SAP exceeds estimates and announces 25 per cent growth in cloud revenue

SAP announced financial results for the second quarter of fiscal year 2024. The company recorded notable growth and even exceeded the forecasts of business analysts.

SAP’s total revenue reached €8.29 billion (a 10% increase over the same quarter last year), beating consensus estimates of €8.25 billion. In the second quarter of 2024, the accelerated growth of the cloud area continued. The current cloud backlog increased by 28% to 14.81 billion euros. At the same time, the increase in cloud revenues amounts to 25%, up to 4.15 billion euros. A good part of the increase in cloud revenue is due to the increase in ERP Suite cloud revenue, which reached 3.41 billion euros, up 33%. The proportion of predictable revenue within SAP continues to rise, advancing by two percentage points in the second quarter of 2024 to 84%.

The positive figures recorded by SAP in the second quarter of 2024 also allow for increased confidence in the expected results for next year. Thus, the German giant expects to register an operating profit of 10.2 billion euros in 2025, a slight increase from the initial predictions, which indicated an operating profit of 10 billion euros. The review is based on efficiency gains due to the company’s transformation programme.

“The momentum that the growth of the cloud division has remained consistent in Q2 2024, thanks to Business AI that allowed to support even more customers. We continue to focus on the transformation of the company and have increased ambitions for operating profit in 2025. In parallel, we continue to invest so that we maintain our leadership position in Business AI. Given the progress made so far and the plans for the future, we are confident that we will see accelerated growth through 2027,” said Christian Klein, SAP CEO. “We remain focused on achieving the objectives proposed for this year. Cloud backlog growth in the second half of 2024, especially in Q4, will be decisive in establishing a solid foundation for our cloud revenue ambitions in 2025. At the same time, we will continue to implement the plan our transformation to achieve our ambition of free cash flow in 2025, despite a cash outflow of several hundred million for restructuring that will extend into next year,” added Dominik Asam, SAP CFO.