SAP SE (SAP) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to SAP's 2012 first quarter results financial analyst and press conference call.

Throughout today's recorded presentation, all participants will be in a listen-only mode.

The presentation will be followed by a question-and-answer session.

(Operator Instructions).

I would now like to turn the conference over to Mr.

Stefan Gruber.

Please go ahead, sir.

Thank you.

Good morning or good afternoon.

Thank you for joining us to discuss SAP's first quarter 2012 results.

I'm joined by Bill McDermott, Jim Hagemann Snabe, and Werner Brandt.

Bill, Jim, and Werner will have prepared remarks for this call and following their prepared remarks, we will have time for Q&A.

As usual, I will now make a few remarks about forward-looking statements.

Any statements made during this call that are not historical facts are forward-looking statements as defined in the US 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 review any forward-looking statements.

All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from current expectations.

The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the US Securities and Exchange Commission, including SAP's Annual Report on Form 20-F for 2011, filed with the SEC on March 23, 2012.

Participants are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today.

Before turning it over to Werner, I would like to remind everyone that we have SAPPHIRE NOW coming up in May in Orlando.

You'll be able to get a first-hand impression of the new products and services we are bringing to the market.

Our financial analyst day will take place on Tuesday, May 15th.

In addition, we've arranged a small program for investors at SAPPHIRE Beijing on July 26th.

So, these are my opening remarks.

I would like to turn the call over to Werner.

Thank you, Stefan.

Before I provide some more details about our non-IFRS results, which are the figures that we use internally to look at our operating performance and are the basis for our guidance, I want to make a few comments concerning adjustments and the SuccessFactors and Sybase segments.

Number one -- in the first quarter we recorded a non-IFRS adjustment of EUR120 million for acquisition-related and restructuring charges, EUR83 million for share-based compensation, and the elimination of a positive effect of EUR7 million related to discontinued operations.

In addition, there was a deferred revenue write-down from the SuccessFactors acquisition of EUR7 million.

Number two -- the first quarter 2012 numbers include the revenue, profit, and cash flows from SuccessFactors as of January 21st -- February 21st, while the comparative prior-year figures do not.

Number three -- earlier this year we decided to fully integrate Sybase business units with the SAP business units.

The combination of the two will enable us to strengthen our position in the Mobile and Database markets.

As a result, Sybase is no longer a separate unit within SAP and no longer meets the criteria to be reported as a separate segment.

In addition, we plan to establish a separate Cloud unit combining the SuccessFactors and SAP Cloud business units.

We are currently finalizing the combination of these two businesses and expect that the combined business unit will meet the criteria of a separate reporting segment, when finalized.

Non-IFRS software and software-related service revenue for the first quarter was EUR2.63 billion, which represented a year-over-year increase of 10% at constant currency.

This marks our ninth consecutive quarter of double-digit growth.

Software revenue increased by 1% year over year at constant currency.

Non-IFRS support revenue increased by 11% year over year, again at constant currency.

Speaking of support revenue, 93% of our new customers choose enterprise support offering, which is up 15% year over year.

Non-IFRS Cloud subscription and support revenue increased to EUR35 million in the first quarter, up from EUR6 million in the fourth quarter of 2011.

The increase was mainly due to the acquisition of SuccessFactors, but the SAP Cloud business also performed well.

Our SSRS gross margin was flat year over year at 82.2%.

The professional service gross margin decreased by 40 basis points year-over-year to 18.7%.

The overall non-IFRS gross margin increased by 70 basis points to 68.4% year over year.

Looking at the expense side of the P&L, you can see that total non-IFRS operating expenses decreased 10% year over year at constant currency.

The increase in cost is mainly due to the acquisition of SuccessFactors and the investment made in our workforce.

Our workforce grew by 3,655 FTEs sequentially in the first quarter.

This was driven by acquisitions, where we grew by 1,866 FTE and sales and marketing, where we added roughly 1,300 FTEs to capture future growth opportunities.

Year over year, we increased our employee base by 10% to 59,420.

Non-IFRS operating margin at constant currency for the first quarter decreased by 110 basis points at constant currency to 24.5% year over year.

There were two effects which impacted operating margin performance in the quarter.

Number one -- slower top-line growth from North America and some European markets.

This accounted for approximately 50 basis points.

Number two -- the acquisition of SuccessFactors.

This accounted for approximately 60 basis points.

The IFRS effective tax rate in the first quarter was 26.9%, which was a decrease of 4 percentage points year over year.

This is within our full-year guidance range of 26.5% to 27.5%.

The non-IFRS effective tax rate in the first quarter was 28.1%, which is a decrease of 2.9 percentage points year over year.

This is slightly above our guidance range of 27% to 28%, but we are on track to be within the range for the full year 2012.

The IFRS and non-IFRS effective tax rate decreases are in line with our expectations since the prior year's effective tax rates were impacted by effects on changes in foreign currency exchange rates and from taxes for prior years.

Now to cash flow.

Operating cash flow in the first quarter increased by 30% compared to the first quarter of 2011.

As a result, also free cash flow in the first three months of 2012 increased by 35% to EUR2 billion.

Our strong cash flow resulted primarily from our exceptional results in the second half of last year, but also was influenced by further decrease of 6 days in our DSO, showing continued improvement in working capital management.

This enabled us to return to a positive net liquidity faster than expected, especially since we acquired SuccessFactors in the first quarter of 2012.

Our net liquidity stood at EUR845 million at the end of this quarter.

Our outlook for the full year 2012 remains unchanged.

For our full outlook, please refer to our press release published earlier today.

Now I would like to hand over to Bill.

Thank you very much, Werner, and thanks to everyone on the call for your time today.

SAP delivered the ninth consecutive quarter of double-digit software and software-related services growth, proving the continued success of our customer-focused innovation strategy.

As Werner stated, software and software-related services in the first quarter was EUR2.6 billion.

It did represent a 12% increase year over year and 10% in constant currency and that was within the range of our guidance.

Software revenue in the first quarter was EUR637 million, representing a 4% increase from the previous year and 1% at constant currency.

We confirmed our full-year outlook for both revenue and operating profit.

We also provided guidance for a very strong second quarter, targeting software revenue growth between 15% and 20% at constant currency and software and software-related services revenue growth between 14% and 16% at constant currency.

We do not plan on providing you quarterly guidance going forward, but we did want to give you a clear indication of what we expect for the second quarter and we are ever confident that we will achieve our quarterly and full-year goals, given our very robust pipeline across all regions and industries.

As stated, we did have a sales execution issue in North America and a slower start in some of the European markets.

We moved very swiftly to address the sales execution issue in North America and we are back on track.

Most importantly, we have not seen any slowdown in customers' buying behavior.

Our customers continue to see SAP as their trusted innovator in business applications and our pipeline remains robust.

For example, our rolling four quarter HANA pipeline has grown by more than 50% since the beginning of this year, indicating that the customer-driven demand for SAP solutions was very solid.

We had a record quarter in Asia-Pacific-Japan and double-digit software growth in many markets, including Latin America, the BRIC, and Germany.

Let me give you some color on the regions.

In Europe, countries like Germany, Austria, and the Nordics performed very well.

In Germany, our performance was outstanding, delivering a strong double-digit performance in the first quarter and this is after an extraordinary Q4 in 2011.

This excellent performance was driven by broad demand for industry solutions in automotive, banking, chemical, and retail.

We continue to see strong customer interest for key innovation like Business Warehouse on HANA, Mobile, as well as our Cloud solutions.

For example, EADS, a global aerospace corporation, chose SAP Analytics to ensure compliance with European policies.

They want to monitor their performance anywhere on mobile devices and they want to accelerate their quarter end closing process, all things SAP enables.

In North America, there was no dip in customer demand or buying behavior, which is a good sign going forward.

Companies continue to invest in SAP solutions to solve fundamental business challenges.

In strategic industries such as retail, for example, BJ's Wholesale Club chose SAP so they would have better insight and real-time management of their entire supply chain.

Likewise, Boston Scientific Corporation chose SAP mobility on our CRM solution to mobilize their workforce and they are doing this in a manner that now really, really drives implementation in a matter of weeks versus months or years, leveraging our rapid deployment solution.

And this is something we're going to continue to talk about, because it generates quick value for customers everywhere.

Latin America had a very good start to the year.

All market units delivered strong double-digit performance and we continue to perform strongly in key industries such as banking, public sector, and oil and gas.

For example, the Guanajuato state in Mexico will leverage our government resource planning solution across its 50,000-employee organization so they run more efficiently.

Also, Banco Davivienda, Colombia's third-largest bank, is leveraging SAP to improve its customer relations across a base of 4.5 million accounts using innovative pricing driven by SAP's Convergent Charging platform.

And, if you think about our overall financial services business, I do want to register this in particular because it grew by more than 34% globally, and this is a testament to our industry solutions and the relevance we have in banking.

APJ was our number one growth region, delivering their best Q1 ever and companies in APJ are early adopters of our new innovation.

Examples include United Breweries, India's largest beer company.

They will run its entire business warehouse on HANA for real-time reporting to gain better insight and to drive more efficiency across their entire supply chain.

We're on track with our investments in fast-growth markets like China, Middle East, and North Africa, and this strong momentum is really showing up in our business results.

So, we are on track.

We are confident and poised for growth.

And I do want to comment on the recent changes we announced in our leadership structure.

Two years ago, we introduced our customer-driven innovation strategy.

Today, SAP's core Application and Analytics business is much stronger and we've also entered three new markets in a big way -- Mobile, Cloud, and Database.

So, SAP is a much more diversified company than before and a stronger company.

This means new customer expectations, new business models, and, of course, new competition.

So, to account for this new reality, we have established a Global Managing Board, which will enable SAP to focus on innovation, growth, and operational excellence.

Therefore, we have appointed Lars Dalgaard and Rob Enslin to the Global Managing Board.

Lars will lead our new Cloud business unit and this combines all cloud assets of both SAP and SuccessFactors.

And Rob is responsible for sales, worldwide.

He will further accelerate our go-to-market activities in all regions, expand our ecosystems, and drive growth within strategic industries.

And we feel that this new structure puts us in a position to really focus on the customer, their needs, so we continuously deliver strong business results, on our way to achieving our 2015 goals.

I'd like to now turn it over to Jim Hagemann Snabe.

Jim?

Thank you, Bill.

In our customer-driven innovation strategy we have doubled our addressable market to over $230 billion and we're expanding in five market categories from our core categories, Applications and Analytics, into, as Bill mentioned, three new market categories, Mobile, Database and Technology, and Cloud.

Let me briefly describe the momentum in these five market categories and how they drive our growth ambitions.

In Applications, we are the undisputed market leader and this business continues to grow also in Q1.

We are the only company in the application market who offers customers continuous innovation without disruptive upgrades.

We continue to optimize our core applications for lower cost of ownership and faster adoption to help companies consolidate their core applications and free up money for innovation.

In addition, we are now very successful in the market for mid-size companies with our all-in-one solutions and in the market for small companies with our fast-moving Business One product.

Analytics remains a high priority for customers and predictive analytics powered by HANA is becoming a benchmark for the industry.

Companies need to react faster to market trends.

They adjust their strategy and execution focus in real time, in particular in volatile markets, which we've seen.

SAP's business intelligence and enterprise information management solutions continue to lead the market.

Gartner named SAP the leader in its 2012 Magic Quadrant for BI platforms and the Magic Quadrant for corporate performance management.

In Mobile, we have great performance, growing our business by more than 30% in the first quarter.

We just unveiled a major new release of our Afaria mobile device management solution and, with the acquisition of Syclo, will extend our leadership in enterprise mobility and applications for the mobile device.

Banking is one of the key growth industries in Mobile.

For example, Australia and New Zealand Banking Group Limited will leverage the Sybase 365 mobile banking solution to expand further into Asian markets by targeting a whole new range of customer segments and SAP is helping them to do just that.

Let me now talk about Database and Technology, where, of course, HANA, as you can imagine, plays a very big role.

We just announced the general availability of SAP's Business Warehouse powered by HANA.

We now offer our flagship in memory technology to more than 12,000 SAP Business Warehouse customers for both data warehousing and analytics.

This is the stop of the volume business with HANA and this will further accelerate market adoption of SAP HANA.

We are committed to our ambition of doubling last year's HANA software revenue to at least EUR320 million.

HANA demand is strong across the board, like Bill mentioned, so stay tuned at SAPPHIRE NOW, where you will hear a lot more about SAP HANA.

We also announced general availability of SAP Sybase ASE as a world-class database option for the SAP Business Suite applications.

Sybase ASE has been in use for more than 25 years in mission-critical environments like risk management for banking and insurance.

More than 30,000 of our customers now have a real alternative for running their SAP applications at greater speed and lower cost with Sybase ASE database.

For example, a mid-sized retailer based in Panama has migrated its ERP systems to Sybase ASE in less than three days.

They realized immediate performance benefits, lowering the time they need to move 280,000 stock-keeping units on the server from four days to four hours.

And finally, let me talk about the cloud.

With the SuccessFactors acquisition we are now a leading cloud player.

The growth momentum of SuccessFactors stand-alone has increased with SAP, clearly demonstrating the power of the combination.

Since joining the SAP family, SuccessFactors' billing grew almost 70%, much faster than other cloud vendors.

Companies like Ceva Logistics, Rio Tinto, and sobees are just some of the customers which chose to run software from SuccessFactors in combination with their existing SAP solutions.

SAP cloud solutions also performed well, as mentioned by Werner.

SAP Business By Design is gaining further traction among larger customers.

For example, Lufthansa Revenue Services now runs By Design with more than 300 users.

We are selling more users per customer, which is exactly the direction that we want to go.

We're also replacing on-demand competitors with our cloud solutions.

For example, Optima, a US-based consulting firm, replacing their Salesforce.com software with an SAP cloud line of business solution in the first quarter.

Our innovation strategy in the five market categories is confirmed by our customers every day, like many of the customer wins mentioned by Bill.

Customers are excited about the opportunities to consolidate core systems for efficiency and make the business applications and analytics available for all people in an organization through the cloud and the mobile device, all in real time.

It is the combination of the five market categories, assembled into pre-packaged industry solutions, delivered with rapid deployment in weeks instead of months, that differentiates SAP from competitors at the customer and enables us to win more than 8 of 10 competitive situations.

On top of that, our speed of innovation continues to accelerate.

For our latest version of Business One for small companies we were able to announce general availability two months ahead of the original schedule.

This is another result of the high-quality collaboration between our development and our go-to-market units.

The same is true for the general availability of HANA for Business Warehouse.

With our innovation strategy and our execution, SAP's role is evolving far beyond the ERP market we created.

In this year, the year of our 40th anniversary, SAP is now relevant for all companies, not just big companies.

We are relevant for all people, not just the desk-top users, and we are relevant for all data, not just the enterprise data.

This is reflected in our new brand campaign titled "Run Like Never Before." The campaign reaches beyond the high-level executives and IT managers to touch any person in any line of business who can work better, smarter, and more efficiently with SAP innovation.

In closing, our customer-focused innovation strategy is sound and our pipeline is robust, as mentioned by Bill.

We'll continue to accelerate our speed of innovation.

We are on track to deliver our full-year 2012 target of 10% to 12% growth in SSRS and we are confident that we will reach 1 billion people with our software and become a EUR20 billion company with a margin of 35% by 2015.

With that, thank you for your attention.

We'll now be happy to take your questions.

Thank you.

(Operator Instructions).

The first question is from Mr.

Gunnar Plagge of Citi.

Please go ahead, Mr.

Gunnar.

Yes, hello.

Thanks for taking my question.

I was wondering whether you could speak a little bit about visibility into the second quarter and here, in particular, about two aspects.

Number one, how many deals -- have you closed deals in North America that slipped in the first quarter?

And secondly, also, could you comment about Europe?

You mentioned that you had a slightly slower start of the year.

Can you give us an update there?

And then I have a follow up.

Thank you.

Thank you very much for the questions, Gunnar.

This is Bill McDermott.

First, on visibility into the second quarter, the pipeline is very strong.

If you look at the pipeline this year compared to last year, which was an exceptional year for us, it's equally as strong and, in some cases, even stronger.

This idea of mobility, big data, the cloud, all supported by a very strong core business, is giving us tremendous visibility and confidence.

As it relates to North America, I think we've covered the execution challenge.

We swiftly dealt with that and, yes, there were deals that we had anticipated closing in Q1 that have already closed in Q2.

And the team is really fired up and very excited, actually.

And shortly we'll announce the new leader of North America.

Rob Enslin is covering for now, but we've got a person lined up.

And secondly, as it relates to EMEA, obviously, Germany, the Nordics, very strong start to the year, but there were some locations that got off to a little bit of a slow start and I attribute that to a very good 2011 and an exceptionally strong close and we've done all the operations reviews and I'm very confident in EMEA, including Southern Europe, in Q2 and beyond.

Our business is in really good shape.

Thank you.

Let's take the next question, please?

The next question comes from Mr.

Rick Sherlund from Nomura.

Please go ahead, Mr.

Sherlund.

Yes, thanks.

Bill, I wonder if we could linger on the North America question just a little longer.

If you could give us maybe a little more insight into what's happening.

We hear stories of reorganization in North America.

It's just not clear how disruptive this could be.

What are you doing and how confident are you that this can snap right back versus, well, will it take a while to get out of this situation?

And how confident can we be that those -- the high bar that you've set is something that we can feel highly confident in that being an achievable objective?

Well, Rick, thank you very much for the question.

The good news is, we're simply snapping back a proven model that's worked for us for more than a decade in North America.

So, to be very specific, if you take the Eastern region of the United States, it's a geographic coverage model and banking happens to be one of the core industries in the East.

The prior leadership team thought it would be a good idea for the East to also run banking.

That was done in utilities and it was done in retail.

That doesn't work.

We always have a focused coverage model on strategic industries and a focused coverage model on geographies.

We simply went back to what we were doing before and, therefore, you should not expect any disruption whatsoever, because we simply went back and got the team focused on what they've been doing for years and years.

So, the disruption is over, the pipeline is strong, and we've got the right leaders in the job.

The fundamentals are terrific.

Bill, are there other reorganizations that are taking place inside North America?

There are not, Rick.

Basically, the reorganization that took place is done and over with.

We went back to a deliberate industry and geographic coverage models that are different and that has now been handled.

And at the territory level, the disruption does not exist with the customer.

It only really existed at the leadership level and that's a matter of focus and execution.

Therefore, you should not lose any sleep on the way we're caring for the customer, covering the customer, and executing in North America.

I really like the plan in North America.

We reviewed it with all the management and, again, the team is fired up and ready to go.

Thank you.

We'll take the next question, please?

The next question comes from Mr.

Michael Briest from UBS.

Please go ahead, Mr.

Briest.

Thank you.

Last week, when you announced the availability of HANA on BW, you also announced a HANA-adoption program and EUR250 million set aside to invest in SAP consulting services.

Werner, I was wondering, could you talk about how that will be accounted for?

Will this reduce consulting revenues or go as a cost against product, perhaps?

And why didn't this have any impact on guidance?

And then secondly, Jim, it's good to see HANA on BW available, obviously, but could you give, maybe, some context on adoption of the previous accelerator products, so BW with BI Accelerator, amongst the 13,000 or so customers you have on BW and then maybe what sort of migration credits they would get as they move over to HANA on BW?

Thanks.

Michael, this is Bill.

Perhaps I can just cover the pricing.

The EUR250 million question that you had is really a pricing strategy.

So, within the context of our pricing strategy, we will allow for migration credits from competitive databases to HANA and that's just part of the normal pricing strategy and, therefore, it's really not so much a question for Werner, because it's not a special sort of announcement.

And the reality is, our customers that want to move to HANA and want to take advantage of these migration credits, have been factored into the guidance and we anticipate that this will just be an uptake of HANA and we'll get even more license revenue out of it.

To make this very clear, Michael, it is covered by the existing plan.

It's not something which is new and comes on top.

It's part of our guidance, as Bill said, for 2012.

And when it comes to your question on BW on HANA, this is, indeed, an important milestone in our path towards a memory-based landscape.

We had already planned in our 2012 budget that we would move from the value space of HANA where we go to individual customers and sell individual programs into the volume and BW on HANA is such a volume opportunity, volume because we know the problem we're solving, which means we can shrink-wrap the solution.

In fact, BW on HANA can be upgraded, traditional BW can be upgraded to a BW on HANA in less than eight days of effort.

And we have enough customers proving that, that we felt confident in going general available weeks before the original plan.

It means we know enter Q2 with three quarters ahead of us for a volume gain with HANA.

Now your question was also, what about the BIA, the Accelerator.

Many customers have adopted the accelerator.

The big difference here is, first of all, HANA is another incremental speed, but, more importantly, what they get with HANA is a general technology that can be leveraged for other things, as well.

The Accelerator for BW was very focused on just the BW piece.

And so suddenly we get an opportunity to go to customers in the thousands and show them what HANA can do.

And with that, also, preempt the competitive argument that there are companies out there who have something similar.

The best way to prove that is to take BW and HANA and see the impact.

Thank you.

Okay, thank you.

Let's take the next question, please?

The next question comes from Mr.

Mohammed Moawalla from Goldman Sachs.

Please go ahead, Mr.

Moawalla.

Yes, thank you for taking my question.

Jim, I'll go, can you, perhaps, clarify -- you gave us a 50% growth in pipeline for HANA.

Can you talk about sales cycles and how these have evolved?

Because I know you've talked about sort of at least doubling for the year, but as we look to understand kind of the quarterly volatility of the HANA number, can you help us understand the metrics and the customer adoption rate?

Because I think at CeBIT you had talked about around about 1,000 customers you were looking to convert this year.

So, can you just update us on those metrics on how that's evolving?

Yes, sure.

This is Bill, Mohammed.

I'd be happy to start and if Jim wants to comment, as well, that's fine.

First of all, the uptake in HANA will be substantial going forward.

As Jim said, we'll more than double the HANA business this year.

It's just a question of how much more than double we'll do.

What I see right now is a knowledgeable -- an ever-increasing, knowledgeable sales force, which is very helpful, because customers want to understand this breakthrough new technology.

In-memory computing, as it relates to compressing data and processing information, is an important fact to understand.

And now a lot of that explanation work has been done and customers are now in proof of concept and they're moving into use cases and adopting and buying HANA.

So, I think a lot of heavy lifting has taken place and now the customers get it and they're more quickly adopting it.

So, the sales cycles are starting to increase in speed.

And that's a very important fact.

The other thing is, on the 1,000, I have no doubt we'll eclipse that number and you have to remember, our BW to HANA has an addressable audience in the thousands and customers view that change from BW to HANA as a natural.

So, all systems are go on HANA and, frankly, we're firing on all systems.

And I think SAPPHIRE will be a breakout event for HANA, in particular, and I hope you're going to be there, Mohammed.

Thank you.

Let's take the next question, please?

The next question comes from Mr.

Neil Steer from Redburn.

Please go ahead, Mr.

Steer.

Thanks very much for taking my question.

Just following on from the previous question, actually, just if my -- if I've got my numbers right, HANA was about EUR27 million, EUR28 million of license sales in Q1.

Was that partially affected by the execution issues in North America, or, as the previous questioner mentioned, is it just the case that we can expect quite a lot of volatility in the quarterly deals on HANA this year?

Thank you very much for the question.

Candidly, there were some HANA deals that were impacted in North America.

So, that's a good callout.

And, therefore, I don't think you should expect so much volatility in HANA.

I actually think you'll see a steady increase in HANA as we march towards more than doubling the business this year.

So, HANA's in great shape.

And don't forget, also, Q1 is roughly 13% of our annual revenues.

So, we're spending a lot of time on what, in measurement of our license sales, is the smallest quarter of the year.

So, the pipeline that looks good.

The deals that didn't happen are happening and we're, again, in great shape.

Maybe I could add one comment that gives you a little bit of flavor.

We wanted this move from value to volume and we had anticipated that to happen in Q1.

It now happened very early in Q2, because we were able to pull general availability earlier because of the quality and the feedback from the customer.

This means that compared to the original plan, we have a little bit longer time in volume.

And so, I would say, in that sense, we're a little bit ahead of the curve on HANA.

And then, the execution problems in Q1 in the US, of course, had an impact, but apart from that, I would say we're ahead, not behind.

Thanks very much.

Thank you.

Let's take the next question, please?

The next question comes from [Matthias Gross] from Mannheimer Morgen.

Please go ahead, Mr.

Gross.

Yes, I've got two questions for Mr.

Brandt.

Have you already found a new head of Human Resources, I mean someone who is supposed to follow Angelika Damman some day?

And, as we can see, you have lots of new employees on board, so are there any new hiring plans for 2012?

Yes.

Let me address the first question, that's a clear no.

As we always said, I do this on an interim basis and this indicates that we are looking for someone to take over this responsibility.

Regarding the headcount, I think we added, as I said, roughly 3,700 coming via acquisition or coming into the organization with a very strong focus on sales and marketing.

I would say if you look down the road, we have not provided any target for the full year and we will not do so, but you can imagine that the hiring goes along with the progress of our business throughout the rest of the year and we will report on this on the quarterly basis.

Thank you.

Let's take the next question, please?

The next question comes from Annika Graf from Financial Times.

Please go ahead, Ms.

Graf.

Hello, everyone.

Thank you for taking my question.

Actually, most of them have already been answered.

Just one question to Mr.

Brandt.

Would it be possible that a successor of Angelika Damman could just be someone on this Global Managing Board, or would that always be like one board member in the same status as before?

That's a decision which has to be taken by the Supervisory Board first and I do not want to speak on behalf of the Supervisory Board, so I cannot give you a clear answer to this question at this point in time.

But would that be a possibility to have someone just on the Global Management Board?

I do not want to speculate at this point in time.

Thank you.

Thank you.

We have time for one final question, please.

The next question comes from Mr.

Hendrik Sackmann from Reuters.

Please go ahead, Mr.

Sackmann.

Hello, everybody.

Just a quick question.

I'm wondering why we get a forecast for HANA and Mobile in 2012, but not for Cloud?

Can you explain to me?

Thank you.

Yes, so we said at the beginning of the year we have -- actually, we've said that now for two years.

We have three new categories that broaden the addressable market of SAP.

And we chose to call out the Mobile and HANA because of the significant numbers we made last year and the fact that we are organically driving that growth, it made sense.

In Cloud, there is a disruptive jump because of the success factor.

And, therefore, of course we can talk about the percentage growth rates, but they will be pretty big.

If you come from a low level, the percentage points are very big.

The key thing that you can read from Q1 is very important is that SuccessFactors as part of the SAP family is now accelerating its business and it was already, as a stand-alone company, the fastest growing cloud business.

So, you see how the SAP customers love to go into the cloud, but with the combination of what they've already invested in and the extension of SuccessFactors and then the brand of SAP from one hand, bringing this to them, this is a perfect match.

And when we released our guidance beginning of the year it was not yet clear whether we would be successful with the acquisition of SuccessFactors.

Therefore, we didn't break it out, but you can assume, as I said in the beginning, that starting with Q2, we will report the Cloud segment for SAP holistically, then for next year we will see whether we will provide on the Cloud segment separately to the overall guidance of the Company.

And one thing I would add to Jim and Werner's remarks is the idea of SAP being a much better choice for the customers because of the innovation that we offer without disruption.

And the alternative in the market is basically offering a disruptive solution, whether it's pay too much or completely re-platform, it's not being well received by the customer and we go in, protecting the assets and the investments, as Jim said, and then offering innovation on the edge or in the cloud through mobile, big data with HANA, and, of course, SuccessFactors.

And this is resonating extremely well with the client base.

Thank you very much.

This concludes the earnings call for today.

We hope to see you all at SAPPHIRE in May.

Thank you for joining and goodbye.

'Bye-bye.

'Bye.

Ladies and gentlemen, this concludes the SAP first quarter 2012 financial analysts and press conference call.

Thank you for participating.

You may now disconnect.