German enterprise software company SAP said on Thursday it would be the latest tech giant to announce significant job cuts, cutting up to 3,000 jobs, or about 2.5% of its workforce.
SAP CEO Christian Klein said on the company’s fourth quarter 2022 earnings call:
“To this end, today we are announcing that we will be implementing a highly targeted restructuring in certain areas of our company that will affect up to 3,000 positions and will include approximately 2.5% headcount reductions.”
At 8:05 am London time after the announcement, SAP’s share price fell more than 2%.
In response to a question about estimated cost savings from job cuts, Luka Mucic, CFO of SAP, said, “We expect only modest cost savings in 2023, and more significant savings in 2024. , is expected to be between €300 million and €350 million. [$327 million-$382 million] It saves execution rate. ”
This comes after the company reported on a conference call that it had a strong fourth quarter.
“Our cloud momentum accelerated in Q4 with S/4HANA [SAP’s enterprise resource planning software]Cloud revenue also accelerated again, growing by 90%. We also returned to positive operating profit growth of 2%,” he said.
“For the full year, we achieved our guidance across the board with cloud revenue up 24%, up 5 percentage points from 2021,” he said.
He added that the company has pulled out of Russia and achieved this despite ongoing global macroeconomic volatility.
In an interview with CNBC last week, Klein suggested the company was “in such a strong position” that it didn’t need to lay off employees.
He added that he was largely optimistic about the technology outlook despite challenges from rising interest rates and supply chain disruptions.
“We are in the technology sector, we are in SAP, and we are very confident about the year ahead,” Klein said at the time.
On Thursday’s earnings call, Klein also said SAP would consider selling a stake in Qualtrics to “focus on its core.” SAP now owns his 71% stake in Qualtrics on a liquid basis.
In November 2018, SAP acquired American business software provider Qualtrics for $8 billion. Qualtrics went public two years later.
“Our go-to-market and technical collaboration with Qualtrics has been very successful and we will definitely continue this,” said Mucic.
“This move is aimed at setting up SAP so that we can focus on our core ERP. [enterprise resource planning] We will consolidate the category and the surrounding categories that accompany it, further enhancing Qualtrics’ ability to independently pursue leadership and pursue corresponding investments,” he said.
He added that Qualtrics is “the best pristine cloud asset” and SAP “should be able to give a very positive valuation to shareholders, but we don’t know that yet.”
“This will significantly increase SAP’s earnings performance, which is not reflected in the current outlook,” he added, without elaborating further.
Qualtrics released fourth-quarter results and earnings guidance on Wednesday that beat analyst expectations.