SAP America Inc.

has been retained to an overall risk rating of "Satisfactory-4" (one notch below the rating of
its parent) based on the most recent financials of its parent, SAP SE (SAP). The rating reflects company's solid
balance sheet, healthy cash reserves of €8.8 billion as of September 30, 2022 along with an availability of a
€2.8 billion syndicated revolving credit facility (as of December 31, 2021). Healthy group liquidity was mainly
due to the cash inflows from operations and the proceeds from the public offerings of Qualtrics shares.

Further, the top line grew at a CAGR of 21.1% over FY17-21 and 1.8% y-o-y in FY21, owing to strong
performance in cloud and software businesses (accounting for 86% of total revenue in FY21) led by growth in
SaaS and PaaS portfolios; despite a fall in service revenue. In addition to this, the Company reported a healthy
gross (72.3%) and EBITDA margin (23.2%). Profitability margins were above the bench mark over the review
period, though the operating income slightly dipped over FY21-Q3’22, owing to rise in share-based payments,
increase in R&D and sales, and marketing expenses.

Moreover, the long-term credit rating for SAP SE is “A2” by Moody’s with a stable outlook, Further, The
business also had a sufficient cash flow from operations to cover its investing needs; the company’s credit
profile improved, debt/EBITDA better to 1.5x in September 2022 as compared to 2.0x in FY21. Additionally, the
Company paid €1.25 billion of the acquisition term loan for Qualtrics before its full maturity date in 2022 and
received €2.8 billion from the public offers of Qualtrics shares.