SAP’s Q2 2024 results show a 10% revenue increase to €8.29 billion, driven by a 25% rise in cloud revenue. Shares opened 5% higher, hitting record highs.
SAP SE unveiled its Q2 2024 financial results on Monday after market close, showcasing a robust performance driven by significant strides in cloud revenue and strategic advancements in business AI.
Shares of SAP opened 5% higher on Tuesday at €193, reaching new record highs and on course for the best one-day performance since January.
The German tech giant reported total revenue of €8.29 billion for Q2 2024, a 10% increase compared to the same period last year, surpassing market expectations of €8.25 billion. This growth was predominantly driven by a 25% surge in cloud revenue, reaching €4.15 billion. The Cloud ERP Suite played a pivotal role, recording a 33% rise to €3.41 billion.
Additionally, SAP’s current cloud backlog, which represents contractually committed cloud revenue expected over the next 12 months, climbed by 28% to €14.81 billion.
SAP maintained solid margins, including a cloud gross margin of 73%, a cloud and software gross margin of 80%, and an overall gross margin of 72.6%. The company reported a 59% increase in earnings per share (basic), reaching €1.10, surpassing market expectations of €1.06.
Management insights
Chief executive officer Christian Klein noted that SAP’s cloud growth momentum remained strong in the second quarter, bolstered by the integration of business AI, which enabled numerous deals.
Klein commented, “We continue to execute on our transformation with great discipline, leading to an increase in our operating profit ambition for 2025. Given our progress and strong pipeline, we are confident to achieve accelerating topline growth through 2027.”
“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,” Chief Financial Officer Dominik Asam noted.
He also emphasised the company’s commitment to its transformation plan, aiming to achieve the 2025 free cash flow ambition despite anticipated restructuring costs spilling into next year.
Regional revenue growth
SAP’s cloud revenue growth was impressive across all markets. In the Americas, cloud revenue increased by 18%, with Brazil and Canada demonstrating exceptional growth, and the US performing particularly well.
In the EMEA region, cloud revenue surged by 32%, with Germany and Saudi Arabia contributing significantly.
The Asia Pacific region recorded a 33% increase in cloud revenue, with standout performances from India, Japan, South Korea, and China.
Strategic focus on business AI and restructuring
As part of its strategic focus for 2024, SAP is amplifying its efforts in business AI, restructuring its operations to harness AI-driven efficiencies and scalability. This transformation is supported by a company-wide restructuring programme expected to conclude by early 2025, aiming to align SAP’s skillset with future business needs. The restructuring is expected to impact 9,000 to 10,000 positions, predominantly through voluntary leave programmes and internal re-skilling initiatives. Despite these adjustments, SAP expects to maintain a headcount comparable to that at the end of 2023.
