SAP reminds market that 2022 is still a transition year SAP shares sold off during its conference call yesterday on cautious 2022 commentary, despite Q3 results supportive of the company''s ongoing Cloud transition. SAP''s current guidance is for non IFRS operating profit to be flat to down in 2021 and 2022, yet consensus was modelling a 3.5% uplift in 2022. SAP has been discussing RandD rising to 17% of sales where it is now (from 15% in 2020), with SandM staying at the current 23% level for now. We believe SAP''s commentary on OPEX has not changed. In addition, SAP has also been pointing to Cloud gross margin inflections to come in 2023 after two years of converged Cloud infrastructure investments. However, the 10bps / year of Cloud GM improvement now expected in 2021 and 2022 is still somewhat disappointing, but does not change the 2023 target for Cloud gross margin improvement. In addition, despite resilient software license and maintenance performance in 2021, SAP reminded investors that it still expects both line items to begin to decline more aggressively as more large customers take up the RISE Cloud transition option. Overall, the reminder that 2022 will be another transition year for group revenues and operating profit dented hopes that SAP is ahead of plan in 2021, which would lead to a more immediate improvement in group metrics in 2022. Cloud migration still heading in the right direction. Reiterate Outperform. SAP raised its FY Cloud revenue growth outlook by 100bps on the top line, now expecting 19% in c/c, and confirmed that Cloud revenue growth should accelerate in 2022. Current Cloud Backlog and cRPO are now accelerating for S4HANA, Qualtrics, and the remainder of the Cloud business. The Concur recovery remains slow, likely causing some caution on the Q4 CCB (and Cloud GM) outlook. Overall, our 2021 revenue estimate is unchanged and we raise 2022 by 1%. Our non IFRS EBIT estimate is unchanged for 2021, with a 3% downgrade for 2022...