Letter from the CEO

 

2024 was another year of fast-paced change. Billions of people around the world went to the polls to select political leaders, redefining the course of their nations as well as geopolitical constellations. In parallel, global economic competition intensified, with the race for leadership in new digital technologies – such as AI and quantum computing – as a central feature. 2024 was also the first year when average global temperatures rose more than 1.5°C above preindustrial levels. It was but one reminder that many of humanity’s greatest challenges remain unsolved.

 

At their very heart, SAP’s solutions enable businesses, countries, and societies to be successful in this rapidly evolving environment. We help our customers harness cutting-edge digital innovation by integrating it seamlessly into their end-to-end business processes, allowing them and the communities in which they operate to become more agile, more resilient, and more sustainable.

 

SAP’s results for the past fiscal year are proof that our solutions are of critical relevance in today’s world. 2024 was another very good year for the company – a year in which we exceeded our cloud goals, accelerating cloud revenue and current cloud backlog growth even further from an already very strong baseline. Total revenue growth returned to double digits, for the first time since 2018. With a major transformation and restructuring program, launched in January 2024, SAP shifted additional resources to growth areas such as Business AI, while also achieving efficiencies that support our ongoing profitable growth.

 

By the end of 2024, our total cloud backlog stood at €63 billion– up 40% over the previous year and hitting a new record high. This large backlog, and a share of recurring revenue now at 83%, provides us with very solid perspectives for the future. SAP is on a more resilient growth path than ever before.

 

The holistic transformation we began four years ago has served as the foundation of SAP’s very successful growth story in 2024. When we announced our plans to fundamentally change our company back in 2020, financial markets were not sure we would follow through. But we did, and in a very determined manner, delivering on our strategic promises.

 

On the financial side, cloud revenue increased to half of SAP’s total revenue in 2024. No major competitor is growing as fast as we are. This impressive success stems, among other things, from numerous customers wins, including the “who is who” of the tech, energy, retail, automotive, and manufacturing sectors.

 

On the product innovation side, we developed a compelling Business Suite offering in the cloud over the past years to run our customers’ most mission-critical business processes end to end. Leveraging this Suite and the unmatched wealth of business data stored in SAP systems, we developed powerful Business AI capabilities tailored to the concrete needs of our customers. Business AI enables companies to thrive amidst intense transformational pressures by automating critical processes. It can, for example, help better predict customer demand and quickly respond to disruptions in the supply chain. It can support software engineers by making it easier and faster to code. And it can automatically read, capture, and review thousands of documents – be it truck delivery notes in companies or administrative forms in government agencies – thereby unlocking great savings in terms of time and costs.

 

By the end of 2024, we had already released more than 130 AI use cases to our customers – overdelivering on our plans. And we equipped our generative AI copilot Joule with 1,300 skills covering 80% of the most-used tasks of SAP end users. Our innovations in this space have cemented our reputation among C-suite executives as the leading AI company in Europe and among the top #5 globally, reflected in the fact that more than 34,000 cloud customers worldwide use SAP Business AI today.

 

In addition to our strong in-house product innovation, SAP complemented its portfolio in 2024 with the acquisition of WalkMe. The company is a great addition to our Business Transformation Management solutions – a set of powerful digital tools that help our customers accelerate their cloud migration and business transformation journeys: Signavio enables our customers to trace, understand, and improve business processes. LeanIX supports the analysis and optimization of complex IT architectures. With WalkMe, we now doubled down on the support we provide to SAP end users – helping them quickly adopt new cloud solutions and get maximum value out of their IT investments. This complete set of Business Transformation Management solutions greatly reduces time-to-value, enabling our customers to profit sooner from pivotal innovations – above all Business AI.

 

SAP’s strong growth and innovation performance in 2024 was clearly recognized and rewarded by global capital markets. Our shares were largely unaffected by stock market turbulence and soared throughout the year. Overall, they appreciated nearly 70% in 2024, greatly outperforming the gains of the DAX (+19%) and the NASDAQ-100 (+26%). SAP ended the year as Europe’s most valuable tech company, with a market capitalization of nearly €270 billion.

In addition to the rising stock market valuation, shareholders will benefit from SAP’s robust performance with an attractive dividend. Given the company’s success in 2024, the Supervisory Board and Executive Board propose a dividend of €2.35 per share for approval at the Annual General Meeting in May, marking an increase of 6.8% compared to the previous year. What is more, SAP continues its €5 billion share repurchase program, designed to return capital to shareholders and to balance out dilution related to employee share programs.

 

Overall, 2024 was another proof point of the successful strategy SAP began to put into action four years ago. We had the courage to change our business model and boldly transform at every level of the company. Today, SAP can call itself the #1 enterprise application and Business AI company. This is an outstanding achievement that required significant effort, dedication, and willingness to change. On behalf of the entire Executive Board, I would like to thank all our colleagues worldwide and our customers and partners for their trust and support along the way. And I would like to thank you, dear shareholders, for believing in SAP in 2024 and beyond!

 

As we look to the future, we will continue to reward your trust by executing diligently on our well-defined strategy. Through to 2027, we expect accelerated, double-digit total revenue growth and an expansion of operating profit as well as of our profit margin. We can say this with confidence because we have all the right pieces in place – from great applications and high-quality data to relevant AI.

 

In 2025, we will once again significantly increase our AI investments, with our nearly 40,000 developers working to deliver an AI-first portfolio and customer experience. In addition, we are launching SAP Business Data Cloud – one of the biggest innovations our company has ever delivered. SAP Business Data Cloud will give customers a holistic view of their operations by bringing data from a wide range of sources together in one place, while retaining its semantical context and meaning. In addition to allowing enterprises to make truly data-driven decisions, this holistic view of all data will play a key role in enabling powerful AI agents – that is, AI apps that greatly assist humans with concrete workflows. Our AI copilot Joule will orchestrate these AI agents to carry out complex tasks autonomously and end-to-end. The ambition is to make every Joule user 30% more efficient by the end of 2025.

 

Building on our successes over the past four years, SAP is thus set to continue its profitable growth journey in 2025 and beyond. We are excited to shape the future; we are setting the bar higher – because being the best is never done. That’s our aspiration. That’s our promise.

 

Sincerely,

 

Christian Klein

CEO, SAP SE