SAP SE (NYSE: SAP) today announced it will host an operationally focused Special Capital Markets Day on November 12th, 2019 to lay out the details of several new initiatives to accelerate operational excellence and value creation. These initiatives are the result of a process that began over the last year and build on the recently announced restructuring program to simplify organizational structures and processes.
SAP is forming a Special Executive Board Committee which will oversee the operational review and identify, evaluate and execute on operational levers across all functional areas of SAP’s business. The goal of the review is to accelerate operational excellence across all functional areas of SAP with a focus on growth, innovation and efficiency. Over the next five years, SAP will significantly increase its investment in core product areas and empower its leadership team to drive faster development cycles and speed of execution. A key component of the operational review is to position SAP as a best-in-class provider of cloud applications across any type of cloud delivery model. SAP intends to announce the results of the operational review and will set definitive project milestone targets at the Special
Capital Markets Day in November. It is not envisaged that any of these initiatives trigger additional restructuring plans.
At the Special Capital Markets Day, SAP will also detail the path to 75% non-IFRS cloud gross margin in 2023 and average 1 percentage point of non-IFRS operating margin expansion per year from 2018 through 2023, representing total margin expansion of approximately 500 basis points during the period.
SAP’s 2023 ambition will be driven by an organic growth strategy and the company commits to a disciplined capital allocation approach:
SAP CFO Luka Mucic stated: “We have high confidence in the operational targets announced today and believe this comprehensive review will improve our business processes and yield significant efficiency benefits. The achievement of our new cloud gross margin target is critical for our long-term success and supported by the successful completion of our multi-year program to converge our cloud solutions on SAP HANA. Our commitment to the operating margin expansion target is an indication of the importance of this initiative both for our business and for long-term value creation for our shareholders.”
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Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
© 2019 SAP SE. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE. The information contained herein may be changed without prior notice.
Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary.
These materials are provided by SAP SE and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.
SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective companies. Please see www.sap.com/... for additional trademark information and notice.
SAP is forming a Special Executive Board Committee which will oversee the operational review and identify, evaluate and execute on operational levers across all functional areas of SAP’s business. The goal of the review is to accelerate operational excellence across all functional areas of SAP with a focus on growth, innovation and efficiency. Over the next five years, SAP will significantly increase its investment in core product areas and empower its leadership team to drive faster development cycles and speed of execution. A key component of the operational review is to position SAP as a best-in-class provider of cloud applications across any type of cloud delivery model. SAP intends to announce the results of the operational review and will set definitive project milestone targets at the Special
Capital Markets Day in November. It is not envisaged that any of these initiatives trigger additional restructuring plans.
At the Special Capital Markets Day, SAP will also detail the path to 75% non-IFRS cloud gross margin in 2023 and average 1 percentage point of non-IFRS operating margin expansion per year from 2018 through 2023, representing total margin expansion of approximately 500 basis points during the period.
SAP’s 2023 ambition will be driven by an organic growth strategy and the company commits to a disciplined capital allocation approach:
- Annual Dividends: An annual dividend payout ratio of 40% or more of the prior year’s profit after tax, consistent with SAP’s current dividend policy.
- Share Repurchase: The Company will evaluate a multi-year share repurchase program and will provide an update of its assessment at the Special Capital Markets Day.
- Acquisitions: SAP’s strategy will focus on tuck-in acquisitions that are complementary to SAP’s existing portfolio while maintaining a strong balance sheet.
SAP CFO Luka Mucic stated: “We have high confidence in the operational targets announced today and believe this comprehensive review will improve our business processes and yield significant efficiency benefits. The achievement of our new cloud gross margin target is critical for our long-term success and supported by the successful completion of our multi-year program to converge our cloud solutions on SAP HANA. Our commitment to the operating margin expansion target is an indication of the importance of this initiative both for our business and for long-term value creation for our shareholders.”
Visit the SAP News Center. Follow SAP on Twitter at @sapnews.
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
© 2019 SAP SE. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE. The information contained herein may be changed without prior notice.
Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary.
These materials are provided by SAP SE and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.
SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective companies. Please see www.sap.com/... for additional trademark information and notice.
