Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining Software AG's Q4 and full year 2022 results 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. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Robert Hildebrandt, Director, Investor Relations. Please go ahead. Good morning, ladies and gentlemen. Welcome to Software AG's analyst call and webcast on its preliminary Q4 and full year 2022 results. Yesterday, Software AG published preliminary results for the reported quarter and the full year 2022, as well as the presentation used in this call. We will start with the presentation from our CEO, Sanjay Brahmawar, followed by our new CFO, Daniela Bünger, before opening the line for taking your questions. Before we start, here are some housekeeping remarks. The conference call is also being broadcasted via web. You may access the webcast via our investor relations website. The webcast will be displayed with presentation slides related to this call and the same slides are available for download on our website. The webcast, including the full call with questions, answers, and the names of the questioners, will be recorded and made available for replay later today. Finally, let me remind you of our disclaimer statement, which is shown at the beginning of the slide presentation and is valid for the entire call. Sanjay, over to you. Thanks, Robert. Good morning, everyone. Thanks for joining our call. Today, I have three headline messages to deliver. First, despite ongoing macro challenges, we delivered a strong fourth quarter and full year in line with our, in case of A&N, ahead of our stated guidance ranges. Our successes, the results of four years of root and branch transformation, form the basis on which we'll start to evolve our strategy going forward. Second, this evolution starts with five strategic priorities for 2023. With demand for SaaS accelerating and our cloud integration portfolio going from strength to strength, these areas will be major themes. We also sharpen our sales execution and deepen our commitment to cost management in the face of macro uncertainty. Doing so will help us become more efficient, productive, and profitable as we scale. These priorities have been developed with the full support of our new supervisory board and with the input of our refreshed management team. They underpin our operating plan and our guidance for the year. They give you a strong sense of how our long-term thinking on strategy is crystallizing as we head into our Capital Markets Day on June 6th. Third, building on the success of Q4, we are taking actions at the start of 2023 that will create a leaner and more productive organization. We've initiated a cost program that will deliver EUR 30 million-EUR 35 million of margin impact this year, with further annualized benefits to come thereafter. The increasing resiliency of our business, clear priorities for 2023, and a leaner operating platform all give me confident of achieving our guidance we've announced today. Before looking to the future, Daniela and I will first provide a quick rundown of the highlights from 2022. During Q4, we delivered strong new business growth in cloud integration, which, along with robust renewals performance, drove our organic Digital business booking growth to 15%. This re-acceleration took our full-year organic Digital business bookings growth to 12% and into our guidance range. Within this, SaaS bookings grew 30%, 3x faster than our subscription bookings. In Q4, we also saw organic Digital business product revenue grow for a seventh consecutive quarter at 7%, leading to a full-year growth of 7%. This trend shows our transformation continuing to drive profit and loss success. Organic Digital business ARR, our key indicator of future revenue and cash flow, also continued to grow consistently at 11%. In A&N, strong execution of large subscription deals pushed bookings growth to 144% in the quarter and 23% in the year. This level of performance was partly driven by the early closing of a large deal brought forward by the Israel's Ministry of Finance. It was an important strategic win for us, combining A&N rehosting in the cloud with API technology from our Digital business portfolio. In shifting this deal into 2022, the consequence is that we've strengthened the comparator against which we are now judging our 2023 performance. This reality is reflected in our A&N ARR guidance for the year. From a product revenue perspective, our organic Digital business and A&N performance helped us reach organic growth of 24% in Q4 and 7% in the full year. On revenue quality, I'll note that 93% of our full-year organic product revenue was recurring. Finally, on organic margin, we delivered 23.1% in the fourth quarter and 21.2% for the full year. I'd like to thank the team for everything they've done to bring us to this point. I'm proud of our achievements so far, and I'm excited about what's to come. Behind the numbers, our performance reflects the strengths we've developed in key growth areas. On the product side, our big goal through Helix was to take a material leap forward with our cloud product portfolio. Now we have strong cloud offerings, in particular in webMethods, ARIS, and Cumulocity. In Q4, our API management and industrial IoT products were all recognized as Magic Quadrant leaders by Gartner. Our product Net Promoter Score also reached an all-time high of +61, up from +52 last year. This recognition demonstrates a level of customer acceptance which has supported ARR growth in the double digits from our cloud integration, ARIS Cloud, and Cumulocity products in 2022. As I mentioned, we've seen particular strength in integration and API management. Here, customers continue to seek innovative solutions to derive value from data stored across disparate cloud and on-premise systems and applications that aren't designed to work together. Our key products to address this opportunity are webMethods.io, our cloud integration and modern API platform, and our recent acquisition, StreamSets. Both of them won great new deals in Q4. In webMethods, we won a fantastic SaaS renewal in DACH region with Airbus. With the support of Microsoft, we won a large expansion deal for our cloud integration and B2B stack with a modern leading logistics firm in North America. StreamSets also continues to grow strongly. During Q4, we saw new synergy deals coming through, including a great win with Dubai Airports. This landmark deal included integration technology from our broader Digital business, building on the synergy success we had in Q3 with G42, and further demonstrating the strength of our acquisition rationale. Wins like this showcase our success in progressing another key Helix ambition, landing new customers. In 2022, we won 333 new logos. This represents our second consecutive record year. Our market impact is also being supported by the quality and improvement of the health of our pipeline, which is helping us become more consistent over time. Despite the macro uncertainty, our Digital business pipeline coverage for the next half year is ahead of our position at this point in 2022. This reflects the ongoing work by Joshua and his team to address the execution issues we saw last year. While it won't make us immune, it does give us a good basis on which to manage any increase in macro impact in the year ahead. Last year, we also continued to create value through migrations and renewals in our Digital business. Our Digital business migration multiplier was 1.5x last year, and we delivered organic renewal bookings up 57% year-over-year. I'll now hand over to Daniela to run through the key financials before coming back to look at our plan for the year ahead. Daniela, over to you. Thank you, Sanjay. It's great to be here today. As you've heard, the results from last year show the quality of the growth platform built through Helix. In my first few weeks here, I've started to see that from the inside. I'm now fully focused on work, working with the team on the final details of our strategy evolution, where we'll continue to improve the quality of our revenue with subscription and SaaS-led growth. This next phase of the transformation will also see greater emphasis on cost efficiency as we prioritize our investments behind the best growth opportunities and ensure our wider business is a leaner, more future-proof organization. This will enable a consistent capital allocation approach that delivers sustainable growth in top and bottom line. I look forward to speaking with many of you in the coming weeks and going into more depth at the CMD later in the year. I now run through the key numbers from the fourth quarter and the full year 2022. In our Digital business, our organic bookings grew at 15% in the quarter and 12% in the full year. SaaS bookings were up by 26% in the quarter and 30% in the full year, reaching a portion of total digital bookings of 24%. This development helps demonstrate the increasing customer demand for SaaS, which will drive a good portion of our 2023 activity. Total Digital business bookings, including StreamSets, grew 37% in the quarter and 29% year-over-year. On ARR, our Digital business also continued to grow double digits. On an organic basic ARR, we were up 11% at the end of Q4, and including StreamSets, we grew by 20%. In A&N, as Sanjay already mentioned, we saw a very strong subscription-led performance in Q4, which benefited from the early closing of a large deal. This drove bookings to growth of 144%. For the full year, this meant bookings growth of 23%, substantially ahead of our guidance range. Our ARR in A&N was up 7% in 2022 and saw a sequential acceleration in Q4. Looking ahead, our strong 2022 performance impacts on our 2023 expectations, and we have approached our 2023 A&N ARR guidance accordingly. In combination, our organic Digital business and A&N results gave us organic total bookings growth of 25, 35% in the fourth quarter and 15% in the full year. Our full year bookings to revenue conversion rate was 44% in the Digital business and 72% for A&N. Both of these rates are broadly in line with the planning assumptions issued at our last Capital Market Day, despite the headwinds coming from the higher share of SaaS in our overall bookings mix. As well as the higher share of A&N migrations to subscriptions. These conversion rates gave us organic product revenue growth of 24% in the quarter and 7% in the full year, within our guidance range. Including StreamSets, our total product revenue grew 28% in the fourth quarter and 10% year-on-year. The StreamSets contribution represents EUR 9.6 million in Q4 and EUR 22.1 million for the period of 8.5 months since the acquisition was closed. As a reminder, this EUR 22.1 million represents the contribution from StreamSets IFRS revenues. To arrive at the non-IFRS group product revenue expectation we provided at the time of acquisition, we need to translate these revenues back into non-IFRS. This is to remove the non-operating net negative impact of factors, including accounting policy changes and the purchase price allocation related to the acquisition. Adjusting for these factors, StreamSets non-IFRS revenue contribution was roughly EUR 27 million in the full year. When added to the group's organic product revenue, our total group non-IFRS product revenue growth would have been 11% net of currency. This is slightly below the assumption we shared with you in April, primarily due to a higher than expected SaaS mix as StreamSets latest cloud products resonated strongly in the market. Moving now to professional services. On an organic basis, professional services revenue was down 3% in Q4 and 1% in the full year. With the contribution of StreamSets, professional service revenue increased by 2% both in Q4 and for the full year. From a margin perspective, professional services achieved a margin of 3.1% in the quarter, and 14.7% in the full year, excluding StreamSets, and 1.2% in the quarter and 13.4% in the full year when including StreamSets. Together, our organic product and professional services revenue led to organic total revenue of EUR 292 million in the quarter and EUR 930.8 million in the full year. This represents growth of 19% and 6% respectively. On a group basis, including StreamSets, total revenue was EUR 303.8 million in the quarter and EUR 958.2 million in the full year. This represents growth of 24% and 8% respectively. Now coming to costs and margins. Total costs increased 10% for the full year on a stated basis, excluding the impact of StreamSets. Adjusting for foreign exchange, total costs increased just under 6% for the full year at the upper end of the range we set out at our Capital Market Day last February. At that time, we also indicated that we would invest between EUR 35 million and EUR 40 million last year, divided across the areas of product innovation, sales, and go to market, and people and culture. At the end of December, we had invested EUR 32 million across these three buckets. Overall, our total cost development brings us to a full year organic non-IFRS EBITDA margin of 23.1% in the fourth quarter and 21.2% for the full year, comfortably within our guidance range. Nevertheless, the ongoing inflationary environment will lead to higher salaries and operating expenses in 2023. The increasing portion of SaaS will come with higher costs, which we'll explain in more detail later. The impact of StreamSets in 2022 amounted to a negative margin impact of EUR 19.1 million, again affected by lower than expected revenue as a result of the strong SaaS performance. This brings me to cash flow. As in the previous quarters, we have continued to see negative technical impact on cash flow as a result of our business model transformation and subscription shifts. Despite our strong Q4 performance, in Q4, our free cash flow was at minus EUR 10.2 million as payments usually land in the following quarter. Looking at the full year, free cash flow has turned slightly negative to minus EUR 1.1 million, versus EUR 91.4 million in the last year. This result was partly driven by a small number of material one-off cash flow outflows, like higher tax payments and M&A charges, which mainly occurred in Q2. A look at our ARR development gives us a clearer indication of future cash flow development as our subscription, SaaS and new business contracts start to stack up over time. In parallel, we continue to be laser focused on driving financial discipline throughout our organization as it relates to cash and cash management. We are driving the right sales behaviors, for example, around payment term negotiations as being as efficient as possible with costs overall. Having spent some time getting to know the business, I'm encouraged by the progress I've seen in these financial areas of the company. Albeit with more to be done and with greater emphasis on return on investment. At the same time, I will ensure that we continue our pursuit of non-financial goals like maintaining a strong employee engagement score. Measures like this contribute to sustainable financial success in the long run. That's it from me for now. Sanjay, back to you. All right. Thank you, Daniela. Now it's time to turn to the future. With the final year of Helix upon us, we are well-placed to continue benefiting from our business model shift and our strong finish to 2022. Importantly, we are mindful of the macro environment. We have budgeted accordingly. On this, sales cycles may be lengthening, but underlying demand remains robust. Given the mission-critical nature of our products, we have not seen customers walking away from deals. With this context in mind, we have also been working hard to bring together our plan for the next phase of our growth. We are finalizing the last details, but the guiding principles we've identified inform both our 2023 plan and the midterm view that we will share with you at our capital market state. The process we've been through to arrive at this plan has been honest and self-critical. We have gained a clear view of where we are strong in our product, in our subscription shift, in the start of what we've made on SaaS, and in the way these developments have helped us become more competitive on new logos. We've also gained a clear idea of where we have still room for improvement. For example, our sales execution has been volatile, and we still have too much portfolio and process complexity in our business. When we instill greater focus around one of our key end markets and simplify our business operations even further, we can drive productivity and efficiency and present an even more powerful product proposition to our customers. Our evolved plan takes all of this into consideration. Before we dive into how this work provides the foundation for our 2023 operating priorities, it's worth noting that in some cases, our decisions, particularly on SaaS and in A&N, have short-term impacts on our revenue or costs this year. As Daniela will explain, these impacts are reflected in our guidance. They reduce overtime and enable sustainable value creation for our customers and our business in the medium and long term. Our five priorities are as follows. First, with demand growing rapidly, we'll accelerate the journey to making Software AG cloud first. For next year, our key growth initiative is to prioritize specific cloud sales motions of products like webMethods.io, StreamSets, Cumulocity, and ARIS Cloud portfolio. We support this activity with programs to increase our CloudOps efficiency as we add scale, including improvements in CloudOps automation and contracting, pricing, and quoting. While our 2022 performance has strengthened our commitment to pressing forward with SaaS, our success impacts margin in the short term. Again, Daniela will pick this up when we discuss our guidance shortly. Second, we will double down on innovation and integration. Our updated market analysis tells us that the cloud application and data integration market is growing at 21% annually to EUR 11 billion by 2026. This represents the largest opportunity across our product set. Prioritizing investment here will further differentiate our product and increase our competitive success. So far this year, we have announced new API management tools for webMethods and launched a new webMethods API Marketplace. Both of these innovations make life easier for developers, increasing efficiency and reducing cost. More innovation like this in 2023 will see us take our product to the next level. Third, we will take bold action on our sales force, increasing sales specialization to drive efficacy and efficiency. We started this process in January by moving to a specialized go-to-market model in North America. This change saw us reduce our overall sales headcount by 33, while at the same time increasing our number of expert quota-carrying resources by 14, and thus customer-facing capacity in this key market. We'll also integrate the specialized StreamSets sales force this year. By shifting to a specialized model, we'll increase our sales competitiveness, matching up head-to-head with key competitors who already go to market by buyer, product, and competitive set. Lastly, we'll continue the work we started last year with partners like Persistent to invest in outside implementation practices for our leading growth products. While this will have temporary impact on our support and services margin, it will allow us to further focus and specialize our own professional services organization on higher margin advisory services over midterm. We continue to leverage the value of A&N by helping customers to the cloud via subscription. This activity builds on our 2050+ Modernization Program, which has already been successful in extending the life cycle of A&N for key customers. Over the last two years, customer churn in A&N's top 170 customers has been extremely low. This is a customer group that accounts for over 80% of A&N's ARR. In 2023, we'll continue to put our weight behind technologies like zIIP and cloud containerization, which extend A&N's life cycle. We'll also accelerate cross-sell into our Digital business, focusing on growth use cases like API enablement, VNO webMethods.io, and the integration of mainframe and cloud data via StreamSets. Fifth, we've introduced a program to optimize our operating platform and increase operating leverage as we grow. We have three types of activity here. First, we'll drive operating efficiency through a lift and shift of resources from tier three geographies into more productive tier one and two countries. We'll also increase G&A, process efficiency, and double down on CloudOps automation to increase productivity. Second, we have a number of people actions underway. We've already executed on our sales specialization work in North America. We are making further changes that will result in workforce reduction of approximately 200 employees or 4% of the total FTE. We've begun talking to some of the people impacted today. We remain conscious of our spending in light of the current macro environment and continue to exercise prudence as we execute against our operating plan. We expect this activity to yield a positive margin benefit of between EUR 30 million and EUR 35 million in 2023, with further annualized benefits to come thereafter. This doesn't mean we'll stop investing in key strategic areas like our cloud offerings. Turning now to our guidance. I want to highlight one key change from last year. We are shifting our headline metric from product bookings to ARR for both our Digital business and A&N. At the start of Helix, we introduced a bookings metric to give you a direct picture of our sales success while our revenue metrics were impacted by our business model shift to subscription. Due to the success of that program, almost 90% of our total bookings in 2022 came from subscription and SaaS. Nearly all our bookings now contribute directly to ARR. Our progress on subscription means that the vast majority of our cash is now collected on annual cycles. This means that ARR is a good reflection of the future cash flows we expect to see in our business. When combined with cash flows we still receive from small amount of perpetual licenses we sell and our professional services revenue. ARR isn't influenced by IFRS accounting, and unlike IFRS revenue, it won't fluctuate because of changes in deployment mix as we push harder on SaaS. We'll provide more detail on the drivers of ARR, particularly on the product side, at our capital markets day later in the year. Our other guidance metrics, product revenue and non-IFRS EBITDA margin, remain unchanged. We will continue to provide bookings numbers in our financial presentation for your reference. I'm now going to walk through our guidance at a high level before handing back to Daniela for a bit more color. For 2023, we expect constant currency Digital business ARR growth of between 10% and 15%. A constant currency A&N ARR development of between -2% and +2%. Constant currency group product revenue growth of between 6% and 10%, and a stated non-IFRS EBITDA margin of between 16% and 18%. Please note that our guidance now incorporates StreamSets. We're delighted with our acquisition, which is growing ARR in the strong double digits year-over-year and is resonating powerfully with customers in the market. We should be mindful that it carries a negative impact on margin until late in its third year of ownership. On ARR, our guidance for Digital business demonstrates our ongoing confidence in its growth. On A&N, against a tough compare, our ARR guidance still demonstrates we remain confident in stable performance. On product revenue, we are similarly confident in growth led by our Digital business despite the technical impact of our ongoing subscription shift in A&N. Our strategic decisions around SaaS and A&N shift to subscription, coupled with the impact we anticipate from the macro environment in 2023, mean that we expect to fall short of the organic EUR 1 billion total revenue ambition we set out in 2019. These dynamics are also the primary reason for the development of our margin against that same original ambition. These decisions are consistent with the aims of Helix and its intention of setting our businesses up for long-term value creation. As such, they are right for the business going forward. Daniela, over to you for some further detail. Thank you, Sanjay. From my perspective, this guide is all about setting Software AG up to deliver a set of ambitious but achievable goals tuned to current macro uncertainty that we can all plan and track our business around with confidence. A strong focus on top line and the transformation to SaaS are the main drivers to ensure we deliver our 2023 results as well as our long-term ambition. This will be combined with a strong focus on sustainable as well as profitable growth. To elaborate how we will achieve this, let me get back to our margin guidance and its context. The bridge you can see on your screen summarizes the drivers of our margin development from 2022 through 2023. First, coming from 2022, we expected a positive margin contribution from revenue growth implied by our 2023 product revenue guidance. Second, you see the benefit of the efficiency and productivity program Sanjay mentioned. This will yield a positive impact to margin of approximately EUR 30 million-EUR 35 million in 2023. Next, we anticipate a temporary margin headwind related to our 2023 strategic priorities, including our focus on SaaS and the continuous transformation of our professional services business. Moving along, you will see we have a margin impact from higher salaries in 2022 and some notable operating expenses due to the wider inflationary environment. In order to mitigate these impacts in 2023, we are evaluating the company's overall compensation plan for the year. We also benefited in 2022 from FX gains that will not be repeatable in 2023. Lastly, there is the margin impact from StreamSets present in our books for the full 12 months of this year. This impact represents a slight year-on-year improvement when compared to an annualized view of last year as we continue to move StreamSets towards margin accretion this third year of ownership. Importantly, if we weren't moving forward with key strategic initiatives we've mentioned, our 2023 margin guidance would have been ahead of current market expectations for this year. However, we are running our business to create value in the long term, and we're very confident that these are the right steps. Now, a comment on our 2023 cost program. As part of our actions this year, we expect one-off costs of around EUR 15 million-EUR 20 million. This means we will also expect total one-off adjustments to our IFRS EBITDA of EUR 15 million-EUR 20 million for the full year. As we look forward, we expect the impact of each negative margin driver to reduce substantially as we head into 2024. When combined with the annualized positive impact of our cost actions and our additional efficiency measures, we expect increased operating leverage in our incremental revenue growth from the subscription and SaaS backlog we see landing in 2024, and all similar revenues thereafter. We will share more on this positive future margin development and its drivers at our capital market day in a few months. Sanjay, back to you. Thank you, Daniela. To bring the call to a close, I'd like to reiterate the messages I opened at the top of the call. First, our strong Q4 and solid 2022 performance was a result of the hard work through the first years of Helix. Second, we are now ready to start evolving our strategy for the next phase. Together with our new supervisory board and our refreshed management team in place, we made an honest assessment of our progress and developed our strategic priorities for the coming year. These priorities will drive our business forward in terms of growth, efficiency and productivity. Lastly, building on the success of Q4 and with the increased resiliency of our business, we're confident in our 2023 guidance. We'll share more detail on our view beyond 2023 at our capital markets day. For now, taking into account our Q4 performance and our macro environment, we believe our ARR growth to be sustainable. We also expect to see continued margin improvement in the midterm. Robert, back to you for questions. Thank you, Sanjay and Daniela. Ladies and gentlemen, you may now ask your questions. Please ask only one question at a time. Operator, please repeat the instructions on how to proceed. Ladies and gentlemen, at this time, we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. In the interest of time, please limit yourself to one question only. In case of more questions, please ask them in a second round or call the investor relations team after the call. The first question is from the line of Sven Merkt with Barclays. Your question, please. Good morning. Thank you for taking my question. Okay, I will keep it to one. Just a question on the margin bridge on page 20 and the strategic initiatives. Maybe for Sanjay. Why you think it's now the right time really to accelerate all these initiatives and also in particular the transition to the cloud? You have just gone through a pretty disruptive transformation and after which you've committed to deliver margin leverage. Why does it make sense to change your plan already so early again? Hi, Sven, and thank you for the question. Let me mention first that, you know, we now see a high increased traction on our cloud products. You know, the innovation that we've launched in the market, both around the integration as well as ARIS and Cumulocity. This is very much driven with the way the customer is engaging with us and based on the customer demand. Then the second thing is that we see that acceleration coming through quite heavily through Q3 and Q4. It makes a lot of sense for us to now, you know, really go with the customer demand, the way the customer wants to buy from us, and to be able to allow our sales force and incentivize the sales force accordingly in the market. The shift makes sense now because of the traction on the, on the products. Perhaps, Josh, you can share a bit from, what you're experiencing in the market also. No, Sanjay, as you said, we continue to see strong demand for our products, and we continue to see strong pipeline build and customer commitment, as well as the partnerships that we've established with our global systems integrators. Thank you. Great. Thank you. The next question is from. Thank you so much. The next question is from the line of Deepshikha Agarwal with Goldman Sachs. Your question please. Hi, thanks for taking my question. My question was majorly on, you know, the DBP performance. Like, you know, we saw that, you know, the SaaS uptake was higher because of which the growth in revenue did not really stack up with bookings. Given the ARR growth that we have of around 10%-15%, how should we think about that as in both like the ARR dynamics versus the revenue dynamics going into FY 2023? Deepshikha, could you repeat the first part? It wasn't very clear. We couldn't hear the first part. I heard up the ARR 10%-15%, would you mind repeating the first part please? In the fourth quarter, what we saw was while the bookings were pretty solid, like the growth in DBP in bookings in the fourth quarter was pretty good, the revenue was not. Okay. Exactly in line. Got it. Got it. Got it. Yes. it. Got it. Got it. Yes. it. Got it. Got it. Yes. it. Got it. Got it. Yes. with it because of high I got it. Sorry. Thank you. I couldn't hear that first part. Let me just first explain that because what we saw is an acceleration in SaaS, Deepshikha. What happens with SaaS is it's ratable, so therefore we don't get the revenue straight away. You only get it from the time that the booking converts into an order. We will see the full impact of that revenue next year. That's the reason why you see the difference between obviously the bookings coming through but the revenue not getting impacted. Then of course on the ARR, you said the 10%-15% growth. We see the impact coming through from the SaaS that we have signed this year. We will get the full impact of that SaaS next year, including the growth that we expect through both new business as well as the renewals. You know, our renewals portion is also growing significantly as we step into 2023. My question basically was that the differential between the ARR growth and the revenue growth will decrease substantially, like will, versus what we saw in the fourth quarter, right? Correct. As we go forward. Okay. Okay. Thank you. Thank you. The next question is from the line of Michael Briest, UBS. Yes. Good morning. Just looking at slide 10 in the pack and the ARR trend, I mean, could you address two things? First, I mean sequentially, ARR is flat, and this was a big quarter for renewals, which would normally generate sort of upsell, cross-sell. Can you comment on that? Looking at the SaaS element within it, I mean it's up EUR 3 million quarter on quarter, EUR 8 million in the six months. These numbers don't suggest to me a dramatic change in consumption patterns. Maybe you can say how much of ARR exiting 2023 you expect to be on SaaS. Just a small clarification if I can, Daniela. On EPS, there was a big hit from something or other. Can you explain what happened to full year EPS? Thank you. Okay. Daniela, do you wanna go with EPS? Michael, it's Sanjay. The first part on the ARR is basically related to the SaaS. The SaaS percentage grew significantly from literally from 25% to 35% in 2023. Therefore that is the reason why you will see a significant change, yeah, in the ARR. Yeah. If we come to the second part, your EPS questions are coming from net income to the EPS. We have a deferred tax impact that drives our tax rate, which led to an unusually high tax payment in 2023. 2022, sorry. That won't repeat? No, no. I mean, it's, it was a tax rate of 71%. No, we won't, we don't want to repeat that. We won't. Sorry. Yeah, Sanjay, I'm struggling with your 25% and 35% because EUR 72 million out of EUR 516 million is the SaaS number for Q4 organically ARR. That's like 15%. I meant booking. Sorry, Michael, I meant booking. In the bookings, we have a significant growth in the amount of bookings related to SaaS, as we step into 2023. What do you think SaaS will be in ARR by the year, end of this year? I think you before you were talking about 15% maybe in cloud by the end of 2023. About 15%-20%, so we're close to the 20% mark. All right. Thank you. Sure. The next question is from the line of Alastair Nolan with Morgan Stanley. Your question please. Morning. Thank you for taking my question. If we just take a step back and I guess look at the margin guidance in particular, the previous mid-term guidance was for that to get towards 25%-30% range. Obviously today it's 16%-18% for 2023. Within that there is the benefit from the cost cutting or the efficiency plan. Can you maybe just walk us through at a high level what the main changes are? I know obviously some of it's gonna be the shift more to the early acceleration more to SaaS, but it would just be helpful to kinda walk us through what really has changed. Absolutely, Alastair. Thanks for the question. You can broadly think of the gap to the midpoint of the guidance as half revenue related and half cost investment related. We view these as temporary headwinds, you know, particularly on the cost investment side. The reasons behind these are essentially twofold. One, the strategic decisions we've taken, firstly on SaaS, really go for more SaaS. Number two, also for A&N subscriptions. As I said, there's more traction and more demand from the customers around A&N subscriptions. The third thing is investing in StreamSets. If we had not taken those decisions, these strategic decisions, our margin would've been up year-on-year and ahead of expectation. The second part is on the macro side, we have considered some top line impact from the macro in 2023, as well as the cost inflation from 2022 that's impacting 2023. Those are mostly offset by the cost actions we've announced today. As I mentioned, and Daniela also in her script, that these are actions that are actually not one-off in terms of cost improvement. They are run rate impacting actions. You will see the benefit come through into 2024 also, and hence see the impact of the margin expansion. Maybe one important thing to add, the impacts of the Helix program that Sanjay was just referring to of about EUR 30 million-EUR 35 million this year. This for us is a run rate improvement, you can expect to see that in the years to come, which is already a significant impact to our margin in terms of percentage. On top of that, I mean, what we've baked into our numbers for this year is really macroeconomic impacts around inflation. While we don't have a crystal ball, I guess we all agree that we expect inflation to go down to levels that we've seen in the past decade or more, at least in Europe and U.S. Great. Thank you both. Thank you, Alastair. The next question is from the line of Knut Woller with Baader Bank. Your question please. Yeah, hello. Thank you. looking at the final revenue mix in 2022, we saw that it was much more favorable than initially factored into your guidance given the strong A&N outperformance. Still, you have been rather organically at the midpoint of your guidance, while one would have normally assumed a clear beat given the more favorable revenue mix. I tried to get a better understanding. Also, I understand that inflation started to kick in mainly in H2. What was basically the burden for the outperformance for the operating profit in 2022? Thank you. Hi, Knut, it's Sanjay. You know, as you can see that we had a re-acceleration first and foremost of the Digital business and you saw that come through in Q4. We'd always said that Q4 was going to be a big quarter for us, and we had a strong pipeline and we had strengthened with our new CRO on board, the, you know, the execution aspects also. That's one, we really accelerated the Digital business side. The second thing is we had, you know, a deal on A&N also that came in. Ladies and gentlemen, sorry for the interruption. We have a problem with the speaker line. Please stay connected. One moment. Sorry for the interruption. We are now back online. The speakers are connected, and we can continue with the question from Knut Woller. Operator, can you hear me now? We can hear you, yes. Okay. Knut, apologies, for this, interruption, but I don't know how far you heard my answer. Perhaps you can let me know whether you got the information you were looking for or did you miss something? Thanks, Sanjay. I just got that you saw the re-acceleration of Digital business in the second half and then the line broke, so I didn't get... Oh, I'm sorry about that. The remainder of your response. No worries. I just reemphasize, you know, Knut, we put a lot of effort onto the Digital business and the execution side, and with Joshua and team. We saw that coming through in Q4. Strong pipeline, ending towards the year but also stepping into 2023. We see this momentum now, number one. Number two was that we had, you know, a deal in Israel Finance Ministry deal in A&N, where the customer wanted to do the deal earlier. As you know, these are, you know, finite set of customers, and we go from the customer demand and customer need perspective. Of course, we have to keep in mind if that deal comes forward, we don't have that customer to renew in 2023. It's just a matter of timing. Those are the reasons that we're kind of driving the higher than expected. Daniela? Yeah. Knut, just to add on the margin side. What happened to the margins with the revenue we saw, especially the fourth quarter? I mean, with the deals closing and closing early, we had higher than planned commission payments that we had to accrue for in the quarter, which also then shifted the cost profile probably more extreme than we had originally anticipated. Again, that's of course not something that we would see every quarter. That was coming with the additional accelerated revenue. Got it. Thank you. The next question is from the line of Andreas Wolf with Warburg Research. Your question please. Good morning. Thank you for taking my question. Mine is on the free cash flow development as you are transitioning also parts of A&N to subscriptions. How shall we look at free cash flow development going forward? When should we expect free cash flow to begin? Thank you. Yeah. I mean, as you saw on the slides, 2022 practically a zero free cash flow. Our projection for 2023 is give or take in the same area, due to all the impacts that we've discussed. One special impact that you couldn't see on the slide but that's worth mentioning is factoring. In all prior years, including 2022, we have used factoring as a measure to improve the cash position. We have not planned for that in 2023. If you would, in a like for like comparison, add factoring back mentally, you could add another EUR 20 million-EUR 30 million to our free cash flow. That would give you an improvement already in 2023. Coming out of the shift to subscription, we do expect a steeper improvement of the free cash flow in 2024. We need to be mindful that cash is the KPI that's always lagging behind. We are very confident that with the cost measures in 2023, the change in the cash profile and the revenue profile, we will see a strong pickup in our cash profile going forward. Thank you. The next question is from the line of Martin Jungfleisch with BNP Paribas. Your question please. Yeah. Hi, good morning. Just a quick one. Can you comment on the expected price increases in the SaaS and maintenance base, if any, and the expected contribution to top line or ARR growth, this year? Thank you. Thank you, Martin. This is something Josh has been working so much on, so I'm going to ask him to give you a feedback on price increases. Yeah. I think Martin, thank you, Sanjay, for the question. I think where applicable and where we have the opportunity to, we are certainly looking at every lever we have around price increases for our portfolio mix. Yeah. Obviously inflation's baked into our contracts, so that's something that is, that we see, strong success on, Martin. Okay. Thank you. Sure. The next question is from the line of Sven Merkt with Barclays. Your question. Yes, thank you. Just two follow-up question. First, first on the inflationary impact on the cost. When you look at slide 20, it seems like that the impact from inflation cost is so much larger than what you expect the incremental revenue. Just the question is essentially, in the past you spoke about the ability to increase prices to compensate for inflation, so why don't we see this now coming through? Second question is just on the maintenance conversion. This accelerated in Q4, and I wonder if that was always the plan and if not, why you decided to accelerate the conversion in Q4. Maybe also it would be great if you would comment what level of maintenance conversion you expect for 2023. Yeah. Hi, Sven. Let me take the second one first. I'm gonna pass it on to Daniela for the inflation related question that you have. Listen, I think we are moving very much in line with what we expected in the changes around the split. You know that we are, you know, in the three buckets of renewals, new business, as well as migrations. To give you a flavor in terms of the change in migrations for a full year of 2021 versus 2022, actually migrations in 2021 were 45% and, in 2022, the migrations are 33%. The portion of migrations is going down. Even in Q4, if you compare it to the previous year, migrations in Q4 were 39% against last year's Q4 of 47%. As a percentage, migrations are going down, obviously renewals are going up, and new business continues to stay steady in the range about 30%-35%. Actually I feel really good about the health of the business and the way it is shifting. You know, we are not having a situation where the sales teams are just trying to push through the migrations to make the numbers. I think it's a even-based change. Over to Daniela. All right. Thank you, Sanjay. First part of the question. Do we expect any further inflation impact in 2023, referring to slide 20 that we've shown? Referring to the full year 2023 expectations, we do believe that globally inflation rates saw its peak last year. While the development of wages depends on inflation rates as well as talent availability, we did take some actions in 2022 to mitigate inflation, especially in hotspots. We do expect that this is the measures that we had to take. We don't expect any additional measures to be taken in this area in 2023, barring a few needed exceptions, of course. Yes. Why is then the inflationary impact, the negative impact, on page 20 much rather than the incremental revenue growth? Shouldn't be. Yeah. If you- If- Inflation is coming down and you have pricing power, this more than be compensated by incremental revenues. Yeah. In 2022, we only saw half a year of the impact. Now in 2023, we see the full year of the measures we took around people in 2022. Now that's why we're seeing a higher impact in 2023 on the costs coming from this area. This is the half year versus full year impact. Okay. Sanjay on the maintenance conversion, can you comment what you expect for 2023? In 2023, we are expecting approximately 30% in terms of conversions. Yeah. Just for the trend to just establish that, right? We've gone 45% down to 33%, down to 30%. You know, you see that portion is going down and new business stays and the renewals goes up. Okay. Thank you. Thank you, Sven. Thank you. With that last question, we would like to conclude the conference call. Ladies and gentlemen, we appreciate your participation and constructive questions. If there are further questions you would like to ask, please contact the IR team. Until next time, goodbye. Thank you.