SAP Reports Strong Q3 2024 Performance, Raises Outlook Amidst Cloud and AI Momentum

WALLDORF — SAP SE (NYSE: SAP) announced impressive financial results for Q3 2024, showcasing significant growth across its cloud offerings and an encouraging upward trajectory in operating profit. This performance underpins SAP’s successful transition into a cloud-driven business and reflects the increasing demand for AI-integrated solutions within enterprise software.

Robust Cloud Growth and Strategic Advances in AI

The third quarter saw SAP’s current cloud backlog surge to €15.4 billion, marking a 25% increase year-over-year (29% at constant currency). Cloud revenue reached €4.35 billion, up 25% (27% at constant currency), with the Cloud ERP Suite showing a standout performance, growing 34% (36% at constant currency). SAP’s emphasis on cloud solutions has evidently resonated with clients, positioning it well amidst the broader shift to cloud-based infrastructure.

Additionally, SAP has continued to invest heavily in Business AI, with innovations like the SAP Knowledge Graph driving both customer interest and usage. The company reported that a substantial portion of Q3 cloud deals now includes AI-driven use cases, underscoring SAP's role as a leader in enterprise AI.

Financial Highlights and Improved Profit Margins

Total revenue for the quarter increased by 9% to €8.47 billion, while cloud and software revenue rose by 11% to €7.43 billion. SAP reported a significant gain in gross profit as well, with IFRS cloud gross profit up 26% and non-IFRS up 27% (28% at constant currency). These results signal SAP’s ability to optimize cloud profitability while continuing to expand its product offerings.

Operating profit also saw a substantial boost, increasing 29% under IFRS standards and 27% non-IFRS (28% at constant currency). This profitability jump reflects the effectiveness of SAP's 2024 transformation program, which focuses on operational efficiency. SAP's CFO Dominik Asam emphasized that the program has already begun to enhance efficiency, helping SAP achieve a stronger operating profit and free cash flow.

Upward Revision of 2024 Financial Outlook

Given its Q3 performance, SAP has raised its 2024 outlook for cloud and software revenue, operating profit, and free cash flow. This optimistic projection highlights SAP’s confidence in sustaining its growth trajectory into Q4, despite a highly volatile economic environment. CEO Christian Klein noted the importance of SAP's recent accomplishments in cloud and AI, expressing enthusiasm about the company's strategic positioning as it heads into 2025.

SAP’s Road Ahead: Sustaining Momentum and Driving Innovation

As SAP accelerates its focus on cloud and AI, its recent results demonstrate the company’s successful adaptation to a changing market. With cloud ERP and business AI innovations leading the way, SAP is well-positioned to meet the evolving needs of global enterprises. The continued integration of AI into cloud deals not only enhances SAP’s value proposition but also sets it apart in a competitive landscape.

SAP’s Q3 2024 financial results underscore the effectiveness of its cloud-first approach, operational efficiencies, and innovative push into AI. By achieving substantial growth and profitability improvements, SAP is setting the stage for continued success and innovation, poised to meet its ambitious 2025 goals.

Sources: SAP Q3 2024 Financial Results