SAP SE O.N. (NYSE:SAP) Q3 2019 Earnings Conference Call - Final Transcript

Oct 21, 2019 • 08:00 am ET


SAP SE O.N. (NYSE:SAP) Q3 2019 Earnings Conference Call - Final Transcript


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Jennifer Morgan

I want to start with the news we learned about on Friday regarding the passing of Mark Hurd. Mark has had a profound impact on our industry, and on behalf of all of SAP, I want to extend our deepest empathy to the entire Oracle community and most, especially to Mark's family and friends. You are on our thoughts and prayers during this difficult time.

Now, let me dive into our Q3 performance. Today we reported strong Q3 and year-to-date results, which Luka will detail shortly. Clearly our experienced management vision powered by Qualtrics is resonating with customers in a key differentiator across all aspects of the Intelligent Enterprise.

With top line accelerating and operational excellence initiatives in full swing, we're on track to reach our full year and mid-term ambition. Let me spend a minute on the macro. Our strong Q3 performance was achieved despite headlines about a slowing global economy, trade wars and political uncertainties.

We had some impact due to macro challenges for example in Asia and the German auto and manufacturing sector. But even in times of uncertainty, technology investments remains a focus for every company and our business is resilient due to the breadth of our global coverage.

Companies continue to turn to SAP to transform, to accelerate their growth organically, and through faster M&A, to drive efficiencies, competitiveness, and successfully navigate a changing macro and regulatory environment.

Our global pipeline is robust as we head into our seasonally strong Q4. SAP's resilience is further underpinned by more predictable revenue approaching 70% of the mix. Let me now highlight our strategic growth drivers in the cloud. We made a bold move with the acquisition of Qualtrics and customers are excited about the holistic experience management platform Qualtrics provide, in addition to what the combination of external data can do.

We're very pleased with Qualtrics growth and we are starting to see the scale of SAP helping drive and close pipelines, especially in the enterprise segment. Qualtrics had some impressive wins in Q3. Dish Networks, Slack Technologies, Akamai, U-Haul, Sharper Image, Stanley Black & Decker, Garmin International, and many others selected Qualtrics in Q3 to move beyond systems of record to new systems of action and achieve breakthrough results.

We continue to beat our competition in both the enterprise and volume parts of our business. Qualtrics' volume engine is helping SAP to expand its footprint in the new account and is helping us open doors for other SAP Cloud solution.

We're also seeing an acceleration of our win rates against Medallia as customers are choosing Qualtrics for its technology and analytics capability and the breadth of XM Solutions across customer experience, employee experience, product experience and brand experience.

With the addition of Qualtrics to success factors, we redefine the traditional human capital category to human experience management, our HXM. Every company needs to understand the factors that impact employee experience, to attract, and retain their talent. And since integrating Qualtrics with this SuccessFactors suite, we've seen