- 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
WALLDORF, Germany, July 22,
2024 /PRNewswire/ -- SAP SE (NYSE: SAP) announced
today its financial results for the second quarter ended
June 30, 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.
All figures in this statement are based on SAP group results
from continuing operations unless otherwise noted.
Financial Performance
Group results at a glance – Second quarter 2024
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q2 2024
|
Q2 2023
|
∆ in %
|
|
Q2 2024
|
Q2 2023
|
∆ in %
|
∆ in %
const. curr.
|
|
SaaS/PaaS
|
4,018
|
3,130
|
28
|
|
4,018
|
3,130
|
28
|
28
|
|
Thereof Cloud ERP
Suite2
|
3,414
|
2,562
|
33
|
|
3,414
|
2,562
|
33
|
33
|
|
Thereof Extension
Suite3
|
604
|
568
|
6
|
|
604
|
568
|
6
|
6
|
|
IaaS4
|
135
|
186
|
–27
|
|
135
|
186
|
–27
|
–27
|
|
Cloud
revenue
|
4,153
|
3,316
|
25
|
|
4,153
|
3,316
|
25
|
25
|
|
Cloud and software
revenue
|
7,175
|
6,505
|
10
|
|
7,175
|
6,505
|
10
|
10
|
|
Total
revenue
|
8,288
|
7,554
|
10
|
|
8,288
|
7,554
|
10
|
10
|
|
Share of more
predictable revenue (in %)
|
84
|
82
|
2pp
|
|
84
|
82
|
2pp
|
|
|
Cloud gross
profit
|
3,030
|
2,357
|
29
|
|
3,043
|
2,368
|
28
|
29
|
|
Gross profit
|
6,017
|
5,409
|
11
|
|
6,029
|
5,432
|
11
|
11
|
|
Operating profit
(loss)
|
1,222
|
1,371
|
–11
|
|
1,940
|
1,457
|
33
|
35
|
|
Profit (loss) after tax
from continuing operations
|
918
|
724
|
27
|
|
1,278
|
799
|
60
|
|
|
Profit (loss) after
tax5
|
918
|
2,982
|
–69
|
|
1,278
|
2,437
|
–48
|
|
|
Earnings per share -
Basic (in €) from continuing operations
|
0.76
|
0.62
|
22
|
|
1.10
|
0.69
|
59
|
|
|
Earnings per share -
Basic (in €)5
|
0.76
|
2.70
|
–72
|
|
1.10
|
2.40
|
–54
|
|
|
Net cash flows from
operating activities from continuing operations
|
1,540
|
848
|
82
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
1,291
|
604
|
>100
|
|
|
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
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q1–Q2
2024
|
Q1–Q2
2023
|
∆ in %
|
|
Q1–Q2
2024
|
Q1–Q2
2023
|
∆ in %
|
∆ in %
const. curr.
|
|
SaaS/PaaS
|
7,782
|
6,110
|
27
|
|
7,782
|
6,110
|
27
|
28
|
|
Thereof Cloud ERP
Suite revenue2
|
6,581
|
4,984
|
32
|
|
6,581
|
4,984
|
32
|
33
|
|
Thereof Extension
Suite revenue3
|
1,202
|
1,126
|
7
|
|
1,202
|
1,126
|
7
|
7
|
|
IaaS4
|
299
|
383
|
–22
|
|
299
|
383
|
–22
|
–21
|
|
Cloud
revenue
|
8,082
|
6,493
|
24
|
|
8,082
|
6,493
|
24
|
25
|
|
Cloud and software
revenue
|
14,134
|
12,863
|
10
|
|
14,134
|
12,863
|
10
|
11
|
|
Total
revenue
|
16,329
|
14,995
|
9
|
|
16,329
|
14,995
|
9
|
10
|
|
Share of more
predictable revenue (in %)
|
84
|
82
|
2pp
|
|
84
|
82
|
2pp
|
|
|
Cloud gross
profit
|
5,867
|
4,596
|
28
|
|
5,892
|
4,617
|
28
|
29
|
|
Gross profit
|
11,778
|
10,693
|
10
|
|
11,803
|
10,737
|
10
|
11
|
|
Operating profit
(loss)
|
434
|
2,174
|
–80
|
|
3,473
|
2,779
|
25
|
27
|
|
Profit (loss) after tax
from continuing operations
|
94
|
1,128
|
–92
|
|
2,223
|
1,667
|
33
|
|
|
Profit (loss) after
tax5
|
94
|
3,491
|
–97
|
|
2,223
|
3,448
|
–36
|
|
|
Earnings per share -
Basic (in €) from continuing operations
|
0.05
|
0.97
|
–95
|
|
1.91
|
1.44
|
33
|
|
|
Earnings per share -
Basic (in €)5
|
0.05
|
3.12
|
–98
|
|
1.91
|
3.23
|
–41
|
|
|
Net cash flows from
operating activities from continuing operations
|
4,297
|
3,160
|
36
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
3,784
|
2,559
|
48
|
|
|
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.
|
Financial Highlights1
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).
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:
https://www.sap.com/investors/en/reports/reporting-framework.html.
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.
Currency Impact Assuming June 30,
2024 Rates Apply for 2024
|
In percentage
points
|
Q3 2024
|
FY 2024
|
|
Cloud revenue
growth
|
+0.5pp
|
–0.5pp
|
|
Cloud and software
revenue growth
|
+0.5pp
|
–0.5pp
|
|
Operating profit growth
(non-IFRS)
|
+0.0pp
|
–1.5pp
|
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).
SAP continues to expect:
- 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.
Additional Information
This press release and all information therein is preliminary
and unaudited. Due to rounding, numbers may not add up precisely.
The full Q2 2024 Quarterly Statement can be downloaded from:
https://www.sap.com/investors/sap-2024-q2-statement.
SAP Performance Measures
For more information about our key growth metrics and
performance measures, their calculation, their usefulness, and
their limitations, please refer to the following document on our
Investor Relations website:
https://www.sap.com/investors/performance-measures
Webcast
SAP senior management will host a financial analyst conference
call on Monday, July 22nd at
11:00 PM (CEST) / 10:00 PM (BST) / 5:00 PM
(EDT) / 2:00 PM (PDT). The
conference 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 second
quarter results can be found at https://www.sap.com/investor
About SAP
As a global leader in enterprise applications and business AI,
SAP (NYSE: SAP) stands at the nexus of business and technology. For
over 50 years, organizations have trusted SAP to bring out their
best by uniting business-critical operations spanning finance,
procurement, HR, supply chain, and customer experience. For more
information, visit www.sap.com.
|
For customers
interested in learning more about SAP products:
|
|
|
Global Customer
Center:
|
+49 180
534-34-24
|
|
United States
Only:
|
+1 (800) 872-1SAP
(+1-800-872-1727)
|
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 2023 Annual
Report on Form 20-F.
© 2024 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 Q2 2024 results were also impacted by other
effects. For details, please refer to the disclosures on page 27 of
this document.
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).
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