SAP SE at Goldman Sachs Technology & Internet Conference

SAP.DE - SAP SE
SAP SE at Goldman Sachs Technology & Internet Conference
Feb 12, 2020 / 07:00PM GMT 

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Corporate Participants
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   *  Luka Mucic
      SAP SE - CFO & Member of Executive Board

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Conference Call Participants
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   *  Mohammed Essaji Moawalla
      Goldman Sachs Group Inc., Research Division - Equity Analyst

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Presentation
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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [1]
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 Good morning, everybody. My name is Mohammed Moawalla. I cover the European software sector out of London.

 We are delighted to have the management of SAP here for the conference. Representing the company is Luka Mucic, Chief Financial Officer. Luka, I appreciate you making the trip all the way over from Germany.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [2]
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 Well, actually, it was a short trip because I was visiting our exciting new acquisition, Qualtrics, in Utah before. It has been actually a short trip. So...

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [3]
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 Excellent. Before we begin, I will read out the safe harbor statement and then we'll dive straight into the Q&A.

 Please note that except for certain information, matters discussed during today's presentation may contain forward-looking statements, which 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 most recent filings with the Securities and Exchange Commission.

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Questions and Answers
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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [1]
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 So with that, let's dive in. So you've obviously just reported your Q4 results showing a continuation of kind of robust growth, but more importantly, margin expansion. Maybe to start with, you could talk a bit about the current macro environment. What are the conversations you're having with your customers in terms of sort of the appetite to spend on IT? How does the sort of pipeline look across the geographies? And anything in terms of impact you see to your business right now or in the foreseeable future from the current situation in Asia and China, in particular?

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [2]
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 Yes. First of all, let me say that I think SAP has become used to faring well in uncertain waters in terms of macro conditions. When you think about the uncertainty in Europe with Brexit, we have been doing very well in Europe in 2019, and also in the past, actually, the U.K. was one of the most robust mature markets that we had. And over the course of the last 24 months, we had a very strong business in -- across the Americas, with also Latin America bouncing back quite nicely. And in Asia, while we had some challenges from macro uncertainty, actually in the key markets in Japan and in Mainland China, I want to add, we had robust growth in on-premise as well as in cloud as well.

 It helps, of course, as well that we have successfully pivoted our business towards more sustainable recurring revenue sources. This year will be approximately 70% of our revenue is in those highly predictable, sticky revenue sources. So I'm not concerned, actually, around the macro environment. I believe there are, certainly, arguments for even a slight improvement when we go to 2020 and the global reach of SAP makes us really relatively low vulnerable against those. SAP is typically investment case even in uncertain times and because it helps customers to become more efficient to digitally transform their businesses, and that is, in particular, in demand in more uncertain territories.

 China, when you take a look at the, of course, current discussions around coronavirus, I think they are not going to hamper our full year expectations for this business. We have a very strong position in the Chinese market, 70% of the Fortune 2000 customers in China are SAP customers. We have been increasing our cloud revenues in the country 20-fold in the last couple of years, and we are one of the very few players who have local data center capabilities there.

 And people are coming back from prolonged New Year's vacations, so to say. Our own offices have been closed by 1 week longer than we originally would have expected as well. But that should not have an impact on our performance, neither in China nor leaving alone the global performance because, obviously, China is still a relatively small piece of the total revenues of SAP.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [3]
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 Okay. So one of the key talking points after the Q4 results was sort of the disconnect between new cloud bookings and then expectations around your cloud revenue growth. And I know SAP's cloud business line is a little different to some of the peers in that there are various moving parts. How should we think about that evolution between new cloud bookings and then the bookings growth?

 And I know you have the pay-as-you-go business as well. And I think we've also noticed that, for example, in the last couple of quarters, there is a bit more lumpiness with some larger deals. So maybe you can kind of help us understand how confident you remained around delivering kind of both the near-term cloud, but the mid-term cloud growth.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [4]
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 First of all, we remain extremely confident, and I think SAP has a history of meeting, if not exceeding, its ambitions as communicated to the market. And our cloud ambitions are not going to be any different. Look, the correlation between new cloud bookings and our cloud revenue growth already for the past few years has weakened and weakened. And that's just simply a function of the much larger renewal base that we have built. And therefore, our renewal success becomes a much more meaningful contributor to drive the cloud growth versus new cloud bookings. Let's also be clear, though, that in the full year 2019, we have been driving -- if you exclude our Infrastructure as a Service business, where we have made the conscious decision during the year to focus this business only on high-value, high-margin opportunities, while working with our hyperscaler partners to serve the rest of the market, which had a very positive impact on the margins, this new cloud bookings metric has been up 31% for the full year. And so that is exactly in line with what we need to drive growth in our SaaS/PaaS portfolio to the levels that we want.

 And to address this kind of false positive shortcomings of a pure focus on a new cloud bookings disclosure, we are going to change our disclosures as of Q1 in 2020 to use a so-called current cloud backlog metric, which actually gives you the expected contractually committed cloud revenues that are going to be realized over the course of the coming 12 months. And the movement between those disclosures from one period to the other one will give you actually the combined success of new cloud bookings as well as renewals happening during the period, and that is a much more holistic and much more meaningful predictor of our future revenue growth. It will still not include the pay-as-you-go revenues, in particular, from our Business Networks group, which is not insignificant. We're talking about slightly above the mid-triple-digit million euro range amount of revenues there. So you will always have to add that, so to say, to the disclosure of the current cloud backlog. But then it will give you a very decent approximation of what to be expected in the next 12 months, and that should provide a lot of relief and a lot of additional confidence to the market.

 As we feel that our cloud business is rock solid, we have guided at the midpoint for 26% purely organic growth in cloud, which at our scale, as we are now looking at reaching up to EUR 9 billion in cloud revenues in 2020, is, of course, above the market average growth in cloud in total. And we remain ever confident in reaching our EUR 15 billion cloud revenue target for 2023. So you can relax and can safely assume that those targets are safe.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [5]
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 Okay. So maybe we could drill a bit into the different levers of growth you have in the cloud. And SAP has assembled quite a broad portfolio of products that, I think, still have significant runway to grow both in the installed base, but also add sort of new customers with. So maybe talk us through the kind of the different product set because there's some really fast-growing stuff, but even the mature stuff is still growing at a fairly decent clip.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [6]
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 Yes. I think broadly speaking, you can think about our cloud business as being separated in 4 buckets, I would say. The first bucket that I'm really proud of is the very fast-growing organically developed cloud solutions that we have assembled over the years. And here in 2019, we have really turned the corner, and these businesses are becoming material contributors, not only in terms of growth rates, but also in absolute cloud revenues. S/4HANA Cloud, first and foremost, which is now already at more than EUR 500 million revenue run rate, which has been growing in high double digits in 2019, actually accelerating its growth throughout the year. And we see now a tremendous opportunity as customers become more open to these core-to-cloud type of movements to have a very, very meaningful growth machine in ERP in the cloud going forward, which was not the case a couple of years ago.

 Next to this, we have assets like analytics cloud, still operating from a slightly lower baseline, but also already a triple-digit million euro business growing in very, very high double digits as well. Then we have -- on the other side of the spectrum are mature cloud solutions. The large-scale assets, Concur, Ariba, SuccessFactors. These were the ones that in the past 2 years have been driving the lion's share of our growth. They are very decent businesses. They still grow in the teens, that's exactly where they should grow. And they are -- law of large numbers inevitably means that the growth rates cannot move up again to the 30s. But the growth in the teens is absolutely sufficient and those assets actually have increased their profitability quite significantly over the course of 2019, as you can see also in the positive operating profit growth.

 Very exciting prospects around Qualtrics come on top. As of 2020, this will be part of our organic growth, obviously. That business has been doing extremely well in its first year of operating as a part of the SAP group. We have actually beaten the business plan in terms of the new business that we are driving with it. We clearly see the first beginnings of tremendous cross-selling synergies. We have been increasing the amount of customers at Qualtrics that do more than USD 1 million in revenue with them on a per annum basis by 60% in that last year. So you clearly see that the opening up of the installed base of SAP to Qualtrics pays off, but that's only the beginning. So in the next few years, we expect that Qualtrics will continue to scale very fast, even while becoming a very meaningful large-scale cloud business.

 And then the fourth pillar is the remaining CX portfolio, which is growing somewhere in the middle between those very high double-digit growth numbers and the teens that we see for the large scales, they are somewhere in the middle of that. The one business that -- where we see growth rates starting to come down is the Infrastructure as a Service business. Here, you have a lag time between the bookings performance and the revenue performance because it takes a while to onboard the customers on our Infrastructure as a Service. And therefore, you had seen that initially the revenue was trailing the new cloud bookings growth.

 Now the opposite is true, while the new cloud bookings growth is already turning negative, the absolute cloud revenue growth in Infrastructure as a Service is still operating at a higher growth level. But also there, it will start to trail the average, which is good, again, for the margins. And in totality across those 4 pillars, that's how the math will work out and why we believe that we have enough firepower, in particular, in terms of new cloud assets that in the past were not a meaningful revenue contributor to very safely uphold the growth rates that we have planned over the next few years.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [7]
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 Okay. And maybe just staying with Qualtrics briefly. I remember at the time of the acquisition, it's a very kind of U.S.-centric business, and internationalization was a key part of the kind of cross-selling, correct? I think you kind of use that playbook also from the previous acquisitions. The success you've had, the acceleration, has it been international so far? Or is there still a lot of runway to go international?

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [8]
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 Well, both, I would say. We have to be very careful that we continue to focus Qualtrics on safeguarding the very successful land and expand sales motion in terms of their volume business. And they have continued to do that. But of course, in terms of our big, large enterprise accounts, that's where we have the opportunity to help them, and that applies across all of the geographies.

 We had in Q4, significant marquee wins for Qualtrics, for example, at JPMorgan in the U.S., but we also had the international accounts contributing strongly to their growth with accounts like Santander in Europe or Allianz in the financial services industry. In APJ, we closed Samsung. Our largest deal for Qualtrics in the entire year was actually a deal in Germany with a technology company there. So you see that we really can help them to globalize their operations quickly, not only in terms of sales and go to market, but also in terms of the efficiency of our shared service infrastructure so that they don't need to add in terms of G&A money, or sales and marketing money, the same amounts that they would otherwise have had to add in order to drive that internationalization.

 So given that also the platform of Qualtrics is operating at extremely high gross margins, above the 90% mark, we believe that this, in the long run, leaves great space for us to increase the profitability and accretive growth as well, extremely accretive. And again, this is a rare case of a business that has been growing around 40% stand-alone, and that in 2019, 2020 and beyond, I believe, can actually accelerate its growth beyond. And with those great efficiency qualities that they have built into the platform, that holds a lot of promise for us.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [9]
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 Okay. Maybe turning to the other kind of top line driver, S/4HANA. We've seen that sort of traction accelerate. Number of go-lives is increasing. We've also seen the deployment models diversifying, if that's the right word. How do you see the demand for S/4HANA? And I know you've recently also clarified the end-of-life support on the enterprise -- the previous enterprise product. So maybe talk us through the various moving parts on how the installed base is adopting, what's the new customer traction because I think you're continuing to drive Oracle replacements and then how the deployment models will also change.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [10]
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 Yes. S/4HANA remains a really exciting core pillar of our growth story, and we have now close to 14,000 customers for S/4. In Q4 alone, we added 1,200. The really exciting part is that, that growth is not only exclusively happening in on-premise anymore but that S/4HANA cloud is becoming really a meaningful contributor to cloud growth with high double-digit growth. We have now 2,300 customers and counting for S/4HANA cloud. So both of these aspects are very important.

 In the last 2 years, I would say, pretty consistently, around 40% of our customer additions for S/4 were net new. Of course, many of them are mid-market companies that are adopting in the cloud right away. But to your point, we also had a number -- a large number of -- a growing number of high-profile replacements. You have -- in the past, we have talked about BT, for example, the largest account of the company that you mentioned, I believe, outside of North America that is moving to S/4HANA.

 Similar things can be said about Standard Chartered Bank in Asia. We have in Q4, closed a very large transaction at Ford, moving them to S/4 holistically, and they were, by far, the largest automotive company out there, I would say, probably the only large automotive company out there that was not a SAP shop wall-to-wall. And you can guess who is among the ones to be replaced in that one as well. So I think we are in a very good position there.

 We face very meaningful and relevant and strong and respectable competition in quite a few of our LoB niches. In ERP, we are in the strongest position that we have, I would say, been for decades. And we drive very meaningful, high single-digit growth in on-premise licenses and high double-digit growth in the cloud. We are gaining market share, and we have every expectation that this will continue, especially since we can add now the flywheel of our hyperscaler partnerships to the equation, which really helps our customers to also consider -- together with the migration of the technology to the newest architecture, to consider a redeployment in the public cloud.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [11]
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 And on that, maybe before we turn to margins, you announced the sort of Embrace partnership with Microsoft on the Q3 results. Maybe help the audience picturize how will Microsoft kind of accelerate sort of S/4 adoption.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [12]
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 Yes. It's really a great partnership that we are very proud of. And then I think also, Microsoft hold us in high regards. At least, I've been hearing Satya talking about this at their last earnings call, and that this is one of the key features that is driving the strength of Azure in the market. I think it's a highly synergistic partnership.

 What is it all about? We joined forces in a joint go-to-market approach with a joint account planning around helping our customers migrate to S/4HANA, that's our benefit, and deploying the S/4HANA systems in the Azure cloud. And moreover, Microsoft has acquired OEM rights to our SAP Cloud Platform that they are going to integrate with the Azure cloud so that the customers that are migrated to Azure can actually use the SAP Cloud Platform for integration scenarios as an innovation platform to build on differentiating scenarios on top of that. And this is working in a great fashion.

 We just announced at the end of Q3, as you know, and in Q4, we had already significant positive impacts from that joint sales motion. The largest deal, as we announced in Q4, was around this partnership. We also had, and that's a transaction that I can talk about, deals like, for example, Suncor Energy, who are moving to S/4HANA, who are deploying the SAP Cloud Platform and do so in an Infrastructure as a Service approach using Azure. So while this has been only very fresh, we already had some of the most material transactions of the fourth quarter being subject to the sales motion, and the pipeline is tremendously increasing.

 So I think this is a great showcase for how companies that in other spaces might compete once in a while like in analytics or in the mid-market actually have a far bigger play to play together if they are combining the strengths in the areas that are synergistic, and I think that's a much better strategy than trying to go it all on your own with an infrastructure that is actually very bespoke and that customers don't look at adopting for other solutions outside a specific given space. So here, it clearly pays off that we did the investments in the past few years to make our application available on all major hyperscaler infrastructures. And our customers are definitely voting with their wallets for this.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [13]
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 Okay. So maybe turning to another important part of the equity story this year and the midterm, is margins. We have seen gross margins starting to inflect and that pace accelerating in many ways in Q4. Maybe just talk us through the different levers you have, both on gross margins, but OpEx efficiencies and kind of lay the building blocks for the kind of margin expansion that you see in the years ahead.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [14]
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 Well, we announced at the beginning of the year that clearly, we are pursuing a significant turnaround in margins after a couple of years in which we saw margin deterioration as a function of our business model transformation, and we are very methodical about this. We created a company-wide transformation program called Best-run topics, which I'm sponsoring and regularly reviewing with our 2 new co-CEOs. And we are focusing on a holistic set of levers, both on the gross margin level, but also when it comes to the different cost ratios of the company, the biggest one being the cloud gross margins. Where in the past, we had a very fragmented setup in the different lines of business, now we are all consolidating everything under one common infrastructure shared service.

 And we have successfully migrated SuccessFactors of third-party databases and onto HANA. Now in Q1, we are going to complete that same job for Ariba. That alone has been driving significant gross margin increases, but the actual bigger impact is still around with the ongoing migration from legacy infrastructure stacks to our converged cloud infrastructure and our hyperscalers. This is not only helping us in terms of gross margins because we can share the capacity across all of the applications and acquire additional capacity only when it is really needed in a much more flexible setup, but it is actually also helping us beyond on the CapEx side of the house. So it is only advantageous there.

 This is actually going to account for half -- roughly half of the entire increase in operating margins that we are committing over the course of the next couple of years. And those are really no-regret savings because they are helping us on the profitability side, but even giving us greater flexibility in terms of pricing for strategic transactions with our customers because we can still drive the profitable deals, even if we have to come up with very appealing pricing for those solutions.

 The other big lever is sales and marketing. And we are moving to a more simplified sales structure after a number of years in which we have had many different separate sales organizations as part of our different cloud areas. And that is going to help in terms of the reduction of management, overhead of management, support functions of operations, functions we can put more feet on the street and redeploy some of those capacities. And also the business model transformation helps because the higher the amount of renewal revenues, the lower the commission rates that we have to pay because the renews are 80% more profitable due to a lower sales commission amount that we need to pay for those. So that is also a very clear line of sight that we have in sales and marketing for additional benefits.

 And then we have other areas like procurement, for example, where we're looking at consolidating a lot of our spend, which will drive significant run rate savings as well. We are ahead of plan actually. When I -- when we started the year, I was giving out the expectation that we should be able to drive for 50 basis points improvement. In 2019, we actually ended up at 80 basis points or 60 basis points at constant currency. And therefore, we are now looking in 2020 for an even bigger increase at the midpoint, around about 1.2 percentage points in margin increase.

 You have mentioned as well that in the second half year, the margin increases have accelerated. That's just purely because Best-run measures are now starting to take effect. We had a restructuring program that we announced at the beginning of the year, where around about 4,000 people have been leaving us in areas that are legacy and low growth. We redeploy those investments into the growth areas. At the same time, those run rate savings are only now starting to fully materialize. And we have roughly 3,000 people that have left us already by the end of the year, and the rest is going to leave us in the first half of 2020. And so when that comes on top, that is, of course, an additional benefit that we're getting in 2020. And afterwards, we should be seeing a steady march by that approximately 1 percentage point every year to the midterm ambitions. But it's comfortable to see that finally, we are actually ahead of plan when it comes to the margins, and therefore, can even more closely attend to the growth opportunities.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [15]
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 Okay. Maybe let's open it up to the audience. If there are any questions at the back. Just wait for the mic, please.

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 Unidentified Analyst,    [16]
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 I have a question regarding your conviction to improve your free cash flow. Last year was quite weak at EUR 2.3 billion, down, I think, 20%. There were some restructuring charges, share-based compensation related to Qualtrics and cash taxes, I think. How do you -- how can you explain your confidence having your free cash flow this year to get to EUR 4.5 billion?

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [17]
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 Yes. You're absolutely right. I mean I said at our Capital Markets Day in November that we will see a very steep increase in both operating cash flow as well as free cash flow because 2019 was depressed because of specific extraordinary factors. We had, on the one hand, the restructuring cash outflows, that was actually in total EUR 884 million. And for 2020, we are only planning for the remaining part, which is around about EUR 240 million. So basically, we are already seeing almost EUR 700 million less restructuring cash outflows for 2020.

 The other aspect was that in both 2018 and 2019, we had quite significant cash tax outflows. In 2019, they were EUR 650 million roughly higher than in 2018. We don't have any line of sight that we would need to expect any of those significant cash tax aspects in 2020 at this time. So if that is true, then out of those 2 measures alone, we will gain a EUR 1.5 billion benefit for 2020. And the rest, the other EUR 1 billion is basically just the growth in our operational business.

 If you can see our guidance, then we are looking at around about EUR 1 billion in additional profits between 2019 and 2020. So that's why we are very confident about these increases, even though it sounds naturally high, so to say, to go from this low level back to the EUR 4.5 billion. And going forward, we believe that our cash flow will increase quite reliably and significantly over the course of the next few years. At our Capital Markets Day, I said, with all uncertainty as cash flow is really hard to forecast, subject to FX exposures, to share price fluctuations and other aspects, that we have a clear opportunity to look at a free cash flow of up to EUR 8 billion by 2023. So that cash flow performance, for sure, will be significantly up from the performance of the last 2 years. And we are very confident in this because we know what made it so weak in the last 2 years, and we don't see those items reoccurring.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [18]
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 Okay. Any further -- oh, yes.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [19]
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 There is another one.

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 Unidentified Analyst,    [20]
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 Sorry, just a follow-up. Since you're forecasting a strong increase in free cash flow, the follow-up question will be on your balance sheet. You're delevering quite fast. How should we think about the optimal level of debt? And how -- could you please maybe reframe the capital allocation priorities in terms of M&A or returning excess cash to the shareholders.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [21]
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 Yes. The way how we think about this has not really changed from what we discussed at our Capital Markets Day in November. So we -- as a company, we have traditionally always had a very conservative approach to our balance sheet and have always sought to deleverage fast after we have spikes in debt due to acquisitions. Outside of acquisitions, we don't need any debt. So our aim is to reduce our leverage ratio, which end of last year stood at around about 1.2 to below 1 already in 2020 and then to below 0.5 in -- by 2023.

 So debt repayments, when they are due, will definitely occur. We are likely going to refinance the outstanding Qualtrics term loan to take advantage of the current very positive environment on the bond market. But that's about the anything that we -- the only thing that we see in terms of additional debt that we would bring in as a replacement of the term loan.

 In terms of the use of cash, we have a clear cascade. We will continue to invest in our organic business needs. The CapEx intensity in our business has come down quite significantly in 2019. And we don't believe that will be significantly increasing again in the next couple of years. We'll definitely look at continuing to pay an increasing dividend year-after-year. And if there are tuck-in M&A opportunities of a smaller scale, then we might consider them.

 It is clear to us that larger scale M&A is not in our cards. Our co-CEOs have also been very clear about that at our Capital Markets Day because we have acquired a very broad portfolio. But if there are nice add-on opportunities, perhaps in areas like in vertical industry solutions or in some other areas that are very strong to our -- very close to our strong capabilities like extended supply chain or other areas of that nature, then we might consider them. But extremely unlikely that anything would happen this year. And if anything happens afterwards, it would be smaller in nature.

 So that should leave enough space for additional capital returns also in the next few years, especially given that the 2020 is a year of very high debt repayments. And afterwards, it's actually moderating down. There was an additional question. I think...

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [22]
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 Did you have a question?

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 Unidentified Analyst,    [23]
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 I asked them already.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [24]
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 All right. Okay.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [25]
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 Any further questions? Great. Maybe just before we wrap up then, obviously, there's been a change of leadership in SAP, Christian Klein and Jennifer Morgan, kind of back to the sort of co-CEO structure the company has seen in the past. Do we -- should we anticipate any major strategic shifts in terms of their roles and responsibilities? How are they kind of being divided up?

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [26]
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 Well, first of all, the CFO is still around so you're all in safe hands now that everything is changing at SAP. And I was joking when I -- when we had our full year earnings conference, the 3 of us were on stage, and I actually counted the years and we were -- the 3 of us are -- have been around at SAP for 60 years. So we have a very experienced management team, even though there was change, obviously, in the roles.

 There should -- I think nobody should expect a dramatic departure from an overarching strategy perspective as a result of the change in the CEO role because the strategy is working. What I think they are both bringing to the table is really a lot of operational experience because they have been operating in the business for a long time. So most of the strategic priorities that we're driving now are really around ensuring that we can put this strategy to work in an optimal way and that the execution on the ground is aligned with the full potential that we're having in it.

 So the 2 key points that we are pursuing here is finalizing the integration road map across our different cloud solutions and with S/4HANA. That is something on which we have a very transparent road map that we are currently in process of communicating to our customers and partners. The other key aspect is increasing the adoption and the consumption of our sold cloud capacities with our customers. So we are rolling out consistent incentives and metrics across the entire organization to be focused on increasing the consumption, which is a key leading indicator to success in renewals as well.

 We will have a strategy meeting in a couple of weeks from now, where we will take a look at what areas of the strategy we will further want to fine-tune. I think SAP will have a growing priority in pursuing its strongholds and vertical plays, for sure, is one of the elements. But that is, again, not a real change in strategy. It's more a renewed focus on what it takes to execute optimally against that.

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 Mohammed Essaji Moawalla,  Goldman Sachs Group Inc., Research Division - Equity Analyst   [27]
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 Great. With that, I think we're out of time, Luka. Thank you for the great insights.

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 Luka Mucic,  SAP SE - CFO & Member of Executive Board   [28]
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 Thank you very much, folks, and thanks for your interest in SAP.




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