SAP reported its first quarter 2024 financial results, showcasing a strong start to the year with accelerated cloud growth and robust performance across its portfolio. The company’s cloud revenue surged 24% (25% at constant currencies) to €3.93 billion, primarily driven by the Cloud ERP Suite, which experienced an impressive 32% revenue growth at constant currencies.
SAP’s current cloud backlog, a key indicator of future growth, reached €14.2 billion, up 27% (28% at constant currencies) — the fastest growth on record. This remarkable momentum reflects the market’s growing preference for integrated cloud solutions and positions SAP well for the remainder of the year.
In 2024, SAP is intensifying its focus on strategic growth areas, particularly in the realm of business AI. The company is undergoing a transformation program to optimize its operational setup, capture organizational synergies, and leverage AI-driven efficiencies. This initiative, expected to conclude in early 2025, will ensure SAP’s resources align with future business needs.
Christian Klein, CEO of SAP, expressed confidence in the company’s trajectory, stating:
“We’re off to a great start in 2024 and we’re confident we’ll achieve our goals for the year. Our transformation program is well on track and will help us capture growth and increase efficiency.”
The transformation program resulted in a €2.2 billion restructuring provision in Q1, covering the majority of the expected restructuring expenses. SAP anticipates providing an update on the program’s progress and financial impact once implementation has further advanced.
Robust Performance Across Key Metrics Seen in SAP Financial Results
Despite the restructuring provision, SAP delivered strong financial results in Q1. Non-IFRS cloud gross profit grew 27% (28% at constant currencies), while the share of more predictable revenue increased by 2 percentage points to 84%. Non-IFRS operating profit rose 16% (19% at constant currencies), even with higher share-based compensation driven by the strong share price increase.
Dominik Asam, CFO of SAP, highlighted the company’s successful transformation program kickoff, allowing SAP to focus investments on the business AI opportunity while decoupling expense from revenue growth. He also noted the unabated growth momentum of the Cloud ERP Suite, reflecting the market’s shift towards integrated cloud solutions.
Free cash flow in Q1 increased by 28% to €2.49 billion, primarily due to increased profitability, working capital improvements, and lower payments for capital expenditures and leasing.
Customer Wins and Solution Adoption for SAP
SAP continued to attract customers globally in Q1, with many choosing “RISE with SAP” for their end-to-end business transformations. Notable customer wins included Brussels Regional Public Service, Clearway Energy Group, Fresenius, LyondellBasell, and ZF Friedrichshafen, among others.
Midsize customers such as Aleron Shared Resources, Climeworks, and Unico opted for “GROW with SAP,” an offering designed to help them adopt cloud ERP with speed, predictability, and continuous innovation.
SAP’s cloud revenue performance was particularly strong in the APJ and EMEA regions, with robust growth in the Americas. Countries like Brazil, Canada, Germany, India, and South Korea exhibited outstanding cloud revenue growth.
Partnerships and Innovations
SAP announced several strategic partnerships and innovations in Q1 to drive customer value and harness the power of data and AI. Collaborations with NVIDIA and Visa, along with new capabilities in SAP Datasphere, exemplify the company’s commitment to empowering businesses with cutting-edge technologies.
SAP reaffirmed its financial outlook for 2024, expecting cloud revenue of €17.0–17.3 billion at constant currencies, cloud and software revenue of €29.0–29.5 billion at constant currencies, and non-IFRS operating profit of €7.6–7.9 billion at constant currencies. The company also anticipates a free cash flow of approximately €3.5 billion and an effective tax rate (non-IFRS) of around 32%.
Beyond financial metrics, SAP remains dedicated to customer satisfaction, employee engagement, sustainability, and diversity. The company aims to achieve a customer net promoter score of 9 to 13, an employee engagement index of 76% to 80%, steadily decrease carbon emissions in line with its Net Zero target by 2030, and increase the number of women in executive roles to 25% by the end of 2027.
As SAP navigates its transformation journey and capitalizes on the vast potential of business AI, the company continues to drive innovation, empower customers, and deliver long-term value to stakeholders.
