRS) for 2023 was 72.6%, increasing 2.2pp at constant currencies year over year. Our cloud margin benefitted from an increase in cloud revenue and significantly lower investments in the Next-Generation Cloud Delivery initiative (modernization of our cloud delivery to enable a more resilient and scalable cloud infrastructure).

Our overall headcount increased by 1,291 full-time equivalents, or FTEs (732 thereof organically), primarily in the functional areas Research and Development and Cloud.

Non-IFRS operating profit in 2023 was €9.04 billion on a constant currency basis (2022: €7.67 billion), reflecting an increase of 13%. Operating profit and margin benefitted from accelerated growth in revenue, completion of the Next Generation Cloud Delivery initiative, and strict cost management.

Thus, non-IFRS operating profit came in above the target range (€8.65 billion to €8.95 billion).

We achieved an effective tax rate (IFRS) of 32.6% and an effective tax rate (non-IFRS) of 29.3%, which is above the outlook of 28.0% to 32.0% (IFRS) and 26.0% to 28.0% (non-IFRS). This mainly resulted from changes in valuation allowances on deferred tax assets.

Operating Results (IFRS)

This section on operating results (IFRS) discusses results only in terms of IFRS measures, so the IFRS numbers are not expressly identified as such.

We break our operations down into three regions: the Europe, Middle East, and Africa (EMEA) region, the Americas region, and the Asia Pacific Japan (APJ) region. We allocate revenue amounts to each region based on where the customer is located. For more information about revenue by geographic region, see the Notes to the Consolidated Financial Statements, Note (A.1).

Revenue

Total Revenue1

€ millions | change since previous year

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

Total revenue increased from €29,520 million in 2022 to €31,207 million in 2023, representing an increase of €1,688 million, or 6%.

Cloud and software revenue represented 86% of total revenue in 2023 (2022: 86%). Service revenue increased 4% from €4,128 million in 2022 to €4,283 million in 2023, which was 14% of total revenue (2022: 14%).

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Revenue by Revenue Type

€ millions

For more information about our regional performance, see the Revenue by Region section.

Cloud revenue refers to the income earned from contracts that permit the customer during the term of its contract with SAP to access specific software solutions hosted by SAP or third parties engaged by SAP. Software licenses revenue results from the fees earned from selling or licensing software to customers. Support revenue represents fees earned from providing customers with technical support services and unspecified software upgrades, updates, and enhancements. For more information about our revenue types, see the Notes to the Consolidated Financial Statements, Note (A.1).

Cloud and Software Revenue1

€ millions | change since previous year

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

Cloud and software revenue grew from €25,391 million in 2022 to €26,924 million in 2023, an increase of 6%.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Cloud Revenue1

€ millions | change since previous year

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

Cloud revenue increased €2,238 million, or 20%, from €11,426 million in 2022 to €13,664 million in 2023. Cloud revenue growth benefitted from the accelerated transition of our customers to the cloud. The transactional cloud revenue remained approximately at the level of the previous year. Cloud revenue for Cloud ERP Suite increased 29%, or €2,417 million, to €10,626 million in 2023 (2022: €8,209 million). For more information about Cloud ERP Suite, see the Performance Management System section.

The current cloud backlog increased €2,721 million, or 25%, to €13,745 million in 2023 (2022: €11,024 million).

Our software licenses revenue declined €292 million from €2,056 million in 2022 to €1,764 million in 2023.

The demand for SAP software helped us maintain a stable maintenance customer base for software support, resulting in software support revenue of €11,496 million in 2023 (2022: €11,909 million). The slight decline is attributable to the accelerated transition of our customers to the cloud and to unfavorable currency exchange rates. SAP Enterprise Support was the largest contributor to our software support revenue.

Software licenses and software support revenue decreased €705 million, or 5%, from €13,965 million in 2022 to €13,261 million in 2023.

More Predictable Revenue1

€ millions

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

We define more predictable revenue as the sum of our cloud revenue and our software support revenue. Our more predictable revenue increased from €23,335 million in 2022 to €25,160 million in 2023. Cloud revenue surpassed support revenue in 2023 and drove the growth of 8%. More predictable revenue accounted for 81% of our total revenue in 2023 (2022: 79%), continuing the upward trend from prior years.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Services revenue combines revenue from consulting services, premium support services, and other services such as training services. Consulting services primarily relate to the implementation of our cloud and on-premise software products. Our premium support offering consists of high-end support services tailored to customer requirements. For more information, see the Notes to the Consolidated Financial Statements, Note (A.1).

Services revenue increased €155 million, or 4%, from €4,128 million in 2022 to €4,283 million in 2023. This increase was predominantly caused by very strong growth across the entire services portfolio of offerings with accelerated growth in our premium support revenues. At the same time, the revenue development was positively impacted by a year-over-year increase in order entry.

Consulting revenue and premium support revenue increased €165 million, or 4%, from €3,709 million in 2022 to €3,874 million in 2023. In 2023, consulting and premium support revenue contributed 90% of the total services revenue (2022: 90%) and 12% of total revenue (2022: 13%).

Revenue from other services decreased €10 million, or 2%, to €409 million in 2023 (2022: €419 million).

Revenue by Region

Revenue by Region (Based on Customer Location)

€ millions

EMEA Region

In 2023, the EMEA region generated €14,004 million in revenue (2022: €12,909 million), which was 45% of total revenue (2022: 44%). Revenue in Germany increased 10% to €4,921 million (2022: €4,469 million). Germany contributed 35% (2022: 35%) of all EMEA region revenue. The remaining revenue in the EMEA region was primarily generated in France, Italy, the Netherlands, Switzerland, and the United Kingdom.

Cloud and Software Revenue (EMEA)1

€ millions

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics. 

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Cloud and software revenue generated in the EMEA region totaled €12,028 million (2022: €11,081 million). That was 86% of all revenue from the region (2022: 86%). Cloud revenue in the EMEA region rose 27% to €5,241 million in 2023 (2022: €4,137 million). Software licenses and software support revenue decreased 2% to €6,787 million in 2023 (2022: €6,943 million).

Americas Region

In 2023, 41% of our total revenue was generated in the Americas region (2022: 41%). Total revenue in the Americas region increased 4% to €12,762 million (2022: €12,227 million). Revenue in the United States increased to €10,204 million (2022: €9,799 million). The United States contributed 80% (2022: 80%) of all revenue generated in the Americas region. In the remaining countries of the Americas region, revenue increased 5% to €2,558 million. Revenue in the remaining countries of the Americas region was generated primarily in Brazil, Canada, and Mexico.

Cloud and Software Revenue (Americas)1

€ millions

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

Cloud and software revenue generated in the Americas region totaled €10,959 million (2022: €10,456 million). That was 86% of all revenue from the region (2022: 86%). Cloud revenue in the Americas region rose 14% to €6,642 million in 2023 (2022: €5,810 million). The United States contributed 81% of cloud revenue generated in the Americas region. Software licenses and software support revenue in the Americas regions amounted to €4,317 million in 2023 (2022: €4,646 million).

APJ Region

In 2023, 14% of our total revenue was generated in the APJ region (2022: 15%). Total revenue in the APJ region increased 1% to €4,441 million (2022: €4,384 million) despite unfavorable changes in currency exchange rates for SAP. Total revenue in Japan increased to €1,243 million (2022: €1,218 million). Revenue from Japan accounted for 28% of all revenue generated in the APJ region (2022: 28%). In the remaining countries of the APJ region, revenue increased 1%. Revenue in the remaining countries of the APJ region was generated primarily in Australia, China, and India.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Cloud and Software Revenue (APJ)1

€ millions

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

Cloud and software revenue in the APJ region totaled €3,937 million (2022: €3,855 million). That was 89% of all revenue from the region (2022: 88%). Cloud revenue in the APJ region rose 21% to €1,781 million in 2023 (2022: €1,478 million). Software licenses and software support revenue decreased from €2,377 million in 2022 to €2,156 million in 2023.

Operating Profit and Operating Margin

Operating profit decreased to €5,787 million and operating margin decreased 2.1pp to 18.5%. Operating profit was impacted by a reduced contribution from software licenses revenue and from increased total operating expenses. Share-based payment expenses increased to €2,220 million (2022: €1,431 million), mainly due to an increase in the SAP share price of more than €40 from January 1, 2023, to December 31, 2023 (January 1, 2022, to December 31, 2022: drop in the SAP share price of around €30). A shorter contract life for on-premise support contracts led to accelerated amortization of costs related to these contracts, resulting in higher amortization expenses amounting to €121 million for 2023 (2022: €0 million). Furthermore, higher personnel costs were driven by higher bonus expenses prompted by strong revenue growth and robust attainment of other bonus measures. In addition, the recognition of a provision for fines in regard to anti-bribery matters led to expenses of €155 million in 2023 (2022: €0 million). Operating profit was also impacted by investments in the Next-Generation Cloud Delivery campaign and in other research and development and sales and marketing initiatives to capture current and future growth opportunities. Next-Generation Cloud Delivery from SAP is the modernization of our cloud delivery to enable a more resilient and scalable cloud infrastructure, and ended mid-2023. Additionally, the prior-year operating profit included a disposal gain of €175 million from the sale of the SAP Litmos business.

Operating Profit1

€ millions | change since previous year

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Operating Margin1

Percent | change since previous year

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

Changes to the individual elements in our cost of revenue were as follows:

Cost of Cloud and Software

Cost of cloud and software consists primarily of costs for deploying and operating cloud solutions, the cost of developing custom solutions that address customers’ specific business requirements, and customer support costs.

In 2023, the cost of cloud and software increased 8% to €5,267 million (2022: €4,883 million) and our cloud margin increased 2.2pp from 69.4% in 2022 to 71.6% in 2023, based on strong revenue growth paired with a slower growth in cost of cloud due to a scalable cloud infrastructure and operational efficiency. The software licenses and software support margin was 89.6%, 0.5pp below the prior-year level (2022: 90.1%). Software licenses and software support revenue decreased 5% to €13,261 million (2022: €13,965 million), primarily attributable to a 14% decline in software revenue. Software licenses and software support costs remained relatively constant year over year at €1,383 million (2022: €1,384 million).

Cost of Services

Cost of services consists primarily of the cost of consulting, premium services, and training courses, and the cost of bought-in consulting and training resources. The cost of services increased 8% to €3,407 million (2022: €3,155 million), in line with increased demand for project consulting and premium engagement services as well as higher business travel costs as COVID-related travel restrictions further eased around the world. Our gross margin on services, defined as services profit as a percentage of services revenue, decreased 3.1pp to 20.5% (2022: 23.6%). As our services business trends away from traditional software licensing and consulting revenue toward more subscription revenue from cloud solutions, we continue to adjust our service delivery resources to support our cloud offerings.

Research and Development

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

The R&D expense rose 4% to €6,324 million in 2023 from €6,080 million in 2022. This increase was mainly due to higher personnel costs driven by a 3% year-over-year growth in our R&D headcount for additional capacity demands in relation to the increased revenue. The R&D expense was also impacted by several initiatives to capture current and future growth opportunities. R&D expense as a percentage of total revenue decreased to 20.3% in 2023 (2022: 20.6%).

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

For more information, see the Our Investments in Innovation section.

Sales and Marketing Expense

Sales and marketing expense consists mainly of personnel costs, direct sales costs, and the cost of marketing our products and services.

Our sales and marketing expense grew 11% from €7,946 million in 2022 to €8,828 million in 2023. This increase is mainly attributable to higher personnel costs due to higher bonus payments prompted by strong revenue growth. In addition, travel costs for sales teams increased as COVID-related global travel restrictions accelerated to ease.

Accordingly, the ratio of sales and marketing expense to total revenue, expressed as a percentage, increased 1.4pp in 2023 to 28.3% (2022: 26.9%). 

General and Administration Expense

Our general and administration expense consists mainly of personnel costs to support our finance and administration, human resource, and corporate functions. 

General and administration expense increased 6% from €1,289 million in 2022 to €1,364 million in 2023. This increase is primarily due to higher personnel expenses in 2023, the majority thereof due to higher bonus payments. The ratio of general and administration expense to total revenue was flat year over year at 4.4% (2022: 4.4%). 

Segment Information

At the end of 2023, SAP had one reportable segment: Applications, Technology & Services. The segment information for 2023 and the comparative prior periods were restated to conform with the new segment composition.

For more information about our segment reporting and the changes in the composition of our reportable segments in 2023, see the Notes to the Consolidated Financial Statements, Notes (C.1) and (C.2).

Applications, Technology & Services

1 Software as a service: SaaS comprises all other offerings that are not shown as PaaS or IaaS.

2 Platform as a service: PaaS primarily includes SAP Business Technology Platform, the SAP LeanIX portfolio, and SAP Signavio solutions.

3 Infrastructure as a service: A major portion of IaaS comes from SAP HANA Enterprise Cloud.

4 Mainly derived from the Applications, Technology & Services segment.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

The Applications, Technology & Services segment recorded a strong increase in cloud revenue of 20% in 2023 (24% at constant currencies), supported by SAP Business Technology Platform as well as SAP S/4HANA, whose cloud revenue increased 67% (72% at constant currencies) to €3,495 million. Cost of cloud for the Applications, Technology & Services segment increased 10% (13% at constant currencies), which overall caused the cloud gross margin to widen 2.7pp (2.9pp at constant currencies) to 70.5%. Thereof, PaaS and SaaS cloud gross margins grew 3.9pp and 1.5pp at constant currencies, which resulted in a cloud gross margin of 84.7% and 70.1% respectively. Software support revenue slightly decreased by 3% (1% at constant currencies) to €11,495 million in 2023. Software licenses revenue decreased 14% (12% at constant currencies) mainly due to the shift toward cloud revenue. As such, the segment achieved a total software licenses and support revenue of €13,259 million. Total segment revenue nevertheless rose 5% (8% at constant currencies) and ended 2023 at €30,057 million.

Overall, the share of more predictable revenue within the Applications, Technology & Services segment increased 1.6pp from 78.4% in 2022 to 80.0% in 2023.

Cost of revenue increased 5% (8% at constant currencies) compared to the prior year, ending 2023 at €7,951 million. This development was mainly driven by an increase in cost of cloud.

Consequently, segment profit increased 11% (15% at constant currencies) and reached €9,811 million in 2023, whereas segment margin improved 1.7pp (1.9pp at constant currencies).

Reconciliation of Cloud Revenues and Margins

1 Software as a service: SaaS comprises all other offerings that are not shown as PaaS or IaaS.
2 Platform as a service: PaaS primarily includes SAP Business Technology Platform, the SAP LeanIX portfolio, and SAP Signavio solutions.
3 Infrastructure as a service: A major portion of IaaS comes from SAP HANA Enterprise Cloud.
4 Mainly derived from the Applications, Technology & Services segment.

Financial Income, Net

Financial income, net, increased to –€456 million (2022: –€1,389 million). Our finance income was €857 million (2022: €811 million) and our finance costs were €1,313 million (2022: €2,200 million).

Finance income primarily consists of interest income on investments in the amount of €486 million (2022: €193 million) and gains from IFRS 9-related fair value adjustments, mainly of Sapphire Ventures investments, and the disposal of equity securities totaling €380 million (2022: €608 million).

Finance costs mainly consist of interest expense on financial liabilities and from derivative instruments (including a forward contract to hedge the USD purchase price from the Qualtrics sale against EUR-USD fluctuations. This forward contract matured in the second quarter of 2023 with a total realized loss of €91 million, of which €106 million was recognized in finance costs) amounting to €639 million (2022: €272 million), and IFRS 9-related fair value adjustments or losses from disposal of Sapphire Ventures investments totaling €525 million (2022: €1,802 million). For more information about financing instruments, see the Notes to the Consolidated Financial Statements, Note (D.1) and Note (E.3).

		SAP Integrated Report 2023
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Income Taxes

The effective tax rate in 2023 was 32.6% (2022: 32.0%). The year-over-year increase mainly resulted from changes in valuation allowances on deferred tax assets, in non-deductible expenses and withholding taxes, which were partly compensated by changes in tax-exempt income, mainly related to Sapphire Ventures. For more information about income taxes, see the Notes to the Consolidated Financial Statements, Note (C.5).

Profit After Tax and Earnings per Share

Profit after tax increased to €3,600 million in 2023 (2022: €3,068 million).

Profit After Tax1

€ millions | change since previous year

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

Basic earnings per share increased to €3.11 (2022: €2.80). The number of shares outstanding decreased to 1,167 million in 2023 (2022: 1,170 million).

Earnings per Share1

€ | change since previous year

1 The numbers for 2023, 2022, and 2021 reflect continuing operations as a result of the divestiture of Qualtrics.

Dividend

We hold the view that our shareholders should benefit appropriately from the profit the Company made in 2023. Our dividend policy is to pay a dividend totaling 40% or more of profit after tax.

The Executive Board and the Supervisory Board of SAP SE will recommend to the Annual General Meeting of Shareholders in May 2024 a total dividend for 2023 of €2.20 per share (2022: €2.05). Based on this recommendation, the overall dividend payout ratio (which means the total distributed dividend as a percentage of profit after tax based on continued and discontinued operations) would be 43% (2022: 140%).

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Compared to the total dividend in 2023, the proposed dividend increased by 7%. The payment in 2022 included a special dividend of €0.50 to celebrate SAP’s 50th anniversary.

If the shareholders approve this recommendation, and based on the number of treasury shares as at December 31, 2023, the total amount distributed in dividends will be €2,568 million. The actual amount distributed could be different from this total amount, because the number of shares held as treasury stock might change before the Annual General Meeting of Shareholders. In 2023, we distributed €2,395 million in dividends.

For more information about the development of our profit after tax, see the sections Financial Income, Net, Income Taxes, and Profit after Tax and Earnings per Share.

Dividend per Share

€ | change since previous year

Finances (IFRS)

Overview

Global Financial Management

We use global centralized financial management to control liquid assets and monitor exposure to interest rates and currencies. The primary aim of our financial management is to maintain liquidity in the Group at a level that is adequate to meet our financial obligations at all times. Most SAP entities have their liquidity managed centrally by the Group, so that liquid assets across the Group can be consolidated, monitored, and invested in accordance with Group policy. High levels of liquid assets help keep SAP flexible, sound, and independent. In addition, various credit facilities are currently available for additional liquidity, if required. For more information about these facilities, see the Credit Facilities section.

We manage credit, liquidity, interest rate, equity price, and foreign exchange rate risks on a Group-wide basis. We use selected derivatives exclusively for this purpose and not for speculation, 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 the management of financial risks are documented in our Treasury Guideline, which applies globally to all companies in the Group. For more information about the management of each financial risk and about our risk exposure, see the Notes to the Consolidated Financial Statements, Notes (F.1) and (F.2).

Capital Structure Management

The primary objective of our capital structure management is to maintain a strong financial profile for investor, creditor, and customer confidence, and to support the growth of our business. We seek to maintain a capital structure that will enable us to cover our funding requirements through the capital markets at reasonable conditions, and in so doing, ensure a high level of independence, and financial flexibility. For more information about the capital structure and its analysis, see the The long-term credit rating for SAP SE is “A2” by Moody’s (positive outlook) and “A+” by Standard & Poor’s (stable outlook).

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Analysis of Consolidated Statement of Financial Position section and the Notes to the Consolidated Financial Statements, Note (E.1).

On May 16, 2023, SAP announced a new share repurchase program with an aggregate volume of up to €5 billion and a term until December 31, 2025. As at December 31, 2023, SAP had repurchased 7,563,796 shares at an average price of €125.49, with payouts of approximately €949 million under the program in 2023. Repurchased shares will primarily be used to service future awards granted under the ‘Move SAP’ share-based compensation plan.

Liquidity Management

Our primary source of cash, cash equivalents, and current investments is funds generated from our business operations. Over the past several years, our principal use of cash has been to support operations and our capital expenditure requirements resulting from our growth, to quickly repay financial debt, to acquire businesses, to pay dividends on our shares, and to buy back SAP shares on the open market. On December 31, 2023, our cash, cash equivalents, and current investments were primarily held in euros and U.S. dollars. We generally invest only in the financial assets of issuers or funds with a minimum credit rating of BBB, and pursue a policy of cautious investment characterized by wide portfolio diversification with a variety of counterparties, predominantly short-term investments, and standard investment instruments. Our investments in financial assets of issuers with a credit rating lower than BBB were not material in 2023.

We believe that our liquid assets combined with our undrawn credit facilities are sufficient to meet our operating financing needs in 2024 and, together with expected cash flows from operations, will support debt repayments, currently planned capital expenditure requirements, and capital returns to our shareholders over the near term and medium term. It may also be necessary to enter into financing transactions when additional funds are required that cannot be wholly sourced from free cash flow, to maintain flexibility, and/or limit repayment risk.

Therefore, we continuously monitor funding options available in the capital markets and trends in the availability of funds, as well as the cost of such funding. In recent years, we were able to repay additional debt within a short period of time due to our persistently strong free cash flow. For more information about the financial debt, see the Cash Flows and Liquidity section.

Credit Facilities

Other sources of liquidity are available to us through various credit facilities, if required.

To retain high financial flexibility, we have available a €3.0 billion syndicated revolving credit facility with an end date in March 2028 plus two one-year extension options. A possible future utilization is not subject to any financial covenants. So far, we have not used, and do not currently foresee any need to use, this credit facility.

As at December 31, 2023, SAP SE had additional available credit facilities totaling €550 million. Several other SAP entities have credit facilities available that allow them to borrow funds at prevailing interest rates.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Financial Debt

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

Maturity Profile of Financial Debts

€ millions

Nominal volume of financial debt on December 31, 2023, included amounts in euros (€7,755 million) and U.S. dollars (€655 million). On December 31, 2023, approximately 60% of the financial debt was held at variable interest rates, partially swapped from fixed into variable using interest rate swaps.

For information about the intended repayments, see the goals for liquidity and finance in the Financial Targets and Prospects section.

Financial Debt by Instrument

Financial Debt

€ millions

For more information about our financial debt, see the Notes to the Consolidated Financial Statements, Note (E.3).

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Cash Flows and Liquidity

2023 Actual Cash Flow and Liquidity Performance Compared to Outlook

We met or exceeded the updated outlook for 2023.

Group Liquidity and Net Liquidity/Net Debt

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 current other financial assets). Group liquidity on December 31, 2023, primarily comprised amounts in euros and U.S. dollars.

The net increase in group liquidity compared to 2022 was mainly due to the Qualtrics divestiture, compensated by the acquisition of LeanIX, the share buyback program, and the repayment of Eurobonds, loans, and commercial paper.

Net liquidity/net debt is group liquidity less financial debt. For more information about our liquidity, see the Notes to the Consolidated Financial Statements, Note (E.3).

For more information about the impact of cash, cash equivalents, current investments, and our financial liabilities on our income statements, see the analysis of our financial income, net, in the Operating Results (IFRS) section.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Development of Net Debt

1 Net debt as at 12/31/2022 includes continuing and discontinued operations, net liquidity/net debt as at 12/31/2023 only includes continuing operations.

Analysis of Consolidated Statements of Cash Flow

In 2023, cash inflows from operating activities increased €535 million to €6,210 million (2022: €5,675 million). This is particularly due to higher profitability, improvements in working capital, lower share-based payments (€1.1 billion in 2023 compared to €1.2 billion in 2022), and higher net interest received (€0.1 billion in 2023 compared to €0.1 billion net interest paid in 2022), which were compensated by higher income tax payments (€2.2 billion in 2023 compared to €1.6 billion in 2022) and higher restructuring payouts (€0.2 billion in 2023 compared to €0.1 billion in 2022). In addition, the decreased volume of trade receivables sold in 2023 amounting to €0.6 billion (€0.9 billion in 2022) affected operating cash flow. Cash collected from customer contracts increased compared to 2022.

Cash outflows from investing activities were €4,603 million in 2023, compared to €699 million cash inflows in 2022. We increased short-term time deposits and debt instruments by €2.5 billion. We paid, net of cash received, a total of €1.2 billion mainly for the LeanIX acquisition in 2023, compared to €0.7 billion mainly for the Taulia and Askdata acquisitions in 2022. We received, net of taxes paid, approximately €5.5 billion for the divestiture of Qualtrics in 2023. Capital expenditure on intangible assets and property, plant, and equipment decreased to €0.8 billion (€0.9 billion in 2022). For more information about current and planned capital expenditures, see the Assets section and the Investment Goals section.

In 2023, free cash flow (for the definition, see the Performance Management System section) increased to €5,093 million (2022: €4,388 million). The free cash flow conversion rate, defined as free cash flow as a percentage of profit after tax, decreased to 141% (2022: 143%).

Net cash outflows from financing activities were €7,758 million in 2023, compared to €6,074 million in 2022. The buyback of treasury shares with a volume of €0.95 billion in 2023 is included herein. Apart from the buyback of treasury shares, cash outflows in 2023 resulted from the repayment of €1.6 billion in Eurobonds, €1.45 billion in loans, and €0.93 billion in commercial paper when they matured. In 2022, we bought back treasury shares with a volume of €1.5 billion. Further cash outflows in 2022 resulted from the repayment of €0.9 billion in Eurobonds and US$0.445 billion in U.S. private placements when they matured.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

The dividend payment made in 2023 was €2,395 million compared to €2,865 million paid the preceding year.

Assets (IFRS)

Analysis of Consolidated Statements of Financial Position

Total assets decreased 5% year over year to €68,335 million.

Assets

Percent

Total current assets increased 11% in 2023 from €18,522 million to €20,571 million, mainly driven by an increase in time deposits in other financial assets.

Total non-current assets decreased 11% to €47,764 million (2022: €53,638 million). Among other effects, this change was mainly due to the divestiture of Qualtrics and the corresponding disposal of goodwill and intangible assets.

Investment in Goodwill, Intangible Assets, and

Property, Plant, and Equipment

(Incl. Additions from Business Combinations)

€ millions | change since previous year

Liabilities

Percent

Current liabilities decreased 16% to €14,642 million in 2023 (2022: €17,453 million). This was mainly due to a decrease in loans payable, bonds, and commercial paper in current financial liabilities.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Total non-current liabilities decreased 13% to €10,287 million in 2023 compared to the previous year’s figure of €11,858 million. This was mainly due to a decrease in non-current financial liabilities. For more information about our financing activities in 2023, see the Finances (IFRS) section.

The equity ratio (that is, the ratio of shareholders’ equity to total assets) grew 5pp to 64% (2022: 59%).

Equity Ratio

Percent | change since previous year

Principal Investments Currently in Progress

In 2023, we finalized various construction projects and continued construction activities in several locations. We plan to finance all of these projects from operating cash flow. Our most important projects are listed below.

Construction Projects

For more information about our planned investment expenditures, see the Investment Goals section. There were no material divestitures of facilities within the reporting period.

Report on the Economic Position of SAP SE

SAP SE is headquartered in Walldorf, Germany, and is the parent company of the SAP Group, which comprises 235 companies. SAP SE is the Group holding company and employs most of the Group’s Germany-based development and service and support personnel.

As the owner of the intellectual property in most SAP software, SAP SE derives its revenue mainly from software license fees and bears the bulk of the Group-wide research and development expenses.

In 2023, as part of Group-internal restructuring measures, SAP America Inc., Newtown Square, United States, repurchased and withdrew own shares from SAP SE. This resulted in a disposal of the shares in affiliated companies in the amount of €4,244 million and a gain from the disposal of affiliated companies in the amount of €3,749 million, reported under Other operating income.

With effect from January 1, 2023, based on a merger agreement concluded on August 9, 2023, SAP SE took over all assets and liabilities of SAP Portals Europe GmbH, Walldorf, Germany. The merger was conducted at book value.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

The SAP SE annual financial statements are prepared in accordance with the reporting standards in the German Commercial Code and the German Stock Corporation Act. The full SAP SE annual financial report and unqualified audit report are submitted to the operator of the Unternehmensregister (German Business Register) for publication and inclusion in the Unternehmensregister (German Business Register). It is available from SAP SE on request.

Product revenue and operating profit are defined as the most significant financial performance indicators with regards to SAP SEs standalone financial statements.

Performance Against Our Outlook for 2023

While product revenue is within our 2023 outlook, operating profit is well above expectations at €4,396 million. This development is mainly attributable to the €3,749 million gains realized under the intra-Group share buyback.

The course of business for SAP SE was favorable in 2023.

Income

SAP SE’s income statement is classified following the nature of expense method and presents amounts in millions of euros.

SAP SE Income Statement − German Commercial Code (Short Version)

The total revenue of SAP SE in 2023 was €19,018 million (2022: €17,786 million), an increase of 7%. Product revenue increased 4% to €14,055 million (2022: €13,550 million). As in previous years, product revenue was primarily generated from license fees paid by subsidiaries of SAP SE.

Service revenue increased 11% to €1,065 million in 2023 (2022: €958 million), while other revenue increased 19% to €3,898 million (2022: €3,278 million).

SAP SE operating profit increased €3,656 million to €4,396 million (2022: €739 million). Other operating income increased €3,463 million to €4,996 million (2022: €1,534 million). The year-over-year increase is primarily due to €3,749 million in gains from the disposal of affiliated companies as a result of the intra-Group share buyback by SAP America Inc.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

SAP SE cost of services and materials increased 6% to €12,217 million (2022: €11,560 million). Services received increased €579 million to €10,177 million (2022: €9,599 million), mainly due to increased services received in the context of intra-Group cost allocations. The costs for licenses and commissions increased €93 million to €2,006 million (2022: €1,914 million).

SAP SE personnel expenses, mainly the labor cost of software developers, service and support employees, and administration staff employed by SAP SE, increased 17% to €3,386 million (2022: €2,905 million), primarily due to an increase in stock based compensation expenses and an increased headcount in the reporting year.

Other operating expenses decreased €104 million to €3,329 million (2022: €3,433 million). This decrease is mainly attributable to a €287 million decrease in currency exchange losses and a €36 million decrease in impairment of receivables. The decrease was partly offset by a €114 million increase in services purchased and by a €179 million increase in other expense, mainly attributable to €155 million in regulatory compliance expenses.

Finance income was €897 million (2022: €1,685 million), representing a year-over-year decrease of €788 million. This decrease is primarily due to a €694 million decrease in net interest income, a €79 million decrease in results from profit and loss transfer agreements, and a €84 million increase in write-downs on financial assets. The decrease was partly offset by a €61 million increase in income from investments.

SAP SE income before taxes increased €2,868 million to €5,292 million (2022: €2,424 million). Income taxes increased €7 million to €504 million (2022: €497 million). After deducting taxes, the resulting net income was €4,766 million (2022: €1,912 million), representing a increase of €2,854 million year over year.

Assets and Financial Position

In 2023, SAP SE total assets closed at €47,752 million (2022: €48,996 million).

SAP SE Balance Sheet as at December 31 − German Commercial Code (Short Version)

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Intangible assets decreased €450 million year over year to €1,111 million (2022: €1,561 million), mainly due to scheduled depreciations on intangibles.

Financial assets decreased €3,589 million year over year to €34,323 million (2022: €37,912 million). This was mainly due to the disposal of shares in affiliated companies totaling €5,254 million. Of this, €4,244 million was attributable to the share buyback of SAP America Inc., and €929 million was attributable to the SAP Portals Europe GmbH shares canceled as a result of the merger. Additions to the shares in affiliated companies amounting to €1,782 million had an opposite effect. Of this amount, €1,238 million was attributable to the acquisition of LeanIX GmbH, Bonn, Germany, and €493 million was attributable to the shares in SAP Nederland B.V., ’s-Hertogenbosch, Netherlands, taken over as part of the merger of SAP Portals Europe GmbH.

The increase of €243 million in accounts receivable and other assets was primarily the result of a €168 million increase in receivables from affiliated companies and a €77 million increase in other assets.

Marketable securities and liquid assets increased €2,355 million to €3,788 million (2022: €1,423 million).

SAP SE shareholders’ equity increased 18% to €15,945 million (2022: €13,540 million). Against outflows of €2,395 million associated with the payment of the dividend and €960 million for the repurchase of stock in treasury, there was a €4,766 million increase due to net income for 2022 and €995 million from the issuance of treasury stock to serve the share-based payments of employees. The equity ratio (that is, the ratio of shareholders’ equity to total assets) is 33% (2022: 28%).

Provisions increased €436 million to €2,846 million (2022: €2,410 million). Other provisions increased €437 million to €2,091 million (2022: €1,654 million), primarily as a result of an increase in other obligations toward employees and provisions for stock-based compensation. Provisions for tax remained at €741 million (2022: €741 million).

Liabilities decreased €4,084 million to €28,951 million (2022: €33,036 million). This decrease mainly resulted from a decrease in liabilities to financial institutions of €2,380 million due to scheduled repayments of bank loans (€1,450 million) and commercial papers (€930 million), the scheduled repayment of bonds in the total amount of €1,600 million, and a decrease of €218 million in trade payables. In contrast, other payables increased €143 million.

The statements made for the SAP Group in respect to Capital Structure, Capital Expenditures and Liquidity are mainly equally applicable to SAP SE. For more information, see the Finances (IFRS) section and the Assets (IFRS) section.

Opportunities and Risks

SAP SE is subject to essentially the same opportunities and risks as the SAP Group. For more information, see the Risk Management and Risks section and the Expected Developments and Opportunities section.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Non-Financial Statement Including Information on Sustainable Activities

With this section and the information referenced to in this section, SAP SE fulfills its duty to produce a non-financial statement (NFS) for the holding company, pursuant to section 289b–e of the German Commercial Code (HGB), and a non-financial group statement, pursuant to section 315b–c in conjunction with section 289c–e of the German Commercial Code (HGB), in the form of a combined non-financial statement. The relevant non-financial matters are referenced in the table below and can be found in the relevant sections of our combined management report.

Additionally, following Article 8 of Regulation 2020/852 of the European Parliament and of the Council of the European Union (EU Taxonomy), we have included information on how and to what extent SAP’s activities are associated with economic activities that qualify as environmentally sustainable under this regulation.

For more information, see the EU Taxonomy Disclosures subsection.

Reporting Framework

The social and environmental data and information included in the SAP Integrated Report have been prepared in accordance with the Global Reporting Initiative (GRI) Standards.

Business Model

SAP’s business model is described in the Strategy and Business Model section of the combined management report. Good governance is a prerequisite for continued success and is described throughout the combined management report. Therefore, we did not include governance as an individual material topic in our materiality assessment and our non-financial statement.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Non-Financial Disclosures in SAP’s Combined Management Report

We determine which non-financial information has to be disclosed based on a materiality analysis we perform using internal and external input. For more information, see Materiality in the About This Further Information on Economic, Environmental, and Social Performance section in our SAP Integrated Report.

The individual non-financial aspects to be covered by the non-financial statement are addressed in the following sections of our combined management report if material. No material risks according to section 289c (3) sentence numbers 3 and 4 HGB have been identified.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

Sustainable Finance: EU Taxonomy Disclosures

Assessment of Taxonomy Eligibility and Alignment

The EU Taxonomy distinguishes between “Taxonomy-eligible” and “Taxonomy-aligned” economic activities. The eligibility assessment for 2023 is in accordance with the current EU Taxonomy regulation and reflects the changes published in the Environmental Delegated Act as well as the amendments to the Climate Delegated Act. As a result, SAP has identified two activities as relevant for disclosure, and examined whether they qualify as Taxonomy-aligned.

Taxonomy-Eligible Economic Activities of SAP

Activity 8.1 “Data processing, hosting, and related activities” (substantial contribution to climate change mitigation)

In this area of activity, we looked at our data centers and our relevant cloud solutions. The criteria for the Taxonomy alignment of activity 8.1 were not met in financial year 2023. We expect to make progress on the transition from Taxonomy-eligible to Taxonomy-aligned over the next few years as we work toward meeting the technical screening criteria. For instance, under the EU Taxonomy regulation, refrigerants used in data centers must not exceed a certain level of global warming potential. The refrigerants SAP uses do not meet these thresholds yet. Replacing them right away would create toxic waste and generate additional costs. Therefore, we intend to replace the refrigerants according to our regular maintenance schedule over the course of the next few years. Also, SAP’s data center colocations and hyperscalers do not yet fully meet the criteria set out in the Taxonomy regulation. We are working with our providers to evaluate options to reach Taxonomy alignment over the next few years.

Activity 3.3 “Manufacture of low carbon technologies for transport” (substantial contribution to climate change mitigation)

This economic activity includes the vehicles purchased for the SAP car fleet. In 2023, SAP capitalized an amount of €210 million. For most of our electric vehicles, we were able to obtain the proof required for Taxonomy alignment from our suppliers, allowing us to report €51 million as Taxonomy-aligned.

Other activity

In single locations, SAP operates combined heat/cool and power generation facilities using fossil gaseous fuels. However, the associated Taxonomy-eligible and aligned revenues, capital expenditures, and operational expenditures are negligible. No further activities for nuclear or gas are applicable.

Minimum safeguards

SAP has conducted a review of all core topics of the minimum safeguards to ensure compliance. Our global due diligence processes ensure that SAP upholds and meets the requirements under the minimum safeguards.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information

As outlined above, we have identified only one activity as a relevant Taxonomy-eligible economic activity to which revenues can be attributed. We considered materiality aspects in this process. Eligible turnover consists of revenue earned from providing the following services, which comply with the description of activity 8.1:

–     Software as a service (SaaS)

–     Platform as a service (PaaS)

–     Infrastructure as a service (IaaS)

SAP’s cloud revenue results from these services. Revenues that qualify as cloud revenue but cannot be classified as Taxonomy-eligible have been excluded. Total revenue is determined according to IFRS, specifically IFRS 15, and matches total revenue presented in SAP’s Consolidated Income Statements. For more information about how we recognize revenue, and about the components of revenue, see the Notes to the Consolidated Financial Statements, Note A.1.

For a detailed description of the development and key drivers of SAP’s revenue, see the Performance Against Our Outlook for 2023 (Non-IFRS) and the Operating Results (IFRS) sections of the combined management report.

		SAP Integrated Report 2023
		To Our Stakeholders	Combined Management Report	Consolidated Financial Statements IFRS	Further Information about Sustainability	Additional Information