SAP Reports Loss Due to Restructuring Costs Despite Growth in Cloud Revenue

SAP Reports Loss Due to Restructuring Costs Despite Growth in Cloud Revenue

SAP, the enterprise software giant, has announced a significant operational loss of 787 million euros for the first quarter of 2024, despite achieving growth in cloud revenues and greater profitability. The loss stems largely from a comprehensive restructuring plan that the company initiated earlier this year.

The company has set aside 2.2 billion euros for restructuring costs, a substantial figure that has dragged its bottom line into the red. This fund also covers “share-based compensation for departing employees,” according to the company’s statement.

Reports indicate that the restructuring will impact approximately 2,600 jobs in Germany alone, as part of SAP’s broader effort to streamline operations. The exact cost of the restructuring remains unspecified, but SAP’s consistently high stock price has also inflated the cost of bonus payments to staff.

CEO Christian Klein stated that the transformation program is proceeding as planned and is expected to help achieve desired growth. The company aims to harness “organizational synergies” and achieve “efficiency gains through AI,” as outlined in its quarterly report.

Looking ahead, SAP is focusing on investments in artificial intelligence and expanding its cloud portfolio. The cloud segment remains SAP’s fastest-growing area, with revenues increasing by 24 percent compared to the same period last year, reaching 3.93 billion euros. The company expects to maintain this growth rate.

“We had a fantastic start to 2024 and are confident in meeting our targets for the year,” said Klein. For the full year, SAP forecasts an operating profit between 7.6 and 7.9 billion euros.