SAP shares surge as cloud growth impresses in Q2

23rd Jul 2024 10:00

(Sharecast News) - Shares in SAP surged 7% on Tuesday after the German enterprise software giant impressed with its second-quarter results, as revenue growth was bolstered by increasing momentum in the cloud and AI markets, while the company announced plans to cut more jobs.

SAP said that its company-wide restructuring plan, which is expected to conclude early next year, will affect 9,000 to 10,000 jobs - more than the 8,000 initially predicted - and cost the company €3bn. However, the overhaul will increase profits by a further €200m.

"The restructuring is intended to ensure that SAP's skillset and resources continue to meet future business needs," SAP said in a statement.

Total revenues were up 10% at €8.29bn in the three months to 30 June, beating the €8.25bn consensus forecast.

Cloud revenues were 25% higher year-on-year at €4.15bn while cloud SaaS sales jumped 33% to €3.41bn. The company also said it ended the first half with a cloud order backlog of €14.8bn, up 28% over last year.

Operating profits were 11% lower than last year at €1.22bn due to restructuring costs of €0.6bn, though non-IFRS operating profits jumped 35% to €1.94bn, beating the €1.81bn estimate.

"Our cloud growth momentum remained strong in Q2, with Business AI enabling many deals," said chief executive Christian Klein.

"We continue to execute on our transformation with great discipline, leading to an increase in our operating profit ambition for 2025. At the same time, we continue to invest into our transformation to be the leader in Business AI."

The stock was up 6.9% at €196.30 by 1217 in Frankfurt.