sap investor presentation 2022

SAP Announces Q4 and FY 2022 Results

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Jan 26, 2023, 01:05 ET

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• All financial outlook metrics met in FY 2022
• Cloud revenue up 33% and up 24% at constant currencies in FY 2022. Q4 S/4HANA cloud revenue further accelerates, up 101% and up 90% at constant currencies
• Current cloud backlog exceeds €12 billion, up 27% and up 24% at constant currencies
• IFRS cloud gross profit up 38%, non-IFRS cloud gross profit up 37% and up 28% at constant currencies in FY 2022
• IFRS operating profit flat, non-IFRS operating profit down 2% and down 7% at constant currencies in FY 2022. Q4 IFRS operating profit up 17%, non-IFRS operating profit up 5% and up 2% at constant currencies
• 2023 outlook anticipates accelerating topline and double-digit non-IFRS operating profit growth
• Targeted restructuring in 2023 reflects focus on strategic growth areas and accelerated cloud transformation
• SAP has decided to explore a sale of its stake in Qualtrics

WALLDORF, Germany , Jan. 26, 2023 /PRNewswire/ -- SAP SE (NYSE: SAP ) today announced its financial results for the fourth quarter and fiscal year ended December 31, 2022 .

Christian Klein , CEO: "SAP is more resilient than ever. We end 2022 with continued strong cloud momentum and a return to operating profit growth in the fourth quarter, marking an important inflection point. Heading into 2023, this gives us great confidence in delivering on our promise of accelerating topline and double-digit non-IFRS operating profit growth. As we enter the next chapter of SAP, I want to thank Luka for his great partnership on this journey."

Luka Mucic, CFO: "In my 37th and final earnings for SAP, I am proud that the SAP team is announcing excellent results and continued cloud momentum. We are on track to deliver our growth and profitability commitments for 2023. I am extremely confident in the continued success of SAP's most exciting transformation in its history. Thank you to the wonderful SAP family that I have been part of for 27 years." 

Financial Performance

Financial Highlights 1

Fourth Quarter 2022

In the fourth quarter, cloud revenue was up 30% to €3.39 billion and up 22% at constant currencies. SAP S/4HANA cloud revenue further accelerated and was up 101% to €0.66 billion and up 90% at constant currencies.

Software licenses revenue was down 38% to €0.91 billion and down 39% at constant currencies. Cloud and software revenue was up 4% to €7.29 billion and flat at constant currencies. Services revenue was up 15% to €1.14 billion and up 10% at constant currencies. Total revenue was up 6% to €8.44 billion and up 1% at constant currencies.

The share of more predictable revenue increased by 6 percentage points to 76% in the fourth quarter.

Cloud gross profit was up 36% (IFRS), up 34% (non-IFRS) and up 27% (non-IFRS at constant currencies). Cloud gross margin was up 2.9 percentage points to 69.4% (IFRS), up 2.3 percentage points to 71.3% (non-IFRS) and up 2.7 percentage points to 71.6% (non-IFRS at constant currencies). This increase was driven by expanding gross margins across all cloud business models, with efficiency gains overcompensating increased investments into our next generation cloud delivery program.

IFRS operating profit increased 17% to €1.71 billion and IFRS operating margin increased by 1.9 percentage points to 20.2%. Non-IFRS operating profit was up 5% to €2.58 billion and up 2% at constant currencies. Non-IFRS operating margin decreased by 0.3 percentage points to 30.6% and was up 0.3 percentage points to 31.2% at constant currencies. The increase in profitability was supported by disciplined spend management in the fourth quarter. In addition, IFRS operating profit included a disposal gain of €175 million and non-IFRS operating profit of €109 million related to the sale of the SAP Litmos business.

IFRS earnings per share decreased 62% to €0.47 and non-IFRS earnings per share decreased 46% to €1.00. The year-over-year decline of earnings per share reflects a contribution to financial income by Sapphire Ventures that, mainly due to market conditions, was significantly lower than in the same period last year. The effective tax rate was 56.3% (IFRS) and 37.0% (non-IFRS). The year-over-year increase mainly resulted from changes in tax-exempt income related to Sapphire Ventures, which were partly compensated by changes in non-deductible expenses in IFRS.

At year end, current cloud backlog expanded to €12.03 billion, growing by 27% and 24% at constant currencies. Current cloud backlog growth was negatively impacted by approximately 1.5 percentage points from the divestiture of our Litmos business and the wind down of our business operations in Russia and Belarus . SAP S/4HANA current cloud backlog was up 86% to €3.17 billion and up 82% at constant currencies.

As of December 31 , total cloud backlog – which is defined as the contractually committed cloud revenue we expect to recognize in future periods – was up 35% to €34.2 billion.

For the full year, cloud revenue was up 33% to €12.56 billion and up 24% at constant currencies, driven by double-digit growth across the SaaS and PaaS portfolio. SAP S/4HANA cloud revenue was up 91% to €2.08 billion and up 79% at constant currencies. 

Software licenses revenue was down 37% to €2.06 billion and down 39% at constant currencies. Despite lower software licenses revenue, cloud and software revenue was up 10% to €26.52 billion and up 4% at constant currencies. Services revenue was up 16% to €4.35 billion and up 9% at constant currencies. Total revenue was up 11% to €30.87 billion and up 5% at constant currencies.

The share of more predictable revenue increased by 4 percentage points year over year to 79% for the full year 2022.

Cloud gross profit was up 38% (IFRS), 37% (non-IFRS) and 28% (non-IFRS at constant currencies). Cloud gross margin was up 2.3 percentage points to 69.3% (IFRS), up 1.8 percentage points to 71.3% (non-IFRS) and up 2.1 percentage points to 71.6% (non-IFRS at constant currencies). This 2.1 percentage point increase was driven by expanding gross margins across all cloud business models, with efficiency gains overcompensating increased investments into the next generation cloud delivery program.

IFRS operating profit was flat at €4.67 billion and IFRS operating margin decreased by 1.6 percentage points to 15.1%. Non-IFRS operating profit decreased 2% to €8.03 billion and decreased 7% at constant currencies and non-IFRS operating margin decreased by 3.5 percentage points to 26.0% and was down 3.2 percentage points to 26.4% at constant currencies. Operating profit performance was impacted by the decision to wind down business operations in Russia and Belarus , and a reduced contribution from software licenses revenue as well as accelerated investments into research and development and sales & marketing to capture current and future growth opportunities.

IFRS earnings per share decreased 56% to €1.96 and non-IFRS earnings per share decreased 39% to €4.08. The year-over-year decline of earnings per share reflects a contribution to financial income by Sapphire Ventures that, due to market conditions faced throughout the year, was significantly lower than in the same period last year. Effective tax rate was 44.6% (IFRS) and 29.5% (non-IFRS). The year-over-year increase mainly resulted from changes in tax-exempt income related to Sapphire Ventures.

Free cash flow for the full year was down 14% to €4.35 billion, in line with the revised outlook of approximately €4.5 billion. This is predominantly due to lower profitability and adverse working capital impacts in other assets. While tax payments developed positively, smaller negative impacts came from share-based payments as well as capital expenditures and leasing. In addition, the increased volume of trade receivables sold in 2022 amounting to €0.8 billion versus €0.5 billion in 2021 had a positive impact on free cash flow. At year end, net debt was €2.07 billion.

Impact of War in Ukraine

In 2022, SAP's business was impacted by the war in Ukraine and SAP's decision to wind down its business operations in Russia and Belarus .

At the end of the fourth quarter, current cloud backlog was approximately €62 million lower due to the termination of existing cloud engagements in Russia and Belarus , reducing current cloud backlog growth by approximately half a percentage point at constant currencies. The impact on full-year IFRS operating profit was approximately €410 million (fourth quarter: €70 million) and approximately €290 million (fourth quarter: €70 million) on non-IFRS operating profit, mainly due to reduced revenues and bad debt provisions.

Other impacts due to this evolving situation are currently unknown and could potentially subject our business to materially adverse consequences should the situation escalate beyond its current scope.

Non-Financial Performance 2022

Customer Net Promoter Score (NPS) decreased 7 points year over year to 3 in 2022, achieving the lower end of the revised outlook range.

SAP's Employee Engagement Index decreased 3 percentage points to 80%, reflecting a continued high level of engagement at the low end of the revised outlook range. SAP's retention rate was 92.3%, closely aligning with 2021 at 92.8%. The proportion of women in management increased to 29.4%, an increase of 1.1 percentage points year over year. In the fourth quarter, the Company also reached 35% of women in the workforce.

Net carbon emissions continued to decrease, at 95 kilotons in 2022, down 15 kt year over year. This result is at the upper end of the revised outlook range.

Business Highlights

In the fourth quarter, customers around the globe continued to choose "RISE with SAP" to drive their end-to-end business transformations. These customers included Al-Futtaim Group, City of Vancouver , ExxonMobil, Fujitsu Limited, German Football Association (DFB), Imperial Brands, Kanton Aargau, Lockheed Martin, Merck KGaA, Munich Leukemia Laboratory (MLL), Lenovo, Lumen Technologies, Natuzzi, PETRONAS, Port of Rotterdam , Renault Group, Swarovski, Warsteiner Brauerei, and ZF Friedrichshafen AG. Accenture, Canon Production Printing, Daimler Truck AG, Ducati Motor Holding, Mahindra Group, Walgreens Boots Alliance, and Zespri went live on SAP S/4HANA Cloud in the fourth quarter.

Key customer wins across SAP's solution portfolio included: ArcelorMittal Europe, C6 Bank, Caixabank Tech, Euronews, Groupe SEB, Groupe TF1, Fressnapf, Haier, Hisense, Macquarie Banking and Financial Services, NBA, DOUGLAS, Qualcomm, Robert Bosch , SCOTT Sports, Soriana, Technical University of Munich , Transport for London , VINCI ENERGIES.

In the fourth quarter, SAP's cloud revenue performance was strong across all regions. Brazil , Germany and Japan had outstanding cloud revenue performances while China , India , the Netherlands , Switzerland , and the United States were particularly strong. For the full year, Germany , the United States , and Japan all had outstanding performances while Brazil , Chile , China , Italy , Saudi Arabia , South Korea , and Switzerland were particularly strong.

On November 15, 2022 , SAP launched SAP Build which enables business users to integrate systems; intelligently monitor, analyze and automate processes; and build applications using SAP BTP and business application data from SAP – all without moving data to an external system. In addition, SAP also announced a partnership with Coursera to empower a new generation of developers.

On December 1 , SAP announced that Francisco Partners had completed the acquisition of SAP's Litmos business. 

On December 5 , SAP and PwC announced a new co-innovation strategy to make sustainability an integral part of standard business operations to help organizations achieve their ESG and net zero target.

Among other recognitions, in the fourth quarter SAP was:

• named a Leader in 2022 Gartner® Magic Quadrant™ for Configure, Price, and Quote Application Suites 2
• named a Leader in Forrester Wave™: Digital Operations Platforms for Manufacturing & Distribution in Q3 2022
• recognized as a Leader in IDC MarketScape: Worldwide Holistic Supply Chain Planning 2022 Vendor Assessment 3

As of January 1, 2023 , SAP maintained its position as an industry leader in the software industry in the S&P Global Corporate Sustainability Assessment for the 16th consecutive year.

On January 18 , SAP was named one of the 100 most sustainable companies in the world, joining the Corporate Knights Global 100 once again.

On January 25 , BMW Group chose RISE with SAP together with additional cloud solutions from SAP to support their transformation to S/4HANA as well as their strategic cloud transformation. Further, through a Platinum Partnership, BMW and SAP are creating a joint approach for the entire automotive industry and related digital end-to-end processes.

Segment Results at a Glance

SAP's two reportable segments showed the following performance:

In the fourth quarter, segment revenue in AT&S was up 4% to €7.74 billion year-over-year, down 1% at constant currencies, primarily due to strong cloud revenue growth, supported by SAP S/4HANA as well as Business Technology Platform. Software licenses revenue decreased due to the shift to the cloud as more customers chose our 'RISE with SAP' offering. Segment support revenue was up 2% to €2.99 billion year-over-year and down 1% at constant currencies.

Qualtrics segment revenue was up 37% to €389 million year-over-year, up 22% at constant currencies in the fourth quarter. The continued strong growth was driven by robust renewal rates and expansions.

Cloud Performance

Business Outlook

Financial Outlook 2023

For the full-year 2023, SAP expects:

• €15.3 – 15.7 billion cloud revenue at constant currencies (2022: €12.56 billion), up 22% to 25% at constant currencies.
• €28.2 – 28.7 billion cloud and software revenue at constant currencies (2022: €26.52 billion), up 6% to 8% at constant currencies.
•  €8.8 – 9.1 billion non-IFRS operating profit at constant currencies (2022: €8.03 billion), up 10% to 13% at constant currencies.
• The share of more predictable revenue (defined as the total of cloud revenue and software support revenue divided by total revenue) is expected to reach approximately 83% (2022: 79%).
• Free cash flow of approximately €5.0 billion (2022: €4.35 billion).
• A full-year effective tax rate (IFRS) of 28.0% to 32.0% (2022: 44.6%) and an effective tax rate (non-IFRS) of 26.0% to 28.0% (2022: 29.5%), strongly depending on the development of Sapphire Ventures' investments.

While SAP's full-year 2023 business outlook is at constant currencies, actual currency reported figures are expected to be impacted by currency exchange rate fluctuations as the Company progresses through the year. See the table below.

Currency Impact Assuming December 2022 Rates Apply for 2023

Non-Financial Outlook 2023

SAP is focusing on three non-financial indicators: customer loyalty, employee engagement, and carbon emissions.

In 2023, SAP expects:  

• a Customer Net Promoter Score of 8 to 12[4].
• an Employee Engagement Index to be in a range of 76% to 80%.
• Net carbon emissions of 0kt, meaning the Company will be carbon neutral in its own operations.

Ambition 2025

By 2025, SAP continues to expect:

• More than €22 billion cloud revenue.
• More than €36 billion total revenue.
• More than €11.5 billion non-IFRS operating profit.
• A non-IFRS cloud gross margin of approximately 80%.
• A significant expansion of the Company's more predictable revenue share to approximately 85%.
• A free cash flow of approximately €8 billion.

SAP expects to update its mid-term ambition in the first half of 2023.

For 2025 non-financial performance SAP continues to aim for:

• Employee Engagement Index between 84% and 86%.
• Steadily increasing the Customer Net Promoter Score through 2025.
• Maintaining net carbon emissions in our own operations of 0 kt. Further, SAP is also committed to achieving net-zero along our value chain by 2030.

Increased Focus on Strategic Growth Areas and Accelerated Cloud Transformation

In 2023, SAP will conduct a targeted restructuring program in selected areas of the company. The purpose is to further focus on strategic growth areas by aligning our operating models and go-to-market approach with our accelerated cloud transformation. Furthermore, SAP intends to strengthen its core business and improve overall process efficiency. The program is expected to affect approximately 2.5% of SAP's employees. The vast majority of the €250 million to €300 million restructuring costs associated with the program is expected to be recognized in the first quarter 2023, impacting IFRS operating profit. The program is expected to provide a moderate cost benefit in 2023 and €300 million to €350 million in annual cost savings as of 2024, impacting both IFRS and Non-IFRS operating profit which will help to fuel investments into strategic growth areas. The expected cost savings and reinvestments are fully reflected in SAP's financial outlook for 2023 and 2025 ambitions.

SAP to Explore a Sale of its Stake in Qualtrics

In line with SAP's strategic initiative to streamline its portfolio, SAP has decided to explore a sale of its stake in Qualtrics.

This would be a continuation of the strategy we set at the time of the Qualtrics IPO in 2021. SAP believes that this potential transaction could unlock significant value for both companies and their shareholders: for SAP, to focus more on its core cloud growth and profitability; for Qualtrics, to extend its leadership in the XM category that it pioneered.

Since the acquisition, Qualtrics has increased revenue by 3.5x to ~ $1.5 billion while delivering profitability, and has significantly expanded its offerings and enterprise customer adoption. In the event of a successful transaction, SAP intends to remain a go-to-market and technology partner, servicing its joint customers and contributing to its growth and category leadership.

A final decision on any transaction, its conditions and timing is subject to market conditions, agreement on acceptable terms, regulatory approvals and the approval of the SAP SE Supervisory Board. SAP has retained Morgan Stanley as financial advisor to assist in the exploration of the sale of its stake in Qualtrics.

The full Q4 2022 Quarterly Statement can be downloaded from: https://www.sap.com/investors/sap-2022-q4-statement . 

Additional Information

This press release and all information therein is preliminary and unaudited.

New consensus provider

As of February 1 st , 2023, Visible Alpha will replace VARA Research as new consensus provider. Analysts and Investors will be able to access the official consensus for SAP SE directly on our website by using the following link: https://www.sap.com/investors/consensus

The consensus estimates published by VARA Research are no longer used for official consensus measurements.

SAP Annual General Meeting of Shareholders

The Annual General Meeting of Shareholders will take place on May 11, 2023 , as a physical event in the SAP Arena in Mannheim , Germany . The whole event will be webcast on the Company's website and online voting options will be available. Further details will be published at https://www.sap.com/agm  in early April .

SAP Performance Measures

For more information about our key growth metrics and performance measures, their calculation, their usefulness, and their limitation, please refer to the following document on our Investor Relations website: https://www.sap.com/investors/performance-measures

SAP senior management will host a press conference on Thursday, January 26th at 10:00 AM (CET) / 9:00 AM (GMT) / 4:00 AM (Eastern) / 1:00 AM (Pacific), followed by a financial analyst conference call at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00 AM (Eastern) / 5:00 AM (Pacific). Both conferences will be webcast on the Company's website at https://www.sap.com/investor  and will be available for replay. Supplementary financial information pertaining to the full-year and quarterly results can be found at https://www.sap.com/investor .

SAP's strategy is to help every business run as an intelligent enterprise. As a market leader in enterprise application software, we help companies of all sizes and in all industries run at their best: SAP customers generate 87% of total global commerce. Our machine learning, Internet of Things (IoT), and advanced analytics technologies help turn customers' businesses into intelligent enterprises. SAP helps give people and organizations deep business insight and fosters collaboration that helps them stay ahead of their competition. We simplify technology for companies so they can consume our software the way they want – without disruption. Our end-to-end suite of applications and services enables business and public customers across 25 industries globally to operate profitably, adapt continuously, and make a difference. With a global network of customers, partners, employees, and thought leaders, SAP helps the world run better and improve people's lives. For more information, visit www.sap.com . 

This document contains forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations, forecasts, and assumptions that are subject to risks and uncertainties that could cause actual results and outcomes to materially differ. Additional information regarding these risks and uncertainties may be found in our filings with the Securities and Exchange Commission, including but not limited to the risk factors section of SAP's 2021 Annual Report on Form 20-F.

© 2023 SAP SE. All rights reserved.

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE in Germany and other countries. Please see https://www.sap.com/copyright for additional trademark information and notices.

1 The Q4 and full-year 2022 results were also impacted by other effects. For details, please refer to the disclosures on page 32 of this document.    2  Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Gartner and Magic Quadrant are registered trademarks and service marks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved. The Gartner content described herein, (the "Gartner Content") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Gartner Content speaks as of its original publication date (and not as of the date of this Quarterly Statement) and the opinions expressed in the Gartner Content are subject to change without notice.   3  IDC MarketScape: Worldwide Holistic Supply Chain Planning, September 2022 , IDC #US49578717   SAP is not responsible for the content of third-party research reports.   4  The guidance is based on an adjusted methodology for 2023 to better reflect the business priorities of the company. The baseline for 2022 calculated using the new methodology is 7.

SOURCE SAP SE

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Cloud Computing/Internet of Things

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• Investor Relations
• Recent Results

July 22, 2024

Second quarter and half-year results 2024, christian klein, ceo.

“Our cloud growth momentum remained strong in Q2, with Business AI enabling many deals. We continue to execute on our transformation with great discipline, leading to an increase in our operating profit ambition for 2025. At the same time, we continue to invest into our transformation to be the leader in Business AI. Given our progress and strong pipeline, we are confident to achieve accelerating topline growth through 2027."

Dominik Asam, CFO

“We are staying squarely focused on delivering our outlook for this year. Our current cloud backlog growth during the second half of 2024, and especially in Q4 will be decisive to lay a solid foundation for our cloud revenue ambition for 2025. At the same time, we’ll continue to execute against our transformation plan to achieve our 2025 free cash flow ambition despite a mid-triple-digit million cash out for restructuring spilling into next year.”

At a Glance

Current cloud backlog of €14.8 billion, up 28%, both at nominal and constant currencies

Cloud revenue up 25%, underpinned by 33% Cloud ERP Suite revenue growth, all at nominal and constant currencies

Total revenue up 10%, both at nominal and constant currencies

IFRS cloud gross profit up 29%, non-IFRS cloud gross profit up 28% and up 29% at constant currencies

IFRS operating profit down 11% due to restructuring expenses of €0.6 billion. Non-IFRS operating profit up 33% and up 35% at constant currencies

2024 financial outlook reiterated. 2025 operating profit ambition increased to reflect anticipated incremental efficiency gains from expanded transformation program

Media Coverage

Christian klein on bloomberg tv.

In this interview with anchor Tom Mackenzie, Christian elaborated why SAP is seeing continuous growth in revenues and profitability, and that AI was a key driver for the results in Q2.

Documents and Links

Financial performance.

All figures are based on SAP group results from continuing operations unless otherwise noted.

Group results at a glance – Second quarter 2024

1 For a breakdown of the individual adjustments see table “Non-IFRS Operating Expense Adjustments by Functional Areas” in this Quarterly Statement. 2 Cloud ERP Suite references the portfolio of strategic Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) solutions that are tightly integrated with our core ERP solutions and are included in key commercial packages, such as RISE with SAP. The following offerings contribute to Cloud ERP Suite revenue: SAP S/4HANA Cloud, SAP Business Technology Platform, and core solutions for HR and payroll, spend management, commerce, customer data solutions, business process transformation, and working capital management. For additional information and historical data on Cloud ERP Suite, see SAP’s Reporting Framework . 3 Extension Suite references SAP’s remaining SaaS and PaaS solutions that supplement and extend the functional coverage of the Cloud ERP Suite. 4 Infrastructure as a service (IaaS): The major portion of IaaS comes from SAP HANA Enterprise Cloud. 5 From continuing and discontinued operations.

Group results at a glance – Six months ended June 2024

Financial Highlights

Second quarter 2024.

In the second quarter, SAP’s strong cloud momentum continued. Current cloud backlog grew by 28% to €14.81 billion and again was up 28% at constant currencies. Cloud revenue was up 25% to €4.15 billion and up 25% at constant currencies, mainly driven by Cloud ERP Suite revenue, which was up 33% to €3.41 billion and up 33% at constant currencies.

Software licenses revenue decreased by 28% to €0.2 billion and was down 27% at constant currencies. Cloud and software revenue was up 10% to €7.17 billion and up 10% at constant currencies. Services revenue was up 6% to €1.11 billion and up 6% at constant currencies. Total revenue was up 10% to €8.29 billion and up 10% at constant currencies.

The share of more predictable revenue increased by 2 percentage points to 84% in the second quarter.

Cloud gross profit was up 29% (IFRS) to €3.03 billion, up 28% to €3.04 billion (non-IFRS), and up 29% (non-IFRS at constant currencies).

IFRS operating profit in the second quarter was down 11% to €1.22 billion. The decrease was driven by restructuring expenses of €0.6 billion associated with the 2024 transformation program. Non-IFRS operating profit was up 33% to €1.94 billion and was up 35% at constant currencies. Non-IFRS operating profit growth was supported by strong revenue growth as well as disciplined execution of the 2024 transformation program.

IFRS earnings per share (basic) increased 22% to €0.76. Non-IFRS earnings per share (basic) increased 59% to €1.10. The effective tax rate (IFRS) was 33.8% (Q2/2023: 33.8%) and the effective tax rate (non-IFRS) was 33.6% (Q2/2023: 33.0%). For non-IFRS, the year-over-year increase mainly resulted from a temporary inability to offset withholding taxes in Germany due to tax losses in 2024 resulting from restructuring. For IFRS, the negative effects from withholding taxes were compensated mainly by changes in tax-exempt income and valuation allowances on deferred tax assets.

Free cash flow in the second quarter increased by 114% to €1.3 billion. While around €0.5 billion was paid out for restructuring, the positive development was primarily attributable to increased profitability and enhanced working capital management. For the first six months, free cash flow was up 48% to €3.8 billion.

Share Repurchase Program

In May 2023, SAP announced a share repurchase program with an aggregate volume of up to €5 billion and a term until December 31, 2025. As of June 30, 2024, SAP had repurchased 12,895,525 shares at an average price of €145.20 resulting in a purchased volume of approximately €1.87 billion under the program. 

2024 Transformation Program: Focus on scalability of operations and key strategic growth areas

In 2024, SAP is further increasing its focus on key strategic growth areas, in particular business AI. It is transforming its operational setup to capture organizational synergies and AI-driven efficiencies, and to prepare the company for highly scalable future revenue growth. 

To this end, as announced in January, SAP is executing a company-wide restructuring program which is anticipated to conclude in early 2025. The restructuring is intended to ensure that SAP’s skillset and resources continue to meet future business needs and is currently expected to affect 9,000 to 10,000 positions, a majority of which will be covered by voluntary leave programs and internal re-skilling measures. Reflecting re-investments into strategic growth areas, SAP still expects to exit 2024 at a headcount similar to year-end 2023. 

In the second quarter, additional restructuring expenses of €0.6 billion were recorded, which mainly reflect the positive reception of the voluntary leave programs. 

While restructuring expenses recorded in the first half of 2024 total €2.9 billion, the overall expenses associated with the program are now estimated to be approximately €3 billion.

Restructuring payouts in the second quarter and first half of 2024 amounted to €0.5 billion. Overall payouts associated with the program are currently expected at approximately €3 billion, of which a mid-triple-digit million amount is expected to occur in 2025.

Business Highlights

In the second quarter, customers around the globe continued to choose “RISE with SAP” to drive their end-to-end business transformations. These customers included: Alpargatas, Auckland Council, Blue Diamond Growers, Border States, Copenhagen Airports, ExxonMobil, Navantia, PANDORA, Porsche Informatik, Powerlink Queensland, Prairie Farms Dairy, ProRail, Prysmian, Shiseido Company, Tokio Marine & Nichido Fire Insurance, VistaPrint, Warsaw City Hall, and Xerox.

BMI Group Holdings, Co-op, Fiagril, Pure Storage, UBE Corporation, and Wegmans went live on SAP S/4HANA Cloud in the second quarter.

Consolidated Hospitality Supplies, flatexDEGIRO, Fortera Corporation, La Trobe University, Stern-Wywiol Gruppe, and Trade Capital Corporation chose “GROW with SAP”, an offering helping customers adopt cloud ERP with speed, predictability, and continuous innovation.

Key customer wins across SAP’s solution portfolio included: Accenture, Ambipar, Arca Continental, BASF, Buderus Guss, Carl Zeiss, DACHSER, Endress+Hauser, iHerb, Lenovo, Minor Hotels, New Look, Parle Biscuits, Refresco, U.S. Sugar, Veolia Group, and Zoomlion.

Beiersdorf, E.ON, Gerdau, Hyundai Motor Company, Kia Corporation and SMA Solar Technology went live on SAP solutions.

In the second quarter, SAP’s cloud revenue performance was particularly strong in APJ and EMEA and robust in the Americas region. Brazil, Canada, Germany, India, Japan, and South Korea had outstanding performances in cloud revenue growth while China, the U.S., and Saudi Arabia were particularly strong.

On April 22, SAP announced AI advancements in its supply chain solutions that we anticipate will unleash a transformative wave of productivity, efficiency and precision in manufacturing. AI-driven insights from real-time data will help companies use their own data to make better decisions across supply chains, streamline product development and improve manufacturing efficiency.

On May 6, SAP announced that it had extended the contract of CEO and Member of the Executive Board Christian Klein for three years, until April 2028.

On May 8, SAP and IBM announced their vision for the next era of their collaboration, which includes new generative AI capabilities and industry-specific cloud solutions that can help clients unlock business value.

On May 13, SAP announced that Charoen Pokphand Foods Public Company Limited (“CP Foods”) had selected multiple SAP solutions to drive further growth and competitive advantage and to ensure the sustainability of its products for the future.

On May 15, SAP announced that the Annual General Meeting (AGM) of Shareholders of SAP SE elected Pekka Ala-Pietilä as new member of the company’s Supervisory Board. Subsequently, Ala-Pietilä was also elected the new Chairman of the SAP Supervisory Board, completing the handover from former Chairman of the Board, Prof. Dr. h. c. mult. Hasso Plattner. In addition, Prof. Dr. Ralf Herbrich was elected and Aicha Evans, Gerhard Oswald and Dr. Friederike Rotsch were reelected as members of the Supervisory Board. The AGM also approved all other proposals of the Executive Board and Supervisory Board with strong support. That includes the adjustment of the compensation of the Chairman of the Supervisory Board. Furthermore, the dividend proposal of €2.20 per share for fiscal year 2023 was approved.

On May 29, SAP and Amazon Web Services (AWS), an Amazon.com company, announced an expanded, strategic collaboration to transform modern cloud enterprise resource planning (ERP) experiences and help enterprises drive new capabilities and efficiencies with generative artificial intelligence (AI).

On June 5, SAP and WalkMe Ltd. (Walkme) announced that the companies had entered into a definitive agreement under which SAP will acquire 100% of WalkMe, a leader in digital adoption platforms. The Executive and Supervisory Boards of SAP SE and the board of directors of WalkMe have approved the transaction for US $14.00 per share in an all-cash transaction, representing an equity value of approximately US $1.5 billion. The offer price represents a 45% premium to WalkMe’s closing share price on June 4, 2024. The acquisition is subject to customary closing conditions, including the receipt of WalkMe shareholder approval and necessary regulatory clearances, and is expected to close in the third quarter of 2024.

On June 5, SAP announced that it was adjusting its dividend policy effective immediately. The new policy is to pay a dividend amounting to at least 40% of the group’s non-IFRS profit after tax from continuing operations (previously: at least 40% of the group’s IFRS profit after tax).

Business Outlook

Financial outlook 2024.

SAP’s financial outlook 2024 is based on SAP’s updated non-IFRS definition of profit measures which, beginning in 2024, include share-based compensation expenses and exclude gains and losses from equity securities, net. For more details, please refer to the  Reporting Framework section on our Investor Relations website.

SAP continues to expect:

€17.0 – 17.3 billion cloud revenue at constant currencies (2023: €13.66 billion), up 24% to 27% at constant currencies.

€29.0 – 29.5 billion cloud and software revenue at constant currencies (2023: €26.92 billion), up 8% to 10% at constant currencies.

€7.6 – 7.9 billion non-IFRS operating profit at constant currencies (2023: €6.51 billion), up 17% to 21% at constant currencies.

Free cash flow of approximately €3.5 billion (2023: €5.09 billion).

An effective tax rate (non-IFRS) of approximately 32% (2023: 30.3%) 2 .

While SAP’s 2024 financial outlook is at constant currencies, actual currency reported figures are expected to be impacted by currency exchange rate fluctuations as the company progresses through the year, as reflected in the table below. 

[2]The effective tax rate (non-IFRS) is a non-IFRS financial measure and is presented for supplemental informational purposes only. We do not provide an outlook for the effective tax rate (IFRS) due to the uncertainty and potential variability of gains and losses associated with equity securities, which are reconciling items between the two effective tax rates (non-IFRS and IFRS). These items cannot be provided without unreasonable efforts but could have a significant impact on our future effective tax rate (IFRS).

Currency Impact Assuming June 30, 2024 Rates Apply for 2024

Non-Financial Outlook 2024

SAP now expects the Employee Engagement Index to be in a range of 70% to 74% in 2024 (previously: 76% to 80%).

In 2024, SAP continues to expect:   

A Customer Net Promoter Score of 9 to 13.

To steadily decrease carbon emissions across the relevant value chain, in line with our target of achieving Net Zero carbon emissions by 2030.

To steadily increase the number of women in executive roles in line with our end of year 2027 target to achieve 25%. 

Ambition 2025

SAP is updating its financial ambition 2025, reflecting the anticipated incremental benefits from the transformation program.

By 2025, SAP now expects:

Non-IFRS operating profit of approximately €10.2 billion (previously: approximately €10 billion).

Cloud revenue of more than €21.5 billion.

Total revenue of more than €37.5 billion.

Non-IFRS cloud gross profit of approximately €16.2 billion.

Free cash flow of approximately €8.0 billion (now including an anticipated mid-triple-digit million Euro restructuring payout in 2025 associated with the 2024 transformation program).

A share of more predictable revenue of approximately 86%.

The 2025 financial ambition is based on an exchange rate of 1.10 USD per EUR.

Non-Financial Ambition 2025

For 2025, SAP now aims to increase the Employee Engagement Index (previously: Steadily increasing the Employee Engagement Index).

SAP continues to aim for

Steadily increasing the Customer Net Promoter Score.

The 2025 non-financial ambitions are in addition to our medium-term targets of achieving Net Zero carbon emissions across the value chain by 2030 and reaching 25% women in executive roles by the end of 2027.

SAP Announces First Quarter 2022 Results

Walldorf, Germany — SAP SE (NYSE: SAP) today announced its financial results for the first quarter ended March 31, 2022.

SAP Announces Q1 2022 Results With Continued Cloud Momentum

• Cloud revenue growth further accelerates, up 31% and up 25% at constant currencies
• Current cloud backlog approaches €10bn, up 28% and up 23% at constant currencies
• SAP S/4HANA cloud revenue significantly increases, up 78% and up 71% at constant currencies. SAP S/4HANA current cloud backlog expands even faster, up 86% and up 79% at constant currencies
• SAP reaffirms 2022 outlook for revenue, non-IFRS operating profit and free cash flow

“Customers powered another quarter of strong cloud growth as they turned to us for solutions to make their businesses more sustainable, their supply chains more resilient, and their enterprises more future-proof. Our signature ERP offering SAP S/4HANA grew at record levels demonstrating the confidence customers place in us to support their business transformations.” Christian Klein, CEO “We are off to a solid start to the year and our outlook remains strong. Despite the current macroeconomic environment, cloud revenue growth accelerated further, fueling total revenue growth. Current cloud backlog grew at a healthy rate and continues to support our confidence in our long-term plans and outlook for the year.” Luka Mucic, CFO

Read the Q1 2022 Quarterly Statement

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