SAP has revealed its plans to cut 3,000 jobs, or 2.5 percent of its global workforce, as the Germany software company looks to cut costs and focus on its cloud business.
Germany-based SAP has reported operating profit of €4.67 billion on annual sales of €30.87 billion (+11 percent) in 2022. SAP’s Cloud revenue touched €26.52 billion (+10 percent) last year.
“We expect only a moderate cost saving impact for 2023, and a more pronounced one in 2024, about 300 million euros to 350 million in run rate savings as of 2024,” SAP Chief Financial Officer Luka Mucic said in its earnings report.
In Germany, where SAP is headquartered, the company will cut slightly more than 200 jobs.
The layoffs come after SAP reported a 30 percent revenue increase in its cloud business in the fourth quarter, helped by strong demand for its software.
SAP has also started the process to sell its stake in Qualtrics. It bought the company for $8 billion in 2018 and took it public in 2021 at a valuation of nearly $21 billion.
Currently, survey-software seller Qualtrics has a market value of $7 billion and SAP has a 71 percent stake.
“(The sale) would result in a quite significant one-time gain,” Mucic said. “This would materially increase the profit performance of SAP, but it’s currently not reflected in the outlook.”
SAP forecast core operating profit of 8.8-8.9 billion euros at constant currencies for this year. It also expects cloud revenue at constant currencies for 2023 to rise to 15.3-15.7 billion euros, from 12.56 billion euros last year.