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Unleashing the Power of Experience Management (XM)

November 11, 2018

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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. Readers are cautioned not to place undue reliance on these forward-

looking statements, which speak only as of their dates.

Safe Harbor Statement

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Together, Powering the Experience Economy

Pioneering the new category of

Experience Management (XM) to

transform brands, customers,

employees and products

Fusing intelligence across the deepest

and broadest suite of business

applications seamlessly integrated on

the most data rich architecture

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Transaction Overview

Transaction

Consideration

• Purchase price of $8 billion

• Includes unvested employee incentive compensation

• SAP will assume Qualtrics’ cash

Financing

• SAP has obtained a €7 billion credit facility to cover purchase price and acquisition-

related costs

• SAP expects to refinance parts of the credit facility via the issuance of debt securities

Management &

Governance

• Ryan Smith will continue to lead Qualtrics, reporting to Robert Enslin, President, SAP

Cloud Business Group

• Qualtrics to operate as an entity within SAP’s Cloud Business Group and will be reported

as part of SAP’s Customer Experience segment

• Qualtrics to continue to be based in Provo, Utah and Seattle, Washington

Expected Closing• Expected to close in 1H 2019

• Subject to receipt of regulatory approval

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Why Qualtrics

Clear Leader and

PioneerAccelerate the disruptive and fast growing category of experience management (XM)

Accelerates

Intelligent Enterprise

Enhances SAP’s Intelligent Enterprise suite as the essential foundation of end-to-end

experience management across all lines of business

Turbocharge

Qualtrics’ GTM

Leverage SAP’s unparalleled global network and go-to-market (GTM) channel to rapidly

scale Qualtrics

Accelerate SAP

Evolution to Cloud

Accelerates SAP’s cloud momentum and predictable revenue model, adds experience

intelligence (customers, employees, products, brand) across SAP’s portfolio

Attractive Financials Rapidly growing and profitable with high visibility revenue model and strong cash flows

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Qualtrics at a Glance

All data as of September 30, 2018.

Experience Management

(XM)

Market leader

Scale

$372M

revenue LTM 9/2018

9,000+ Total customers

75%+ of Fortune 100 Companies

$44B+ TAM

Fast growing

Early adoption

Cloud Model

40%+ growth today…

…and into the future

Highly predictable SaaS model

600+ customers with

over $100K

subscription ACV

Leading presence in academia…

…the experience users of the future in

enterprises

Profitable

Expanding margins

Free cash flow positive

since inception in 2002

Only 22% of revenue from

non-US customers

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Qualtrics is the Leader in Experience Management

Executives must own all dimensions of Experience, identify Experience gaps, and act on them

Experience evolves from all aspects of a business. Gaps around customer complaints, employee turnover, and

product dissatisfaction must be addressed

Qualtrics captures experience data across key dimensions – brand, customer, employee, product – and combines it

with operational data to provide a comprehensive view of a brand’s operations and perception, and triggers action

Experience Data

The WhyOperational Data

The What

Action

Any Engagement Method ((Web, Chat, In-app, Emails, SMS, Social Media, etc.)

Captures Sentiment The “Why”

In the MomentLive Real Time Experience Data

Systems of Record(ERP, HCM, CRM, customer service, etc.)

Transactional FactsThe “What”

In the MomentReal Time Operational Data

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Fusing X and O to Power and Transform the Experience Economy

Cloud Platform | Data Management | AI

77% of the world’s

transactions across

25 industries touch

SAP systems

1.8B experience

touchpoints run on

Qualtrics

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Powerful Combination

Powering the

Intelligent

Enterprise

High 30sy/y cloud growth2

413,000+customers

~15,000sales reps

$350BTAM

68%Non-US Revenue

€25B+FY2018E Revenue1

1. Based on FY 2018 Total revenue outlook at constant currencies

2. Based on FY 2018 Cloud subscription and support outlook at constant currencies

42%y/y revenue growth

9,000+customers

~450sales reps

$44BTAM

22%Non-US Revenue

$372MLTM 9/18 Revenue

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Offering Outside-in Data to Customers

• jetBlue selected Qualtrics because it was the best customer

experience platform that offered total control over all phases

of customer experience program management.

• With the ability to combine relational, front-office data (brand

purchase drivers) with transactional, back-office data

(experience and satisfaction) into a centralized hub, jetBlue

gained the ability to easily pinpoint their biggest impact areas

and make immediate, impactful changes.

• Using Qualtrics, jetBlue found that:

• 82% of their passengers preferred cheaper ticket prices over

free bags.

• Dissatisfaction amongst Philadelphia customers was due to

the lack of shops and amenities open early in the morning.

• The security interview process required at Lima, Peru’s

airport was leading to negative remarks about the company.

• Qualtrics provides Volkswagen with the ability to collect

and distribute insights in real-time, and with customizable

dashboards and access. Volkswagen Group Australia

could finally deliver actionable insights to dealers.

• They can collect customer and employee feedback on the

same platform.

• In the future, Volkswagen Group Australia will use

Qualtrics to predict and deliver what customers expect

from the customer experience at every touchpoint

— buying, driving, and owning.

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Driving Step-Change Growth for Qualtrics

Global Reach

Every LOB

Cross-sell /

Up-sell

Industry

Domain

Expertise

Partner

Ecosystem

Increase

Qualtrics’ global

presence

Plugged into

every line-of-

business

Massive

cross-selling

opportunity

enhanced by

~15,000 person

sales reps

Access SAP’s

unmatched

industry

expertise

Amplify

expansion

through partner

network

Leverage SAP’s base of

413,000+ customers

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$ millions,

unless otherwise stated FY2016 FY2017

LTM

09/18

Revenue growth191M 290M

+52%

372M

+42%

Subscription gross margin 80% 88% 88%

Overall gross margin 68% 73% 74%

Operating margin (5%) 4% 2%

Operating cash flow margin2 9% 14% 15%

Free cash flow margin2 2% 7% 9%

• Best-in-class gross margins

• Strong operating cash-flow

• Expanding OCF and FCF margins

• FCF positive since inception

40%+ organic growth today…

and into the future

1. All figures based on Non-GAAP and Qualtrics accounting policies and definitions

2. Defined as cash flow in percent of total revenue

Impressive Financial Profile1

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Successful Acquisition Strategy and Strategic Organic Innovation

2014 2015 2016 2017

€ 47BMarket Cap € 50B € 75B € 77B€ 40B

Cloud

Revenue

€ 90B € 102B€ 72B

New Co-CEOs

20181

SAP Acquires Sybase

to expand to DB &

Mobile

Launched

Suite on HANA

2013

New 2020 Target:

€8bn in Cloud

Public Cloud

HEC

Analytics Cloud

Data Hub

201220112010

€ 0.01B €0.02B€ 0.3B € 0.8B

€ 1.1B

€ 2.3B

€ 3.8B

€ 3.0B

• Integrated Intelligent Suite

• Revolutionizing

Customer Experience

with C/4HANA

• Innovation with Intelligent Systems

(Leonardo)

€ 114B

C/4HANA

€ 5.2B

1. Based on FY 2018 Cloud subscription and support outlook at constant currencies

Raised 2020 Target:

€8.2 - €8.7bn in Cloud

Doubled Addressable

Market

Be the most innovative cloud company powered by HANA Intelligent Enterprise

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Appendix

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($ in thousands, Fiscal Year Ending December 31) FY 2016 FY 2017

9 Months

Ended 9/17

9 Months

Ended 9/18 LTM2

Revenue $190,603 $289,903 $207,079 $289,566 $372,389

Add: Total Deferred Revenue, End of Period 133,931 185,145 161,742 228,199 228,199

Less: Total Deferred Revenue, Beginning of Period (89,930) (133,391) (133,391) (185,145) (161,742)

Calculated Billings $238,604 $341,657 $235,430 $332,620 $438,846

Period over Period Growth 43.2% 41.3% 39.6%

Subscription $142,525 $213,274 $151,699 $215,533 $277,109

Research on Demand $38,147 $51,812 $37,524 $51,489 $65,776

Services $9,931 $24,817 $17,856 $22,544 $29,504

Total Revenue $190,603 $289,903 $207,079 $289,566 $372,389

Period over Period Growth 52.1% 39.8% 42.3%

Qualtrics Non-GAAP Reconciliation1

1. All figures based on Qualtrics accounting policies and definitions

2. LTM reports FQ4 ‘17 through FQ3 ’18c

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9 Months

Ended 9/17

9 Months

Ended 9/18 LTM2

GAAP Total Gross Profit $129,623 $210,819 $150,473 $213,228 $273,572

GAAP Gross Margin 68.0% 72.7% 72.7% 73.6% 73.5%

Add: Cost of Revenue Stock-based Compensation Expense 7 7 6 4 6

Add: Cost of Revenue Amortization of Acquired Intangible Assets 81 135 101 500 534

Non-GAAP Total Gross Profit $129,711 $210,961 $150,580 $213,732 $274,112

Non-GAAP Gross Margin 68.1% 72.8% 72.7% 73.8% 73.6%

GAAP Subscription Gross Profit $114,621 $187,722 $133,537 $189,013 $243,198

GAAP Subscription Gross Margin 80.4% 88.0% 88.0% 87.7% 87.8%

Add: Cost of Revenue Stock-based Compensation Expense 7 7 6 4 6

Add: Cost of Revenue Amortization of Acquired Intangible Assets 81 135 101 500 534

Non-GAAP Subscription Gross Profit $114,709 $187,864 $133,644 $189,517 $243,738

Non-GAAP Subscription Gross Margin 80.5% 88.1% 88.1% 87.9% 88.0%




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9 Months

Ended 9/17

9 Months

Ended 9/18 LTM2

GAAP Sales and Marketing Expense $95,919 $140,524 $102,994 $138,318 $175,848

GAAP Sales and Marketing Expense (as % of Revenue) 50.3% 48.5% 49.7% 47.8% 47.2%

Less: Stock-based Compensation Expense (64) (4,415) (4,414) (559) (562)

Less: Amortization of Acquired Intangible Assets (47) (32) (30) (111) (111)

Non-GAAP Sales and Marketing Expense $95,808 $136,077 $98,550 $137,648 $175,175

Non-GAAP Sales and Marketing Expense (as % of Revenue) 50.3% 46.9% 47.6% 47.5% 47.0%

GAAP Research and Development Expense $22,303 $40,680 $29,078 $45,643 $57,245

GAAP Research and Development Expense (as % of Revenue) 11.7% 14.0% 14.0% 15.8% 15.4%

Less: Stock-based Compensation Expense (309) (1,438) (1,348) (1,568) (1,674)

Less: Amortization of Acquired Intangible Assets - - - - -

Non-GAAP Research and Development Expense $21,994 $39,242 $27,730 $44,075 $55,571

Non-GAAP Research and Development Expense (as % of Revenue) 11.5% 13.5% 13.4% 15.2% 14.9%

GAAP General and Administrative Expense $21,909 $26,522 $17,239 $26,958 $36,241

GAAP General and Administrative Expense (as % of Revenue) 11.5% 9.1% 8.3% 9.3% 9.7%

Less: Stock-based Compensation Expense (322) (1,087) (750) (973) (1,272)

Less: Amortization of Acquired Intangible Assets (59) (59) (44) (104) (119)

Less: Legal Costs Related to Acquisitions (60) - - (648) (648)

Non-GAAP General and Administrative Expense $21,468 $25,376 $16,445 $25,233 $34,202

Non-GAAP General and Administrative Expense (as % of Revenue) 11.3% 8.8% 7.9% 8.7% 9.2%




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9 Months

Ended 9/17

9 Months

Ended 9/18 LTM2

GAAP Operating Income (Loss) ($10,508) $3,093 $1,162 $2,309 $4,238

GAAP Operating Margin (5.5%) 1.1% 0.6% 0.8% 1.1%

Add: Stock-based Compensation Expense 702 6,947 6,518 3,104 3,514

Add: Amortization of Acquired Intangible Assets 187 226 175 715 764

Add: Legal Costs Related to Acquisitions 60 - - 648 648

Non-GAAP Operating Income (Loss) ($9,559) $10,266 $7,855 $6,776 $9,164

Non-GAAP Operating Margin (5.0%) 3.5% 3.8% 2.3% 2.5%

Net Cash Provided by Operating Activities $17,806 $39,618 $36,056 $52,509 $56,039

Operating Cash Flow Margin3 9.3% 13.7% 17.4% 18.1% 15.0%

Less: Purchases of Property and Equipment (14,372) (18,272) (11,350) (16,388) (23,310)

Free Cash Flow $3,434 $21,346 $24,706 $36,121 $32,729

Free Cash Flow Margin3 1.8% 7.4% 11.9% 12.5% 8.8%




3. Defined as cash flow in percent of total revenue

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Experience Management (XM): A Vast and Underpenetrated Market Opportunity

Total #

of Organizations

Average

Contract Value

Total

Market Opportunity

Enterprises with

>$50M in revenue

Global post-secondary

academic institutions

US K-12 school

districts

Federal, state, local

government agencies

$44BnSubscription ACV by

organization size and type

Research on Demand spend

by organization size and type

X =

RoD In 2018

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Experience Data Powering The Intelligent Enterprise

+

SAP Qualtrics

The Intelligent Enterprise is super-charged to take

action when transactional data is enriched with data

reflecting sentiments and perceptions that reveal an

outside-in perspective of a company’s performance.

Experience Management is the next evolution of

Enterprise software. Combining outside-in

experience with operational data empowers a true

360 view on an Enterprise’s situation.

unleashing the power of experience management (xm) - sap.com · enhances sap’s intelligent...

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