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SAP Announces Restructuring Plan and Financial Guidance


In a recent announcement, German enterprise software giant SAP revealed its plans for a restructuring program that will impact approximately 8,000 employees. As a result of this initiative, SAP aims to enhance its focus on key strategic growth areas, particularly in the field of artificial intelligence software.

To mitigate the impact of the restructuring, SAP anticipates that most affected employees will have the option to participate in voluntary leave programs or undergo internal re-skilling. The company envisions exiting the year 2024 with a headcount similar to its present levels as it continues to invest in growth opportunities.

SAP has also provided updated financial guidance for the years 2024 and 2025. For 2024, the company expects cloud revenue, at constant currencies, to range between €17 billion and €17.3 billion, reflecting a 24% to 27% increase. Furthermore, the combined revenue from cloud and software is projected to be between €29 billion and €29.5 billion, indicating an 8% to 10% rise when adjusted for currency fluctuations.

In terms of profitability, SAP aims to achieve an adjusted profit for 2024 ranging from €7.6 billion to €7.9 billion, an increase of 17% to 21% from the previous year when considering constant currencies. The projected free cash flow for this period stands at €3.5 billion, which includes €2 billion in costs associated with the restructuring program.

Looking ahead to 2025, SAP now foresees an adjusted operating profit of €10 billion, which incorporates €2 billion in stock-based compensation expense—an increase of €500 million from their previous forecast. Additionally, the company has revised its free cash flow projection to €8 billion, surpassing their initial estimate of €7.5 million. It’s important to note that SAP has maintained its previous revenue forecast of more than €37.5 billion for 2025.

As a result of these developments, SAP shares experienced a late trading surge, rising by 4.9% to reach $171.37.

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