Shares of the German software giant SAP surged to a record high during early trading on Wednesday following the release of its latest financial results and the announcement of a restructuring plan involving 8,000 job cuts to drive artificial intelligence (AI) expansion.
During the early hours of trading on Wednesday, SAP’s stock rose by 7% by 8:30 a.m. London time, reflecting investor optimism in response to the company’s strategic moves.
In the fourth quarter of 2023, SAP reported a 5% year-over-year increase in revenues, contributing to a remarkable 50% surge in its stock value over the year, marking its most robust performance since 2012.
In a statement released on Tuesday, SAP disclosed its intention to offer voluntary buyouts or facilitate job transitions for 8,000 employees as part of a restructuring initiative planned for 2024. This restructuring aims to align the company with its future business requirements.
The proposed restructuring is expected to impact over 7% of SAP’s 108,000 full-time workforce, with assurances from the company that its overall headcount will remain stable by the year-end.
Highlighting its strategic priorities, SAP emphasized a heightened focus on key growth areas, particularly in Business AI. The company also outlined plans to revamp its operational framework to capitalize on organizational synergies, AI-driven efficiencies, and to position itself for scalable revenue growth in the future.
Describing the restructuring as a pivotal step towards seizing upcoming technological opportunities, SAP’s Chief Financial Officer, Dominik Asam, emphasized the company’s commitment to leveraging the potential of artificial intelligence. As part of this initiative, SAP intends to invest approximately $2 billion over the next two years to reskill its workforce and prepare for the evolving tech landscape.
Asam acknowledged the likelihood of some involuntary departures resulting from the restructuring but emphasized the company’s efforts to prioritize reskilling and internal transfers for the majority of affected employees.
While affirming the continuous growth of SAP’s cloud computing segment, Asam noted a noticeable slowdown in the demand for software services. Despite this, he expressed confidence in SAP’s cloud business trajectory, highlighting the company’s successful transformation into a cloud-centric growth enterprise.
