Written by Hakan Elsen
FRANKFURT (Reuters) – SAP shares rose 5% to 221 euros ($239.21) at market open on Tuesday after the German software company raised its full-year target for its strong cloud business in the third quarter. ) reached an all-time high. .
Third-quarter cloud revenue rose 27% to €4.35 billion ($4.71 billion), adjusted for currency effects. This was driven by a 36% increase in sales of Cloud ERP Suite resource planning software.
According to CEO Christian Klein, artificial intelligence was a key growth driver. “About 30% of cloud contracts in the third quarter included AI usage scenarios,” he said late Monday.
Guidance for 2025 remains unchanged, with Barclays analysts writing in a note that “even the new guidance appears conservative.”
They added that management spoke “encouraging” about this conservatism.
Operating profit rose 28% to 2.24 billion euros, beating expectations, due to cost reductions and relatively few new jobs, Chief Financial Officer Dominic Assam said.
The company expects restructuring costs to be around 3 billion euros as it evaluates hiring up to 10,000 of its 100,000 total employees in preparation for the AI era.
On this basis, the Waldorf-based group slightly raised its full-year cloud and software revenue target from 29 billion to 29.5 billion euros to 29.5 billion to 29.8 billion euros.
The company expects operating profit to be 7.8 billion euros in 2024, with a forecast of 7.6 billion to 7.9 billion euros.
JPM analysts view SAP’s performance as a “reader on the health of a company’s IT spending, especially the software within it,” pointing to rivals Oracle, Workday and Microsoft.
(1 dollar = 0.9239 euro)
(Reporting by Hakan Ersan; Writing by Miranda Murray and Marleen Kaesebier; Editing by Jason Neely and Louise Heavens)
