- Current cloud backlog of €15.4 billion, up 25% and up 29% at
constant currencies
- Cloud revenue up 25% and up 27% at constant currencies
- Cloud ERP Suite revenue up 34% and up 36% at constant
currencies
- Total revenue up 9% and up 10% at constant currencies
- IFRS cloud gross profit up 26%, non-IFRS cloud gross profit up
27% and up 28% at constant currencies
- IFRS operating profit up 29%, non-IFRS operating profit up 27%
and up 28% at constant currencies
- SAP raises its 2024 outlook for cloud and software revenue,
operating profit and free cash flow
WALLDORF, Germany, Oct. 21,
2024 /PRNewswire/ -- SAP SE (NYSE: SAP) announced
today its financial results for the third quarter ended
September 30, 2024.
Christian Klein, CEO:
Q3 was another strong quarter for SAP, and we are confidently
raising our 2024 financial outlook. Cloud revenue growth developed
remarkably well in the quarter, especially for our Cloud ERP Suite.
Even more importantly, we are making strong progress on Business AI
with groundbreaking innovations such as SAP Knowledge Graph. A
significant part of our cloud deals in Q3 included AI use
cases.
Dominik Asam, CFO:
We are very pleased with our third quarter performance. The 2024
transformation program has already started to yield efficiency
improvements. This allowed us to deliver a strong operating profit
and free cash flow, while retaining our topline momentum.
We're now focused on carrying that momentum into Q4 to safeguard
the achievement of our 2025 ambition amidst a highly volatile
environment.
Financial Performance
Group results at a glance – Third quarter 2024
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q3 2024
|
Q3 2023
|
∆ in %
|
|
Q3 2024
|
Q3 2023
|
∆ in %
|
∆ in %
const. curr.
|
|
SaaS/PaaS
|
4,234
|
3,291
|
29
|
|
4,234
|
3,291
|
29
|
30
|
|
Thereof Cloud ERP
Suite2
|
3,636
|
2,711
|
34
|
|
3,636
|
2,711
|
34
|
36
|
|
Thereof Extension
Suite3
|
597
|
581
|
3
|
|
597
|
581
|
3
|
4
|
|
IaaS4
|
117
|
180
|
–35
|
|
117
|
180
|
–35
|
–34
|
|
Cloud
revenue
|
4,351
|
3,472
|
25
|
|
4,351
|
3,472
|
25
|
27
|
|
Cloud and software
revenue
|
7,429
|
6,679
|
11
|
|
7,429
|
6,679
|
11
|
12
|
|
Total
revenue
|
8,470
|
7,744
|
9
|
|
8,470
|
7,744
|
9
|
10
|
|
Share of more
predictable revenue (in %)
|
84
|
82
|
2pp
|
|
84
|
82
|
2pp
|
|
|
Cloud gross
profit
|
3,184
|
2,525
|
26
|
|
3,209
|
2,535
|
27
|
28
|
|
Gross profit
|
6,212
|
5,637
|
10
|
|
6,236
|
5,651
|
10
|
11
|
|
Operating profit
(loss)
|
2,214
|
1,723
|
29
|
|
2,244
|
1,767
|
27
|
28
|
|
Profit (loss) after tax
from continuing operations
|
1,441
|
1,272
|
13
|
|
1,437
|
1,352
|
6
|
|
|
Profit (loss) after
tax5
|
1,441
|
1,272
|
13
|
|
1,437
|
1,352
|
6
|
|
|
Earnings per share -
Basic (in €) from continuing operations
|
1.25
|
1.09
|
15
|
|
1.23
|
1.16
|
6
|
|
|
Earnings per share -
Basic (in €)5
|
1.25
|
1.09
|
15
|
|
1.23
|
1.16
|
6
|
|
|
Net cash flows from
operating activities from continuing operations
|
1,475
|
1,124
|
31
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
1,248
|
865
|
44
|
|
|
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 – Nine months ended September 2024
|
IFRS
|
|
Non-IFRS1
|
|
€ million, unless
otherwise stated
|
Q1–Q3
2024
|
Q1–Q3
2023
|
∆ in %
|
|
Q1–Q3
2024
|
Q1–Q3
2023
|
∆ in %
|
∆ in %
const. curr.
|
|
SaaS/PaaS
|
12,016
|
9,401
|
28
|
|
12,016
|
9,401
|
28
|
29
|
|
Thereof Cloud ERP
Suite revenue2
|
10,217
|
7,695
|
33
|
|
10,217
|
7,695
|
33
|
34
|
|
Thereof Extension
Suite revenue3
|
1,799
|
1,706
|
5
|
|
1,799
|
1,706
|
5
|
6
|
|
IaaS4
|
417
|
564
|
–26
|
|
417
|
564
|
–26
|
–25
|
|
Cloud
revenue
|
12,433
|
9,965
|
25
|
|
12,433
|
9,965
|
25
|
26
|
|
Cloud and software
revenue
|
21,563
|
19,542
|
10
|
|
21,563
|
19,542
|
10
|
11
|
|
Total
revenue
|
24,798
|
22,739
|
9
|
|
24,798
|
22,739
|
9
|
10
|
|
Share of more
predictable revenue (in %)
|
84
|
82
|
2pp
|
|
84
|
82
|
2pp
|
|
|
Cloud gross
profit
|
9,052
|
7,121
|
27
|
|
9,101
|
7,152
|
27
|
28
|
|
Gross profit
|
17,990
|
16,330
|
10
|
|
18,039
|
16,388
|
10
|
11
|
|
Operating profit
(loss)
|
2,648
|
3,897
|
–32
|
|
5,717
|
4,546
|
26
|
27
|
|
Profit (loss) after tax
from continuing operations
|
1,534
|
2,399
|
–36
|
|
3,660
|
3,019
|
21
|
|
|
Profit (loss) after
tax5
|
1,534
|
4,763
|
–68
|
|
3,660
|
4,801
|
–24
|
|
|
Earnings per share -
Basic (in €) from continuing operations
|
1.31
|
2.07
|
–37
|
|
3.13
|
2.59
|
21
|
|
|
Earnings per share -
Basic (in €)5
|
1.31
|
4.21
|
–69
|
|
3.13
|
4.39
|
–29
|
|
|
Net cash flows from
operating activities from continuing operations
|
5,772
|
4,284
|
35
|
|
|
|
|
|
|
Free cash
flow
|
|
|
|
|
5,031
|
3,423
|
47
|
|
|
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
Third Quarter 2024
In the third quarter, SAP's strong business momentum continued.
Current cloud backlog grew by 25% to €15.38 billion and was up 29%
at constant currencies. The acquisition of WalkMe contributed
approximately 1 percentage point to that growth rate. Cloud revenue
was up 25% to €4.35 billion and up 27% at constant currencies,
fueled by Cloud ERP Suite revenue, which was up 34% to €3.64
billion and up 36% at constant currencies.
Software licenses revenue decreased by 15% to €0.28 billion and
was down 14% at constant currencies. Cloud and software revenue was
up 11% to €7.43 billion and up 12% at constant currencies. Services
revenue was down 2% to €1.04 billion and down 2% at constant
currencies. Total revenue was up 9% to €8.47 billion and up 10% at
constant currencies.
The share of more predictable revenue increased by 2 percentage
points to 84% in the third quarter.
IFRS cloud gross profit was up 26% to €3.18 billion. Non-IFRS
cloud gross profit was up 27% to €3.21 billion and was up 28% at
constant currencies.
IFRS operating profit in the third quarter was up 29% to €2.21
billion. Non-IFRS operating profit was up 27% to €2.24 billion and
was up 28% at constant currencies. Operating profit growth was
mainly driven by strong revenue growth as well as disciplined
execution of the 2024 transformation program.
IFRS earnings per share (basic) increased 15% to €1.25. Non-IFRS
earnings per share (basic) increased 6% to €1.23. IFRS effective
tax rate was 33.0% (Q3/2023: 27.8%) and non-IFRS effective tax rate
was 33.4% (Q3/2023: 27.1%). Both year-over-year increases mainly
resulted from a temporary inability to offset withholding taxes in
Germany due to tax losses in 2024
resulting from restructuring.
Free cash flow in the third quarter increased by 44% to €1.25
billion. While around €0.3 billion was paid out for restructuring,
the positive development was primarily attributable to increased
profitability and lower tax payments. For the first nine months,
free cash flow was up 47% to €5.03 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
September 30, 2024, SAP had
repurchased 16,709,250 shares at an average price of €157.09
resulting in a purchased volume of approximately €2.62 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 and the acquisition of WalkMe, SAP now
expects to exit 2024 at a headcount slightly ahead of year-end
2023.
While restructuring expenses recorded in the first nine months
of 2024 total €2.8 billion, the overall expenses associated with
the program are estimated to be approximately €3 billion.
Restructuring payouts in the third quarter and first nine months
of 2024 amounted to €0.3 billion and €0.8 billion respectively.
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 third quarter, customers around the globe continued to
choose "RISE with SAP" to drive their end-to-end business
transformations. These customers included: B3, CAF - the
Development Bank of Latin America
and the Caribbean, Chalhoub Group,
Cochlear, Dakota Provisions, E.ON, eBay, Energy Queensland,
Equinor, FairPrice Group, Gestamp Servicios, JAPAN AIRLINES,
Lands' End, Mercado Libre, Mondelez
International, OLAM Global Agri, Roche, Rolls-Royce Power Systems,
Schwarz Group, Siemens Healthineers, Southern Glazer's Wine
& Spirits, SRAM, Tetra Pak, ZEON Corporation, and Zwilling.
Clorox, CPKC Railways, J.M. VOITH, KAESER KOMPRESSOREN, Nvidia,
Panasonic Energy of North America,
and VistaPrint went live on SAP S/4HANA Cloud in the third
quarter.
Dawn Foods, DXC Technology, Gainsight, L'OCCITANE Group, Mistral
AI, Palmer Candy, The Pool Tile
Company, and SCHURTER Holding 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: AAK,
Aramark, Bosideng, BY-HEALTH, Continental Automotive Technologies,
Duni Group, Hamburg Commercial Bank, HR Campus, Kruger Services,
Manchester City Council, Merck KGaA, PayPal, pfm medical, RWE, and
VP Bank.
Breakthru Beverage Group, Cox Automotive Australia, and
Heartland Dental went live on SAP solutions.
In the third quarter, SAP's cloud revenue performance was
particularly strong in APJ and EMEA and robust in the Americas
region. Brazil, Chile, Germany, Italy, India,
Japan and Spain had outstanding performances in cloud
revenue growth while China,
Saudi Arabia and the U.S. were
particularly strong.
On July 30, SAP announced that the
SAP Supervisory Board reached a mutual agreement with Executive
Board Members Scott Russell and Julia
White to leave the company's Executive Board, effective
August 31.
On September 3, SAP announced that
the SAP Supervisory Board reached a mutual agreement with Chief
Technology Officer and Executive Board Member Dr.-Ing. Juergen Mueller to leave the company's Executive
Board, effective September 30,
2024.
On September 12, SAP announced
that it successfully completed its acquisition of WalkMe Ltd., a
leading digital adoption platform company.
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.
For 2024, SAP is updating its cloud and software revenue,
operating profit and free cash flow outlook and now expects:
- €29.5 – 29.8 billion cloud and software revenue at constant
currencies (2023: €26.92 billion), up 10% to 11% at constant
currencies, raising the midpoint by €400 million. The previous
range was €29.0 – 29.5 billion at constant currencies.
- €7.8 – 8.0 billion non-IFRS operating profit at constant
currencies (2023: €6.51 billion), up 20% to 23% at constant
currencies, raising the midpoint by €150 million. The previous
range was €7.6 – 7.9 billion at constant currencies.
- €3.5 – 4.0 billion free cash flow (2023: €5.09 billion). The
previous outlook was approximately €3.5 billion.
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.
- 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 September 30,
2024 Rates Apply for 2024
|
In percentage
points
|
Q4 2024
|
FY 2024
|
|
Cloud revenue
growth
|
–3.0pp
|
–1.0pp
|
|
Cloud and software
revenue growth
|
–2.0pp
|
–1.0pp
|
|
Operating profit growth
(non-IFRS)
|
–2.0pp
|
–2.0pp
|
Non-Financial Outlook 2024
In 2024, SAP continues to expect:
- The Employee Engagement Index to be in a range of 70% to
74%.
- 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%.
Additional Information
This press release and all information therein is preliminary
and unaudited. Due to rounding, numbers may not add up precisely.
The full Q3 2024 Quarterly Statement can be downloaded from:
https://www.sap.com/investors/sap-2024-q3-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, October
21st 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 third 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
1The Q3 2024 results were also impacted by other
effects. For details, please refer to the disclosures on page 25 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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