Sap SE
Q4 2024 Earnings
Market Reaction
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Did SAP Beat Earnings? Q4 2024 Results
SAP closed out Q4 2024 with a mixed but broadly constructive report, posting earnings per share of $1.40 against a consensus estimate of $1.49, a miss of 6.04%, even as revenue climbed 10.7% year over year to $9.38 billion. The headline earnings shortfall was largely explained by $323 million in restructuring charges tied to the company's ongoing 2024 transformation program, which weighed on IFRS profitability while the underlying cloud business accelerated sharply. Cloud revenue surged 27% to $4.71 billion in the quarter, with CEO Christian Klein noting that half of all Q4 cloud order entry incorporated AI capabilities, a signal of deepening enterprise adoption of SAP's Business AI offerings. Current cloud backlog expanded 32% to $18.08 billion, providing strong forward visibility. Looking ahead, SAP guided 2025 cloud revenue to $21.60 billion-$21.90 billion, representing growth of 26-28% at constant currencies, alongside non-IFRS operating profit of $10.30 billion-$10.60 billion, up 26-30%, suggesting confidence that restructuring headwinds are largely behind it.
- Cloud ERP Suite revenue growth of 35% in Q4, driven by SAP S/4HANA Cloud adoption
- Current cloud backlog grew 32% to €18.1 billion providing strong forward revenue visibility
- Total cloud backlog of €63.3 billion, up 43%
- Disciplined execution of 2024 transformation program improving operating leverage
- Share of more predictable revenue increased to 81% in Q4
- Strong software licenses and support business performance
- AI integration driving cloud order entry with half of Q4 orders including AI
“Q4 was a strong finish to the year, with half of our cloud order entry including AI. Looking at the full year, we exceeded our cloud goals, accelerating cloud revenue and current cloud backlog growth against a much larger base. Total cloud backlog now stands at €63 billion, up 40%. Revenue growth has returned to double-digits. Looking ahead, our strong position in data and Business AI gives us additional confidence that we will accelerate revenue growth through 2027.”
SAP CEO, on the earnings call
Forward Guidance & Outlook
For 2025, SAP expects cloud revenue of €21.6–21.9 billion at constant currencies (up 26–28%), cloud and software revenue of €33.1–33.6 billion at constant currencies (up 11–13%), non-IFRS operating profit of €10.3–10.6 billion at constant currencies (up 26–30%), and approximately €8.0 billion in free cash flow (under an updated definition). The effective non-IFRS tax rate is expected to be approximately 32%. Current cloud backlog growth is expected to slightly decelerate in 2025. Currency tailwinds of approximately 2.5pp on cloud revenue growth and 4.0pp on non-IFRS operating profit growth are anticipated if December 31, 2024 exchange rates hold. The 2025 outlook assumes an average exchange rate of 1.08 USD per EUR.
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Figures from SEC filings and company reports. Not investment advice.