Cloud taking over as the dominant revenue stream With S/4HANA Cloud backlog growth still accelerating (+79% in Q1), SAP continues to indicate that Cloud revenue growth will accelerate not only in 2022, but in 2023 as well. With maintenance revenues still growing, revenue growth (S/4Hana Cloud grew 71% in FQ1 on a EUR1.6bn ARR) is not yet coming from meaningful cannibalisation. With licenses declining to just 4% of sales in Q1, vs 40% of sales from Cloud revenues, SAP is finally starting to see the light at the end of the Cloud transition tunnel, with a return to double digit c/c revenue growth possible as early as 2024. Double digit EBIT growth targeted for 2023 H1 2022 profits will now not only be impacted by the increased investments in RandD and SandM as part of the Cloud transition, but also Russia wind down costs, including the accelerated amortisation of Cloud infrastructure and of sales commissions. But with the hiring Q1 weighted, H2 margins should show improvement, with a further step up in 2023 as Cloud gross margins start to inflect higher. The CFO has confirmed he will stay on board in order to deliver the double-digit operating profit growth guidance for next year. SAP implies the 2025 80% Cloud gross margin target may be difficult to achieve due to incremental demand for SAP RISE and S/4HANA Private Cloud, which may drive outperformance on Cloud revenues and Operating profit, but with a lower Cloud gross margin. Reiterate Outperform as a defensive profile in a challenging market We lower our non IFRS EBIT estimate by 2% this year on Russia exit costs, but our Exane EBITA estimates increase 5% due to lower FY stock comp. Our EPS comes down on a higher tax rate and lower financial income. We keep our EUR120 TP unchanged (now USD130); using our recently implemented valuation framework we continue to use a weighted EV/Sales (5x) and EV/EBITA (11x) approach applied to FY23, now weighted 75:25 (from 50:50) reflecting the recent...