Ladies and gentlemen, good day and welcome to the SAP Q4 2019 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Stefan Gruber, Head of Investor Relations. Please go ahead, sir.

Good morning or good afternoon. This is Stefan Gruber. Thank you for joining us to discuss our results for the fourth quarter of 2019. I’m joined by our new Co-CEOs, Jennifer Morgan and Christian Klein; as well as our CFO, Luka Mucic, who will make opening remarks on the call today. Also joining us for Q&A is Ryan Smith, the CEO of Qualtrics. Before we get started, as usual, I would like to say a few words about forward-looking statements and our use of non-IFRS financial measures. Any statements made during this call that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995.

Ladies and gentlemen, please stand by.

Okay. Before we get started, I would like to say a few words about forward-looking statements and our use of non-IFRS financial measures. Any statements made during this call 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, outlook 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, including SAP’s Annual Report on Form 20-F for 2018 filed with the SEC on February 28, 2019. Participants of this call are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. On our Investor Relations website, you can find our Quarterly Statement and a financial summary slide deck, which are intended to supplement our prepared remarks today and include a reconciliation from our non-IFRS numbers to IFRS numbers. Unless otherwise noted, all financial numbers referred to on this conference call are non-IFRS, and growth rates and percentage point changes are non-IFRS as reported year over year. The non-IFRS financial measures we provide should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with IFRS. With that, I’d like to turn things over to our Co-CEO, Christian Klein.

Thank you, Stefan, and thanks to everyone on the phone and webcast for joining. First of all, I hope everybody had a great start into 2020. SAP certainly had a great finish in 2019. Q4 was strong finish to yet another record year. Once again, we have kept the promise and delivered on our raised business outlook. The 2019 results speak for themselves; total revenue up 12%; operating profit up 15% and our operating margin pushing to 30%. Our on-premise business continues to grow. Our cloud business continues to soar. With cloud revenue up 40%, we outperformed our major competitors and continue to rapidly gain cloud market share. We are combining growth with increased profitability, harvesting the initial benefits of the Best-Run program. Operating margin has jumped up by 80 basis points and we expect to see more of that as we continue with SAP’s transformation to drive operational efficiency. An important driver of that success is the cloud gross margin, up more than 5 percentage points. We are steadily increasing the efficiency of our cloud delivery and we continue to leverage our hyperscale partners. This also shows in our CapEx, down 45%, despite supporting a much bigger cloud business now. We are proud of these results and energized by the many opportunities ahead. Customers across all industries turn to SAP to help them master the digital transformation and become intelligent enterprises. Together with us, our customers are driving complete business transformations, embedding the latest technology innovations we deliver using real-time data as a tremendously powerful asset. And we are seeing an increased number of these large transformational deals, deals greater than €5 million now contribute 1/3rd of our total order entry. So our winning product strategy of delivering the intelligent enterprise is in full execution and it builds upon…

Thank you, Christian. In our first 3 months of Co-CEO, as we spent a lot of time listening to our customers, our partners, our employees, and our investors. And we continue to form our views of the business, and we’ll share more of these perspectives and plans throughout 2020. Like, any new CEOs, we bring a fresh perspective to our roles, and we see that there are areas where will be more focused, where we will accelerate, and we find unique opportunities for further growth. Let me highlight some early priorities, which we’re executing on. Successful and satisfied customers remain front and center for achieving long-term growth and profitability goals. This starts with engineering world-class products. We’re breaking down the silos, and cross-pollinating our engineering teams, removing redundancy, tightening the integration between our cloud solutions, and cloud to S/4. This allows us to focus our R&D resources more effectively and efficiently, disinvesting in long-tail solutions that do not serve the broader market to free up an investment and accelerate innovation in high growth priority must win segments. Together with our partners, we will focus on delivering smooth and faster implementations and higher adoption of our solutions. This ultimately drives higher customer renewals and expansion into additional products across our portfolio. With our best-run program and increased focus on operational excellence, we are creating a simpler, more agile SAP for our customers and employees. We have an amazing workforce of over 100,000 employees, who are committed to our customer success, and we’re off to a fast start 2020. Coming out of our kick-off meetings around the world, our workforce is energized. We’ve further integrated our sales team to gain scale and create a better experience for our customers as they work with SAP. Our services and support teams are laser focused…

Yeah. Thanks a lot, Jenn. Let me start by saying that I’m likewise, very proud of our 2019 results. In particular, our strong increase in profits and margins, while continuing our remarkable top-line momentum. Let me cover our results in some more detail. First, in 2019, we hit all revenue and profit targets. In fact, we have kept our promise for half a decade now, successfully hitting or beating all revenue and profit targets in that timeframe, even though that we have raised. I am very proud that we continue to keep our promise in 2019. For the full year, new cloud bookings was €2.3 billion and grew by 25% and 31% excluding our Infrastructure as-a-Service. As discussed at our Capital Markets Day, starting with Q1 2020, we will replace the disclosure of new cloud bookings with the new KPI, the current cloud backlog or CCB offshore. This metric gives you the contractually committed cloud revenues that we expect to recognize over the upcoming 12 months. The CCB starts a subset of the remaining performance obligations number that we disclosed under IFRS 15. It is cloud-only, at 12 months only. It’s expansion between 2 key days, reflects our success in both contracting new cloud business as well as renewing existing business. So compared to new cloud bookings, it is a more holistic indicator of our cloud success. The cloud revenue grown by 40% in 2019. We have now surpassed €7 billion mark. This makes our cloud revenue now more than 50% larger than our software license revenue. We also continued our strong double-digit growth, cloud and software, total revenue and operating profit. We’re seeing really strong growth rates in Qualtrics and a very positive effect in SuccessFactors and Human Experience Management. Now I also wanted to underscore when Jenn and…

Thank you.

Thank you. Operator, we can now start the Q&A session.

[Operator Instructions] And we will take our first question from James Goodman with Barclays.

Good afternoon. Thank you very much for taking my question. I wanted to ask you a couple of things about the cloud business, if I may. Firstly, you noted the 10 percentage point benefit to new cloud bookings from this major shift from an on-premise customer to the cloud, which is coming under Embrace, which is clearly encouraging. But you’re taking, I guess, the benefit already there from Microsoft in terms of revenue in the SAP Cloud Platform. So my question is can you expand on what this customer is doing precisely and where additional revenues are coming to you through the cloud business? And then the follow-up cloud question is just on the ISG business, where we move to about 14% growth from 20% over the last quarters. Thank you.

Yeah, so on this large deal – it’s Christian here, first of all – on this large deal, just to give you some context, this is not directly related now to Embrace. So what this large multinational customer really decided is to move existing on-premise landscape to the cloud and to go with the SAP HANA Enterprise Cloud offering in order to not only migrate the landscape to the cloud, but do a real business transformation. I mean, this customer really has certain requirements in adapting new business models, driving automation. And this is why this customer decided to shift its complete landscape to a hyperscaler, plus SAP will work with this customer hand-in-hand to migrate and transform this customer into an intelligent enterprise. And that’s by the way also not a one-off deal. I’m actually expecting that more and more customers really focus on their own transformation while shifting more and more of these projects to hyperscalers plus SAP to drive the transformation.

And this is Jennifer, maybe – let me hit the point on the cloud bookings, because I know that this is a topic. I want to make a couple of points here. You remember earlier in 2019, we made the strategic decision to really focus on our SaaS business and move away from infrastructure as a service, because we knew that we could get better focus on what we do well and leverage a lot of the motions to the hyperscalers in our business. So that was a strategic decision that we made early in 2019, which did have an impact on the top-line revenues. When you look at where the growth is coming from, Qualtrics is going to be an incredible growth engine. The results we had in 2019 were really specific to Qualtrics continuing to execute within their customer base and the customers that they were growing. We did really start to pick up steam toward the second half in terms of expanding and doing some nice large deals in our installed base accounts. And what we’ve also done is, Ryan and I together, have learned quite a bit and we placed one of our most seasoned sales executives from SAP to be the Chief Revenue Officer within Qualtrics, so we can both bring that really strong sales execution into Qualtrics, and also the knowledge of SAP and where we can really focus Qualtrics to drive the large deals and scale across the globe. I mentioned our C/4 portfolio. Now, you all know that Bob came in, Bob Stutz in Q3. And this was an area where we needed somebody who brought experience in this market, who understood the differentiation that SAP could bring to focus on that differentiation, and frankly, to execute. So we’ve learnt here. You’re going to see us move and make progress here. You’re going to see new product development happen this year. And we’re very confident that this portfolio is now more focused and we’ll execute. And I don’t want to forget about our organic cloud solutions. Christian talked about S/4 in the cloud. We also have Analytics, which has really strong growth, digital supply chain. While these might be smaller in terms of the revenue size, the growth and the steam of these are picking up. And then finally, when you look at how we get the scale of all these solutions in our customer base, we made the decision to move all of our sales resources within the different specialized sales forces under Adaire Fox-Martin, who now own overall go-to-market responsibility and can get better focus and scale, and really get all these businesses humming and get the synergies of the micro-suite, as we go out and sell the cloud. That’s really the plan for how we’re going forward with the growth.

Yeah, and perhaps just quickly to come back to your precise question, so to reiterate that very large deal was a net new incremental deal and was not cannibalized by any of the Embrace transaction. And your specific question around ISG and the 14% cloud growth that you saw there in Q4, on that business you really have to take a look at the full-year results, because it is significantly influenced by a transaction volume based pay-as-you-build revenues. There is a mid-triple-digit-million euro amount of revenues in there. And in that business, you have greater variability than in a classic SaaS business. And that portion actually it came in Q4 a little bit shorter than in the other quarters and that basically is the reason why you’ve seen Q4 revenues being a little bit smaller. But all in all the 19% that you’ve seen, ISG has been actually very consistently a result around the 20% mark that these businesses, despite their scale have been posting for a number of years now. So there is really nothing except for this small seasonality blip on the transaction volume based revenues that you should read into this.

That’s great context. Thank you very much.

Thank you. Let’s move to the next question, please.

We will take our next question from Kirk Materne with Evercore ISI.

Hi, thanks. Thanks very much. Maybe I have two quick ones. One just for Luka, just on this new metric you’re going to be giving us in terms of cloud or cloud current backlog, I guess, some of the debate this morning would be looking at the cloud bookings growth. Wouldn’t it necessarily appear to be robust enough to support your longer-term targets? I assume this new metric maybe lines up a little bit better with what you are hoping for over the next few years, is that fair? And I know you don’t want to give us the number exactly right now. But I’m just trying to get a sense on, if that’s going to be a better metric in your view to gauge, say, ACV growth in the cloud business?

Yeah, Kirk, thanks a lot for the question. And it’s exactly that. I mean, as you know, I’ve been preaching this for some time now. The correlation between our new cloud bookings performance and our actual revenues has been weakening over time. And that’s quite natural, because the impact of our renewal business as our baseline growth is, of course, getting heavier and heavier. And therefore, moving to current cloud backlog, which gives you the entirety of our success in both driving new order entry, but also successfully renewing what we have and then spending out the impact that this will have on the next 12 months revenues is going to give you a much better holistic picture of the expected revenue, so that you can read much better into this than by taking only the singular view on the new cloud bookings. So it’s a qualitatively much more meaningful disclosure that you will see starting from Q1.

Okay, great. And then, just one for Jennifer, Jennifer, I know you all hosted your sales kick-off events over the last couple of weeks. And you mentioned having new Chief Revenue Officer for Qualtrics. Were there any other things you all changed heading this year that we should be aware of? I know you always will change something generally going into a fiscal year. But any other sort of call-outs you make in terms of either ways you’re thinking about going to market a little bit different this year or just some general sort of normal procedures around that? Thanks.

Yeah. So the great thing is that when you look at our leaders across the various geographies and even the leaders within the different cloud businesses, we have really strong stability and experience. And that helps – that really helps us to continue to execute and get the synergy and scale that we need, depending where every region is in terms of their cloud growth and where they see the opportunity. One of the things that we did put a strong focus on is when you look at these leaders in the businesses that they run now. Making sure, we’re putting just as strong of a focus. Obviously, the bookings is going to continue to drive and be key to driving our revenue growth, but we also want to make sure that our leaders and the people in the field are also just as focused on consumption. So we have put accelerators in there. For our sales teams to be rewarded for entering that our customers are not only just buying our solutions, but they’re consuming that, so their incentive to help accelerate that consumption and focus on our customers success.

Thank you.

Thank you. Let’s take the next question, please.

Our next question is from Charlie Brennan with Credit Suisse.

Great. Thanks very much for taking my questions. I’ve got 2 actually. The firstly, just a question on core ERP, and particularly, this deal that you flagged in the statement as moving to the cloud. You have been flagging up S/4HANA on-premise licenses as being a positive factor to license growth. Can you just help us quantify, is the shift of core ERP to the cloud going to be a material drive r going forward? And does the start to change your license outlook for the group? And then secondly, just around the cloud bookings and backlog metric. There is a fair amount of investor focus on it. We have seen increasing volatility in the cloud bookings number. As we move to the backlog, does that smooth out the volatility? And does it start to give us a much more even pattern of the business going forward? Thank you.

Okay. So let me start – Christian here – on the S/4HANA question, Cloud ERP. So after that quarter, we have now roughly close to 14,000 customers S/4HANA customers. And we are seeing, of course, that our installed base is moving, and if they’re now moving to on-prem and cloud. And by the way, I really feel this is a winning strategy, because sometimes, in some industries, with higher process complexity, large customers still the side to choose S/4HANA, on-prem, where we will also continue to deliver innovations and also functionality for certain kind of industries, other industries with lower process complexity utilities, professional services, they are more and more moving to the cloud. And especially also for some LOPs also in the core like finance, we are seeing this traction now coming. And we’re having now over 2,000 customers for S/4HANA Cloud in over 20 industries, we also now have to prove that our cloud ERP is really also broad enough to really also courage just goes of larger customers going forward. So we see actually this hybrid part really pays off, and also, last but not least, I mean, we have seen that our S/4HANA customers 40% of them are net new. So that’s also a clear signal that we are also attracting new customers that we are winning market share. And that doesn’t only now mean that we’re only moving our installed base, but really also entering new fields, especially on the cloud side as well.

Yes. And therefore, let me just add that, of course, we are anticipating this shift. It’s a gradual one when it comes to the core, and therefore, you’ll have seen or not seen, but you’ve heard us confirming that S/4HANA was again, a major growth engine across both deployment models with high-single-digit growth also in on-premise licenses. And we continue to expect that S/4HANA in on-premise will post positive growth also in 2020 and beyond. However, at the same time, it’s great news, actually that we start to see the engine going and more customers adopting S/4HANA also in the cloud with the steep increase in customers to 2,300 with the increase on the revenue side, where this is becoming a meaningful engine. And it is based into both our assumptions for continued growth in the cloud as well as the implicit assumptions around the development of our on-premise business. So we’re not seeing anything that will change our perspective of the business, and how it will unfold in the next couple of years.

Thank you. Let’s move to the next question, please.

We will take our next question from Phil Winslow with Wells Fargo.

Hey, thanks for taking my question, and then congrats on a great close to the year. I just wanted to focus on the comments you mentioned about the change in how bonus metrics are calculated for your sales team going to more of consumption-based model versus purely sales, so I guess, kind of a jump out about Christian and Jenn, just sort of – how are you sort of rolling that out? Is there sort of differentiation between your cloud deals versus on-premise deals with that? And just how do you sort of expect to roll that out, sort of impacts from that?

Yeah. Thanks for the question, Phil. Let me just add some context to this new bonus plan change. First of all, it’s very important to highlight that this is not only related to the sales. All of our people in development and service and support in cloud operations will have a cloud consumption metric, and why is that, because in the cloud, especially the deal doesn’t stop with the point-of-sale. We have to make sure that we support our customers all the way along on the point-of-sale to onboard, to support to one and really showing them their business value, showing our customer the business value out of our cloud solutions. And then at the end, of course, we have to make sure that we have high renewal rates. And that’s a common exercise, this is not only related to sales. This is also up to development services and support to operations to really make this is a top priority. And Jenn and I really a hold the flag high on customer success and this is one of the measures now we are driving to really make sure that we are going to execute that. And that also, of course, our customers feel the benefit of that.

Okay. Thank you.

Thank you. Let’s move to the next question, please.

We will take our next question from Adam Wood with Morgan Stanley.

Hi, good afternoon. And thanks for taking the question. I’ve also got 2. Just the first one, maybe for Christian, on the integration of the products. Could you talk a little bit about the timeframe of getting all of the cloud products integrated into S/4HANA? And then maybe where you’ve completed that integration, what benefits have you seen in terms of cross-selling adoption? And any metrics you can give would be very helpful for benefits on that side? And then maybe as a follow-up on the license side of the business, and how that evolves as more customers move to cloud, could we also talk about support, traditionally, it’s kind of been an all on offering model on support for customers, but as more of those landscapes run on cloud subscriptions rather than on license and support, how does that impact the support business? And was that effect to behind the lowering of the percentage of predictive revenue looking out to 2023? Thanks very much.

Thank you, Adam. Let me just give you some more details about what we are doing on the integration front. So first and foremost, it’s really important to understand that, when customers buy SAP solution, we are talking about a real business policy integration based on 1 data model. So it’s not just the technical integration, where you shift data from the left to the right. It’s really about making business processes one across the value chain. How did we progress? So with SuccessFactors, HR, and with S/4 and Finance, there are, of course, core mission critical processes that we actually finished on the cloud side integration in Q4. So that customers have really waterline data model and all the business services, what you need to 1 business, of course, they have been delivered in Q4 last year. Now what comes next? Ariba procure-to-pay, it’s currently just connects to cash front-office to back-office. This will now happen during the course of 2020, so the same into for Concur. And we will also actually announce the detail format for that in a few weeks to come. So that also our customers and, of course, our whole community has more details around when is the integration being delivered. And as I said, everything will happen throughout 2020. The engineering teams are already working on that since quite a while. So this will be done in 2020.

Yeah. Let me quickly expand on support, because really there has been no change at all in our assumptions surrounding support revenues. Actually, we have been even slightly ahead of our own internal planning in terms of our support performance. We continue to enjoy extremely high renewal rates. We’re renewing around about 96% on a revenue base. So this remains a very, very sticky business for us with very reliable growth profile as well. The effect that we have adjusted – slightly adjusted the outlook for the percentage of recurring revenues, highly predictable revenues for 2020. There’s actually nothing to do with our predictable revenue streams, it has to do with effective when we divide the original range. We were actually having more conservative assumption for the development of our non-predictable revenue streams, the software revenues, in particular, as well as our service revenues, but as we have actually for number of years, not seen mid-single-digit declines in software licensees as implicitly assumed in our guidance, but actually have held the software license revenues at a high level, and therefore, we have a higher baseline now for those revenues. And that is one of the driving reasons that the percentage of highly predictable revenues of around 70% and not at the high-end of this range. And the other reason is that we have not assumed that our services business will bounce back so strongly with our posting double-digit growth quite honestly. And from that perspective, there is the other factor. But in terms of our predictable revenue streams, everything works as expected.

Thanks. Thank you very much.

Thank you. Let’s take the next question, please.

Our next question is from Neil Steer with Redburn.

Hi, thanks very much. I’ve just got 2 hopefully quick questions. First is, Luka, would you care, you mentioned, obviously, that you’re expecting quite a bounce in the operating cash flow and free cash flow in 2020. Would you hazard a guess to what those levels would be, please? And secondly, when do you assess the commitment to remove or stop the standard support on ECC in 2025? Is that to be reviewed at some stage? Or are you sticking by that?

Yeah. Let me start with the free cash flow and operating cash flow figures. I would expect a positive balance here of round about $2.5 billion, so very much in line with what we had discussed at our Capital Markets Day about $1.5 billion from those increased cash items that we have seen in 2019 dissipating in particular; the income tax cash payments as well as the restructuring payments, which basically have for the large [spot run their course] [ph]. And the rest is basically the positive development of our business and the growth that should then translate into those increased cash flow and performance. So basically, what I shared in November still is our planning for 2020.

With regard to the maintenance expansion, I mean, we are in constant talks with our customers with the user [pool] [ph]. And SAP also in the past has left no customer behind. And this notion will, of course, continue. And you can expect the communication going out very soon where we give more clarity around this topic.

Thank you very much.

Okay, thank you. Let’s take the next question, please.

Our next question is from Alex Zukin with RBC.

Hey, guys. Thanks for taking my questions. Two quick ones. So first, I want to ask on S/4HANA. On the positive we observed over the past few quarters kind of steady rate of adds and go-lives. When will we see an acceleration on the go-live portion and what do you expect the impact on the P&L from these go-lives to be?

I mean, I can take the first one, but I guess Luka can take the second one with the impact on the P&L. So the go-lives actually, as you also have seen now, they went up quite significantly, in line with, of course, also the increase we have seen on the license customer. As I also said at the beginning and also knowing this from being the COO or SAP, often times when you’re implementing S/4HANA, the technology is not that actually that the biggest problem. Actually, to technically upgrade to S/4HANA we have smoothened that a lot with new tools for the data migration and for the upgrade itself. Oftentimes, it’s really about changing business processes, changing the business model of a company where you can – where you have to get the people with you, where you have to readapt and redefine business processes, which were standing there for very long time. That’s for sure one of the major reasons why we see a certain delay between the license customers and the go-live customer. Certainly, what we are doing with our partners, because they see now this huge demand out there in the market and they clearly have in some parts of the world, a lack of skilled resources, so we are working heavily together with our, with the largest SI to further up-skill people, because these days the demand is so high that they have to qualify much more resources in the months to come. So – and we are on that. And then, with regard to the P&L, I mean, when we close a S/4HANA deal, we realize the revenue right away. And then also on the S/4HANA Cloud, we are having their go-live state after 20 – 20 days after the deal signature, so there where you have very fast time to value. And then, when you have access to the system, this is, I guess, also when we start realizing the revenue. Luka, correct me if I’m wrong.

Christian, I taught you well, correct. But let me just add on top that, of course, S/4 go-lives typically have an indirect flywheel effect, because we see that a lot of customers that are modernizing their core and transforming it show at the same time an increased demand and ambition to extend this to the edges and really completely digitize the entire extended value chain, including suppliers for example with the ISG solutions. Ariba is a very, very common attach, so to say, to an S/4 transformation and the same, of course, goes on the HR side that then a modernization of the HR and keep going from on-prem to SuccessFactors. It’s a quite frequent combination with an S/4 go-live. So in that respect, it has a cross-fertilizing effect on the rest of the portfolio. But in terms of the direct revenue recognition, Christian is absolutely correct.

But what we saw in Q4 what was interesting is we saw that over 50% of the license revenue from S4 was actually from existing S/4 customers, right? So it’s not just the customers you were moving from ECC to S/4, we’re seeing customers who, yeah, we’ve already maybe tracked them as moving to S/4, but they’re expanding their deployment. So we’re going to continue to see the revenue effect from new customers, customers moving from ECC and S/4 customers expanding.

Understood. Thank you, guys.

Thank you.

Thanks. We’ve time for two more questions.

We will take our next question from Stefan Slowinski with Exane BNP Paribas.

All right, thanks for squeezing me in here. Couple of quick ones. Just on that large deal with the 10% contribution to cloud bookings, were there any cloud apps as part of that deal or was it just HANA Enterprise Cloud? And if so, is there therefore still up-sell potential on top of that deal by adding some of your cloud apps to that? And then the second question I had was just on Europe in particular and especially the cloud growth in Europe, 44% was quite strong. And just wondering, obviously, couple of the names you highlighted, BT, Vodafone are in Europe. Are you seeing an accelerating dynamic there in Europe more broadly in terms of cloud adoption or is it just kind of execution on your side? Thank you.

Yeah, perhaps I can quickly answer both questions. So first of all that large deal, also have a SaaS cloud as component attached to them, but not – no, we are not sold out with them, so we clearly have the ambition to come back for more. And upon successful migration to the cloud, there is no reason why we should not see further benefits from that one. And in terms of the proliferation of cloud in Europe, you’re absolutely correct. I mean, the cloud is now prevalent here. The concerns around the cloud have largely vanished. Of course, it’s important to European customers that you have a tight handle on data privacy topics that you have options around local data residency that you have the appropriate security certification and quality certifications in place. There is a tight amount of inspection among European customers, especially around this. But, of course, they know that SAP as European domicile company with full data center availability across the region is a trusted partner. And therefore, can take advantage of this. And of course, we also have a particularly strong account control here in our kind of heritage markets. That’s why also Germany now is really a very, very strong performer across the cloud a couple of years ago. Perhaps it was still lagging behind a little bit. Now it has already been for a while, the second largest of our country when it comes to the cloud revenue performance.

Great, thank you.

Good. Thank you. We’ll take the final question, please.

Our question comes from Julian Serafini with Jefferies.

Hi, thanks for squeezing me in at the end. So I just want to ask one quick question on the guidance, specifically the cloud revenue guidance for 2020. So, if I’m looking at it, correct me with the numbers, I mean, the new guidance implies 24% to 28% constant currency growth, right, whereas previously it was 29% constant currency growth. So, I guess, I’m trying to understand what led to this reduction in the guidance. I mean, is it really just the de-emphasis of the infrastructure business, there was something changed in your end market, or is it just conservatism? Any color would be helpful that you could share here.

Yeah. Perhaps, quickly just as a point of note, I mean, our mid-term ambitions, multi-year ambitions, while they were, of course, set with an average currency development of the past, in mind, they are not strictly constant currency guidance. That’s only true for the current year guidance. So that’s just as a backdrop for you to take with you. And indeed, I mean, we are – what we are expecting is that infrastructure as a service will not grow as a proportion of our total cloud revenues any longer. We have seen, of course, for a long period of time that this business has been growing faster than the rest of the portfolio that has actually already pretty much normalized to round about the same growth rates from revenue perspective and much lower growth rates from bookings perspective at 2019. So we expect that it will remain at or below 10% roughly contribution to our total cloud revenues. But the rest of the portfolio is definitely in a strong shape, not only through acquired assets, that for a long time were carrying our growth. We see now a great opportunity, especially in the next coming years post-2020, that given the very strong momentum in the core going to the cloud. And that this can become very material business for SAP. At the moment, it is just reaching scale and growing, of course, much faster than the average. But I think if we continue to play our cars well, like in those few deals that we have highlighted that this actually can be beyond 2020, a really material contributor that can easily make up for any kind of reduced revenue expectations that we have for the low-margin Infrastructure-as-a-Service business.

Okay. Great. Thank you. I appreciate the clarification.

Good. Thank you very much. This concludes the SAP Q4 2019 earnings call. Thank you so much for joining and we look forward to seeing you at one of the SAP events in 2020. Thanks so much and goodbye.

Thank you.

Thanks a lot.

Ladies and gentlemen, this concludes today’s call. And we thank you for your participation. You may now disconnect.