SAP to cut 10,000 roles by 2025

Predicts overall headcount will remain the same as it announces strong Q2 results

Tech giant SAP has announced its restructuring programme, first revealed in January, will impact between 9,000 and 10,000 positions by early 2025.

The vendor claimed many of these changes will be addressed through voluntary leave programmes and internal re-skilling measures.

SAP revealed costs associated with its ongoing reorganisation have climbed to an estimated €3 billion, up from previous projections.

In the second quarter of 2024, SAP recorded additional restructuring expenses of €600 million, bringing the total for the first half of the year to €2.9 billion.

This increase is largely attributed to the strong employee response to voluntary leave options.

Despite the significant number of affected positions, SAP anticipates its overall headcount at the end of 2024 to remain similar to year-end 2023 levels, as the company reinvests in strategic growth areas.

Q2 results

Despite these restructuring expenses, SAP reported strong financial results for the second quarter of 2024, particularly in its cloud business.

Cloud revenue increased by 25% to €4.15 billion, driven by a 33% growth in cloud ERP Suite to €3.41 billion.

Current cloud backlog grew by 28% to €14.81 billion and total revenue was up 10% to €8.29 billion.

Cloud gross profit rose 29% (IFRS) to €3.03 billion.

Non-IFRS operating profit increased by 33% to €1.94 billion, supported by strong revenue growth and disciplined execution of the transformation programme.

Free cash flow in Q2 increased by 114% to €1.3 billion, despite €500 million in restructuring cuts.

However, software licences revenue decreased by 28% to €200 million, reflecting the ongoing shift towards cloud-based solutions.

IFRS operating profit decreased by 11% to €1.22 billion, primarily due to the €600 million in restructuring expenses. Despite this, IFRS earnings per share increased by 22% to €0.76, while non-IFRS earnings per share rose 59% to €1.10.

SAP also reported progress on its share repurchase programme, announcing that as of June 2024, it had repurchased 12,895,525 shares at an average price of €145.20, totalling approximately €1.87 billion of the planned €5 billion programme set to run through 31 December, 2025.

SAP said the reorganisation underscores its commitment to positioning itself at the forefront of the AI revolution in business software.

This article was first published in CRN UK.