SAP announces restructuring to impact 10,000 employees in 2025

The vendor outlined the cuts alongside announcing strong Q2 performance

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 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 €3bn, up from previous projections.

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

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 per cent to €4.15bn, driven by a 33 per cent growth in cloud ERP Suite to €3.41bn.

Current cloud backlog grew by 28 per cent to €14.81bn and total revenue was up 10 per cent to €8.29bn.

The share of more predictable revenue increased by 2 pp to 84 per cent while cloud gross profit rose 29 per cent (IFRS) to €3.03bn.

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

Free cash flow in Q2 increased by 114 per cent to €1.3bn, despite €0.5bn in restructuring cuts.

However, software licenses revenue decreased by 28 per cent to €0.2bn, reflecting the ongoing shift towards cloud-based solutions.

IFRS operating profit decreased by 11 per cent to €1.22bn, primarily due to the €0.6bn in restructuring expenses. Despite this, IFRS earnings per share increased by 22 per cent to €0.76, while non-IFRS earnings per share rose 59 per cent 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 €1.87bn of the planned €5bn 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.