SAP 2022: 11% revenue growth, 2.5% staff targeted by restructure

SAP has announced what it calls a “targeted restructuring” as part of its full-year and fourth-quarter 2022 results. It expects this to affect 2.5% of its employees in 2023. It predicts a “moderate cost benefit” in 2023 and €300m to €350m in annual cost savings as of 2024.

It is also exploring the sale of its share in Qualtrics, the online survey provider it bought for $8bn in 2019, under the leadership of Bill McDermott, and partially divested in 2020. SAP stated that, since acquisition, Qualtrics’ revenue has increased by 3.5 times to approximately $1.5bn. “In the event of a successful transaction, SAP intends to remain a go-to-market and technology partner … A final decision on any transaction, its conditions and timing is subject to market conditions,” it said.

The supplier reported revenue of €30.87bn, representing 11% year-on-year growth. Of that, €12.56bn was cloud revenue, up 33%, 41% of the total. That compares with 2021 cloud revenue of €9.418bn, 34% of the €27.842bn total.

CEO Christian Klein said: “SAP is more resilient than ever. We end 2022 with continued strong cloud momentum and a return to operating profit growth in the fourth quarter, marking an important inflection point… As we enter the next chapter of SAP, I want to thank [CFO] Luka [Mucic] for his great partnership on this journey.”

Mucic is stepping down from his role, and said: “In my 37th and final earnings for SAP, I am proud that the SAP team is announcing excellent results and continued cloud momentum. We are on track to deliver our growth and profitability commitments for 2023. I am extremely confident in the continued success of SAP’s most exciting transformation in its history. Thank you to the wonderful SAP family that I have been part of for 27 years.”

In the fourth quarter, the supplier stated that cloud revenue was up 30% to €3.39bn. It also flagged cloud revenue from its flagship SAP S/4HANA ERP system as being up 101% to €0.66bn.

As in previous quarterly statements, SAP noted the impact of the war in Ukraine and its decision to “wind down” its business operations in Russia and Belarus. It said that at the end of the fourth quarter, “current cloud backlog was approximately €62m lower due to the termination of existing cloud engagements in Russia and Belarus”.

By “cloud backlog”, the supplier means contractually committed cloud revenue it expects to recognise in the future. SAP also noted that “other impacts due to this evolving situation are currently unknown and could potentially subject our business to materially adverse consequences should the situation escalate beyond its current scope”.

The supplier listed some customers that have chosen the Rise with SAP business transformation as a service it has been touting since January 2021. These included ExxonMobil, Fujitsu Limited, the German Football Association (DFB), Lockheed Martin, Merck KGaA, the Munich Leukemia Laboratory, Port of Rotterdam, Renault Group and Swarovski.

SAP also stated that Accenture, Canon Production Printing, Daimler Truck AG, Ducati Motor Holding, Mahindra Group, Walgreens Boots Alliance and Zespri went live on SAP S/4HANA Cloud in the fourth quarter.

The supplier picked out Brazil, Germany and Japan as having “outstanding” cloud revenue performances, while China, India, the Netherlands, Switzerland and the US were particularly strong.

It also highlighted the launch, in November 2022, of SAP Build, a low-code development platform it hopes will appeal to business users.