SAP plans to sell stake to Qualtrics and cut 3,000 jobs

(Bloomberg) — SAP SE plans to cut about 3,000 jobs this year as it explores selling its remaining stake in Qualtrics International Inc. as the company looks for ways to boost profits.

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The German software company expects 2023 adjusted operating income to rise to a range of 8.8 billion euros ($9.6 billion) to 9.1 billion euros in constant currency, according to a statement released Thursday. This beat the average analysts’ forecast in the Bloomberg survey of 8.65 billion euros.

Job cuts are 2.5% of the state. SAP joins a growing list of tech companies that are cutting jobs and looking for ways to cut costs after falling stock prices last year.

“The process will take some time,” chief financial officer Luka Muchic said of the cuts. “We expect only modest cost savings in 2023 and more pronounced in 2024.”

The company said the goal of the reorganization and the motivation for Qualtrics’ sale is to refocus on its biggest business, cloud services. The cloud business was SAP’s largest source of revenue last year. Earlier this month, Moody’s upgraded SAP’s outlook to positive due to the company’s transition.

Read more: SAP Key for Bull-Bear Debate Operating Profit Guide: Preview (1)

The restructuring will cost the company 250-300 million euros, most of which will be recognized in the first quarter of this year. “The program is expected to deliver moderate economic benefits” throughout the year and save between €300 million and €350 million in annual costs in 2024, the company said.

Key Ideas

  • SAP’s cloud computing revenue grew 22% in constant currency in the fourth quarter year-over-year to €3.39 billion.

  • The company’s current cloud portfolio is €12 billion, up 24% in constant currency.

  • SAP says Qualtrics results are currently included in its 2023 forecast.

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