At its customer fair in Orlando, USA, SAP will be bringing news for shareholders this time. The most important is that the group plans to spend up to 5 billion euros on share buybacks. The program is fed by the sale of the American subsidiary Qualtrics to the financial investor Silver Lake, which will flush an additional 7.7 billion dollars into the group's coffers in the second half of the year.
Bernd Freytag
Economic correspondent Rhein-Neckar-Saar, based in Mainz.
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The steady repatriation of capital has priority and is an expression of financial discipline, said the new CFO Dominik Asam. The former CFO of Infineon and Airbus has been on board since March and had some long-awaited news for shareholders in Orlando: new medium-term targets. They were expected after the Qualtrics sale at the latest and are also intended to reflect the new optimism in the cloud business.
In concrete terms, SAP management delivered roughly what the financial markets had expected: the loss of Qualtrics is more or less compensated for by the stronger growth of other businesses. In detail, Europe's largest software group expects cloud revenues to grow by more than 2025 percent on average to more than 23.21 billion euros by 5. During this time, sales are expected to increase by 8 percent annually to more than 37.5 billion euros. For the operating profit, the Group expects an average growth of 13 percent to 11.5 billion euros. The updated targets show "SAP's momentum in this new phase of our transaction," said CEO Christian Klein. The "strong resilient" growth in the cloud ensures accelerated growth in revenue and operating profit.
Stock market has changed its mind
Two and a half years ago, Klein had prescribed a strategic shift towards the cloud, which was viewed skeptically by investors for a long time and led to falling share prices. For half a year now, the picture has turned again, Germany's most valuable listed group is regaining value on the stock market. Although the new medium-term targets did not trigger any fireworks together with the share buyback, the share price rose by 1.5 percent to 123 euros on Wednesday. This is the first time in a long time that SAP is valued at more than €150 billion. The new outlook is solid, investment bank JP Morgan wrote.
In order to drive growth, SAP management wants to take advantage of three trends. Artificial intelligence (AI), connectivity and sustainability. "In a world characterized by market dislocations, changing regulatory frameworks, and critical skills shortages, our customers continue to turn to SAP for solutions to their most pressing problems," Klein said.
AI collaborations with Microsoft and IBM
And this time he underpinned the full-bodied announcements with a whole bouquet of cooperations. For example, the Walldorf-based company wants to integrate Microsoft's AI offer "Copilot" into some programs. Microsoft is the largest investor in ChatGPT developer Open AI and uses the GPT-4 language model for Copilot itself. At the beginning of May, it was announced that SAP was even working with IBM on its own "generative AI", i.e. a program that can create speech and texts similar to a human.
In a preliminary discussion at the trade fair, board member Thoma Saueressig pointed out that SAP had already integrated 130 "AI scenarios" into the programs. SAP is already "the unknown AI giant from Germany." In fact, however, the company's understanding of AI is broad, including machine learning or self-improving receivables management. According to Saueressig, the reliability of the data is important for SAP customers. SAP is able to use its wealth of data to improve the quality of the AI and thus gain more confidence in the solutions.
Networking of supply chains as a focus
In addition to AI, Saueressig cited the networking of supply chains as another focus of the future strategy. The model is Catena X, the trading platform for the automotive industry co-founded by SAP. The aim is to offer further industry solutions, for example for the pharmaceutical industry, the manufacturing industry, high-tech and consumer goods manufacturers. In addition, SAP hopes to create new growth opportunities through the new requirements for sustainable business. Similar to financial accounting, the Group wants to offer its more than 330,000 corporate customers environmental accounting in order to keep a constant eye on CO₂ emissions across all business processes and value chains at the push of a button.
To ensure the security of the new cloud environment, SAP is relying on a new unusual partner: Lidl's parent company Schwarz. Its subsidiary XM Cyber has developed a solution to defend against cyber attacks, which SAP intends to use in its own IT infrastructure and the systems of its customers in the future as part of a strategic partnership. The software of the Israeli company, which Schwarz bought two years ago, simulates hacker attacks in order to detect possible gaps. The retail giant continues to expand its IT business. In addition to SAP, he says he counts the stock exchange operator Nasdaq, the Bank of England and the Port of Hamburg among his customers.