SAP Shares Soar on Strong Cloud Growth and AI Integration

SAP shares hit all-time high after upbeat cloud business outlook

STORY: Shares in business software maker SAP were up 5% on Tuesday (October 22)... Hitting all-time highs of over $239. This boost came after the tech firm raised its full-year targets on a strong cloud business in the third quarter. During Q3, cloud revenue grew 27% to around $4.7 billion dollars... Boosted by a rise of over a third in sales of its Cloud Suite software - a system which manages day-to-day business processes. CEO Christian Klein said that artificial intelligence (AI) was a key growth driver... With a third of cloud contracts in Q3 including AI use scenarios. This comes at a time when many tech giants are facing pressure from investors to show returns on their AI investments. And, in preparation for the era of AI, the company is evaluating a tenth of its 100,000 jobs... Expecting the cost of its restructuring to come in at over $3.2 billion. On this basis, the group has nudged up its full-year cloud and software revenue target to highs of $32 billion dollars.

SAP's stock rises on fast-growing cloud revenue - SiliconANGLE

Shares of the business software company SAP SE were trading higher late Monday after it reported third quarter earnings and sales that came in just ahead of the Street's estimates and raised its full year outlook for cloud and software revenue. The company reported earnings before certain costs such as stock compensation of €1.23 per share on revenue of €8.47 billion ($9.21 billion), up 9% from a year earlier. Wall Street analysts had forecast the earnings of just €1.21 per share on sales of €8.36 billion. All told, the company reported a net profit of €1.44 billion, up from $1.27 billion in the year-ago period. SAP's cloud computing revenue was the main growth engine, rising 25% from a year ago to €4.35 billion, but it still came in slightly below the Street's target of €4.39 billion. SAP also reports a novel metric it calls Current Cloud Backlog or CCB, which refers to the amount of cloud sales that will be booked over the next 12 months. It said CCB rose 25% to €15.4 billion. Analysts had been expecting CCB growth of 28%, the same as in the previous quarter. SAP's chief executive officer Christian Klein (pictured) hailed what he said was "another strong quarter" for the company, adding that cloud revenue growth "developed remarkably well, especially for our cloud ERP suite." It's notable that SAP continues to prosper even as the broader economy in Germany stalls, with that country's gross domestic product expected to contract for a second straight year in 2024. The company, which is the biggest tech firm in Europe, has been looking to migrate customers from its legacy, on-premises systems to the cloud. To entice customers, it has been luring them with the promise of advanced artificial intelligence services that can enhance their business processes The company's bottom line benefits from its customer's shift to the cloud, where it has been able to pitch its growing range of AI services. When SAP's customers move to the cloud, they generally spend more money on subscription fees than they do on its legacy, on-premises licenses. On a conference call, Klein told analysts that the company is pushing to accelerate its customers' transition to the cloud through its AI services, which aren't available to on-premises users. He said around 30% of its new cloud deals in the quarter contained AI use cases. Looking ahead to the fourth quarter, SAP raised its outlook for a number of financial metrics, including its free cash flow, which is now viewed at between €3.5 billion to €4 billion, up from a figure of about €3.5 billion previously. The company's guidance for cloud revenue remains steady at €17 billion to €17.3 billion, which would represent growth of 24% to 27%. SAP's American depository receipts gained more than 3% on the report. Prior to today's gains, its stock had risen 51% in the year to date.

SAP shares up 4.4% in early trade after raised cloud business outlook

FRANKFURT (Reuters) - Shares in SAP were up 4.4% in Lang & Schwarz pre-market trade on Tuesday after the German software company raised full-year targets on strong cloud business in the third quarter. Cloud revenue grew 27%, adjusted for currency effects, to 4.35 billion euros ($4.71 billion) in the third quarter, boosted by Cloud ERP Suite resource planning programme sales, which increased by 36%. Artificial intelligence was a key growth driver, according to CEO Christian Klein. "Around 30% of our cloud contracts in the third quarter included AI use scenarios," he said late on Monday. Operating profit grew by 28% to 2.24 billion euros, exceeding expectations, due to cost-cutting measures and a comparatively low number of new hires, CFO Dominik Asam said. The company expects the cost of an ongoing restructuring at around 3 billion euros as it evaluates up to 10,000 of its roughly 100,000 jobs to prepare for the emerging era of AI. On this basis, the Walldorf-based group raised its full-year cloud and software revenue target to 29.5-29.8 billion euros for the full year instead of 29-29.5 billion euros. 2024 operating profit is now seen at 7.8 billion euros after a previous forecast of 7.6-7.9 billion euros. (Reporting by Hakan Ersan, Writing by Miranda Murray)

German tech giant SAP raises full-year outlook on cloud hopes

The German tech giant SAP has reported robust third-quarter earnings and raised its full-year outlook for important metrics, including cloud computing and software revenue, operating profit, and free cash flow. Despite a subdued economy in Germany, the software company has thrived due to its strategic pivot towards artificial intelligence. SAP's American Depositary Receipts (ADRs) rose by 3.5% in after-hours trading on the New York Stock Exchange, indicating a likely higher opening in Frankfurt. SAP remains one of the top performers in the European markets, up 51% year-to-date, closing at €211 per share on Monday. Its shares have repeatedly reached all-time highs over the past five months, fuelled by consistently positive earnings results. SAP's cloud revenue has been accelerating since the first quarter, growing by between 20% and 30% over the first three quarters. The success of SAP's AI-powered core business is a testament to its restructuring plans and strategic shift. CEO Christian Klein said in the latest statement released on Monday: "Q3 was another strong quarter for SAP, and we are confidently raising our 2024 financial outlook. Cloud revenue growth was particularly impressive, especially for our Cloud ERP Suite. Even more importantly, we are making strong progress in Business AI with groundbreaking innovations such as SAP Knowledge Graph. A significant portion of our cloud deals in Q3 included AI use cases." Since the beginning of the year, SAP has made a strategic shift towards artificial intelligence, particularly Business AI. "SAP will further sharpen its focus on key strategic growth areas, particularly Business AI. It also intends to transform its operational setup to capture organisational synergies, AI-driven efficiencies, and to prepare the company for highly scalable future revenue growth," the company stated in January. As part of this strategy, Europe's largest software maker announced a plan to cut 8,000 jobs to support its AI-driven business model, increasing this target to a 9,000-10,000 headcount cut in July. However, the restructuring cost the company approximately €2.8bn in the first nine months. SAP's current cloud backlog, a key metric referring to the revenue expected to be booked over the next 12 months, reached €15.4bn, up 25%, or 29% at constant currencies, year-on-year in the third quarter. This followed a 28% increase in the second quarter and a 27% growth in the first quarter. Cloud revenue rose by 25%, or 27% at constant currencies, while overall revenue increased by 9.4% year-on-year to €8.47bn, slightly surpassing analysts' estimates of €8.47bn. SAP reported earnings per share of €1.23, beating the consensus forecast of €1.22 per share. SAP has now raised its 2024 outlook for key metrics, forecasting cloud and software revenue of between €29.5bn and €29.8bn, with the midpoint representing a €400m increase, or 10% to 11% annual growth at constant currencies. The company also expects operating profit to rise by 20% to 23% year-on-year, raising the midpoint by €150m. Free cash flow is now projected to reach €4.0bn, up from the previously estimated €3.5bn.

SAP shares up 4.4% in early trade after raised cloud business outlook

FRANKFURT, Oct 22 (Reuters) - Shares in SAP (SAPG.DE), opens new tab were up 4.4% in Lang & Schwarz pre-market trade on Tuesday after the German software company raised full-year targets on strong cloud business in the third quarter. Cloud revenue grew 27%, adjusted for currency effects, to 4.35 billion euros ($4.71 billion) in the third quarter, boosted by Cloud ERP Suite resource planning programme sales, which increased by 36%. Artificial intelligence was a key growth driver, according to CEO Christian Klein. "Around 30% of our cloud contracts in the third quarter included AI use scenarios," he said late on Monday. Advertisement · Scroll to continue Operating profit grew by 28% to 2.24 billion euros, exceeding expectations, due to cost-cutting measures and a comparatively low number of new hires, CFO Dominik Asam said. The company expects the cost of an ongoing restructuring at around 3 billion euros as it evaluates up to 10,000 of its roughly 100,000 jobs to prepare for the emerging era of AI. On this basis, the Walldorf-based group raised its full-year cloud and software revenue target to 29.5-29.8 billion euros for the full year instead of 29-29.5 billion euros. Advertisement · Scroll to continue 2024 operating profit is now seen at 7.8 billion euros after a previous forecast of 7.6-7.9 billion euros. ($1 = 0.9243 euros) Reporting by Hakan Ersan, Writing by Miranda Murray Our Standards: The Thomson Reuters Trust Principles., opens new tab

Continued strong cloud business makes SAP more optimistic

"The growth in cloud revenues developed extraordinarily well," said Christian Klein, CEO of Europe's largest software company, during a conference call on Monday. Offerings with artificial intelligence (AI) played a decisive role in this. "Around 30 percent of our cloud contracts in the third quarter included AI application scenarios." The programs for resource planning (ERP) were particularly popular, added SAP CFO Dominik Assam. His company recorded above-average sales growth of 36 percent in this area. "This is the eleventh quarter in a row with a growth rate of more than 30 percent." The Cloud ERP Suite now accounts for more than four-fifths of total cloud sales. At the same time, business with traditional software licenses has declined less sharply than expected. This was well received by investors. SAP shares listed in the USA rose by around four percent in after-hours trading on Wall Street. SAP FORECASTS CONTINUED STRONG GROWTH According to the information provided, cloud revenues rose by 27 percent to 4.35 billion euros in the past quarter, adjusted for currency effects. Operating profit even increased by 28 percent to 2.24 billion euros and exceeded market expectations. The reason for this, in addition to the cost-cutting measures, was the comparatively low number of new hires, explained CFO Assam. The improved earning power and lower tax payments had driven the free cash flow, which is used as an indicator for the dividend amount, by a disproportionately high 44 percent to 1.25 billion euros. On this basis, the Walldorf-based group is now targeting cloud and software revenues of 29.5 to 29.8 billion euros for the full year instead of 29 to 29.5 billion euros. The operating result is expected to be between 7.8 and eight billion euros instead of 7.6 to 7.9 billion euros. The company predicted a cash inflow of 3.5 to four billion euros instead of the previous figure of around 3.5 billion euros. "We are also well on the way to achieving our targets for 2025," emphasized SAP CEO Klein. Double-digit percentage growth rates and rising profits can also be expected in the following years. SAP again put the cost of the ongoing Group restructuring at around three billion euros. In order to prepare for the emerging era of artificial intelligence (AI), SAP is reviewing up to 10,000 of its approximately 100,000 jobs. Through retraining and new hires in areas with a promising future, however, the overall headcount is to remain largely unchanged. (Report by Hakan Ersen; Edited by Hans Busemann; If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets)).

SAP 3Q Revenue, Profit Climb on AI Demand; Outlook Raised

SAP posted higher revenue and profit in the third quarter boosted by artificial-intelligence demand, and raised its full-year outlook. Reporting on a non-IFRS basis, the German business-software company said total revenue rose 9% to 8.47 billion euros (US $9.21 billion). Revenue from cloud and software climbed to EUR7.43 billion from EUR6.68 billion a year earlier. Chief Executive Christian Klein said a significant number of the company's cloud deals in the quarter included AI-use cases. Profit after tax increased to EUR1.44 billion from EUR1.35 billion. Operating profit, which is more closely watched for software companies, jumped 27% to EUR2.24 billion. SAP, like other European software companies, presents its figures as two sets of numbers. One set is based on the International Financial Reporting Standards, an international accounting method that seeks to provide a global reporting standard, though analysts and investors tend to follow SAP's non-IFRS numbers, which exclude restructuring expenses and acquisition-related charges. For the year, SAP increased its non-IFRS outlooks at constant currencies for cloud and software revenue, operating profit and free cash flow. It now expects cloud and software revenue between EUR29.5 billion and EUR29.8 billion, up from a prior projection of between EUR29 billion and EUR29.5 billion; operating profit between EUR7.8 billion and EUR8 billion, up from between EUR7.6 billion and EUR7.9 billion; and free cash flow of EUR4 billion, up from EUR3.5 billion.

SAP soars as cloud revenue increases and RISE becomes the methodology that CEO Christian Klein always wanted it to be

SAP's share price hit an all-time high yesterday as soaring cloud revenue - up 25% year-on-year - and an upbeat outlook cheered Wall Street. Overall revenue was up nine percent year-on-year to €8.47 billion with a net profit of €1.44 billion. Of that, cloud revenue came in at €4.35 billion. Current Cloud Backlog - AKA the amount of cloud sales expected t o be booked over the next 12 months - was up 25% year-on-year to €15.4 billion. All of this led CEO Christian Klein to declare: I guess it's fair to say that all the hard work to drive SAP's cloud transformation over the last four years has led to a highly resilient, as well as innovative, company and offers us a strong foundation for many successful years to come. He picked out a number of customer use cases to back up his argument and highlight adoption of RISE: Speaking of world class retailers, Sainsbury's, one of the UK's largest supermarkets chains, decided to become part of the SAP family and selected RISE in Q3. And so did Mercado Libre, an e-commerce leader operating in 18 Latin American countries. With RISE, we will help Mercado Libre to strengthen decision-making through real-time data, front office, back office, supply chain, amongst other things. They are also a business AI customer and have major expansion plans in these areas. In Q3 we signed a wise deal with Schwarz Group. Schwarz is the parent company of the well-known supermarket chain Lidl and Kaufland, operating about 14,000 store with almost 600,000 employees. I was closely involved in the conversation for this partnership. It was all about RISE as a key enabler to redesign the end-to-end core processes of Schwarz to leverage in the cloud the latest innovations around business AI, and to achieve their long-term growth and sustainability growth, for example, with the Green Ledger. As for the inevitable AI angle, Klein said that some 30% of new cloud deals over the past quarter contained AI use cases: In Q3, one of Europe's most exciting tech startups opted for GROW with SAP, our cloud journey offering for net new customers. Mistral AI is creating some of the world's best large language models. They are growing rapidly and see the need for a complete ERP solution to scale their business on a global level. We also have a technology partnership with Mistral. Their large language models are available on the GenAI hub. And we are running Large 2, one of Mistral's latest modules on SAP infrastructure. Our partners and customers now have access to an excellent LLM alternative hosted on European territory. Staying with tech, NVIDIA went live on RISE in Q3, and that was a rapid implementation that took only six months, thanks to our close collaboration. Also in Q3, the software company Gainsight, a specialist in customer success solutions, signed a GROW with SAP deal. It's just great to see. Quarter by quarter, more and more of the world's hottest tech companies are choosing SAP. They consider our cloud solutions a solid foundation for exponential growth and value creation. They see us as an innovative leader in ERP, business AI, supply chain solutions and more. To say it in short, they trust us to bring out the best in their business and that's something we are very proud of. Klein noted that SAP's digital copilot Joule is now one year old and pointed to upgrades underway: We are supercharging Joule with collaborative AI agents. Most AI chain instances are fit to perform only one type of task in sales, in HR, in supply chain. But however, many key processes cut across departments. Financial predictions, for instance, involve data from sales, supply chain management, HR and other functions. [indiscernible] will soon be able to orchestrate several AI agents to carry out such complex processes end-to-end. That's possible, because SAP speaks the language of all corporate functions. We are not trapped in one silo. So while many in the software industry talk about AI agents these days, I can assure you, Joule will be the champion of them all. So far, we have added over 500 skills to Joule and we are well on track to cover 80% of the most frequent business and analytical transactions by the end of this year. And in Q3 alone, several hundred customers licensed Joule. Our progress was also accelerating with regard to the other elements of our AI architecture. Well ahead of time, we reached a goal to embed over 100 AI use cases across our solutions. And the GenAI hub, consumption by our partners more than tripled from Q2 to Q3. And even better, the consumption by our customers more than quadrupled. I'm so, so happy to see that, finally, RISE is the kind of methodology offering that I always aspired it to be. Nicely done by SAP - and a prime example of playing the long game to deliver results.

SAP : Deutsche Qualität

Buoyed by a remarkably robust quarterly performance, SAP has revised its full-year forecasts upwards, reflecting optimism boosted by the expansion of its cloud activities. The stock gained 4.4% before the opening. "The expansion of our cloud portfolio has accelerated exceptionally well," said Christian Klein, CEO of the European software giant, at a conference with analysts on Monday. He stressed that solutions incorporating artificial intelligence were a key driver of this growth, pointing out that "almost 30% of our third-quarter cloud agreements included AI components". SAP CFO Dominik Assam highlighted the growing popularity of enterprise resource planning (ERP) systems, a sector in which the company recorded a 36% increase in sales, outperforming industry averages. "This marks the eleventh consecutive quarter where we've seen growth in excess of 30%," he added. The ERP cloud suite now accounts for more than four-fifths of total cloud sales, while traditional software licensing activities saw a smaller decline than anticipated. According to the reported data, cloud revenues jumped by 27% to 4.35 billion euros in the last quarter, when adjusted for currency effects. Operating profit rose by 28% to 2.24 billion euros, exceeding analysts' forecasts. Assam explained that this performance was attributable not only to a policy of cost control, but also to a more measured hiring policy. Improved profitability and a lower tax charge propelled free cash flow - a key indicator for the dividend - up 44% to 1.25 billion euros. "SAP reported solid results for the third quarter of 2024, slightly exceeding consensus in terms of sales and more pronounced in terms of earnings and profitability, thanks to a noticeable improvement in licenses", summarizes Baader Helvea. Targets raised On the strength of these results, the Walldorf-based group is raising its targets for the current financial year, now targeting sales of between 29.5 and 29.8 billion euros for its software and cloud activities, compared with the previous range of 29 to 29.5 billion euros. Operating profit is expected to be between 7.8 and 8 billion euros, compared with 7.6 to 7.9 billion euros previously. Cash flow has also been revised upwards, with forecasts of 3.5 to 4 billion euros, instead of the 3.5 billion euros initially forecast. "We are well on our way to achieving our targets for 2025," said Klein, anticipating double-digit growth and higher earnings in the coming years. SAP also confirmed that the cost of its ongoing restructuring would amount to around three billion euros. As part of its adaptation to the emerging era of artificial intelligence, the company is re-evaluating up to 10,000 positions out of its 100,000 or so employees. However, thanks to retraining initiatives and new hires in growth sectors, the total workforce is expected to remain broadly stable. SAP is set to consolidate its 2024 star status in Europe, with its share price already up nearly 60%. Its capitalization, at $265 billion, is close to that of ASML ($280 billion).

SAP Gains $26 Billion in Market Value, Surging Past ASML -- Update

SAP gained about $26 billion in market value after the German business-software company raised its revenue and earnings forecasts for the year amid strong demand for artificial intelligence, dethroning ASML Holding as Europe's most valuable technology group. Shares in SAP climbed more than 5% in European morning trading, adding more than 24 billion euros ($25.96 billion) in market value and lifting it to about 273.10 billion euros. ASML's market value stands at 264.37 billion euros. The switch comes after ASML shed more than $60 billion in market value earlier in the week after the Dutch semiconductor-equipment maker warned the recovery for some areas of the industry could extend well into the next year. Meanwhile, the company behind the Concur travel and expense management platform raised guidance for cloud and software revenue, operating profit and free cash flow this year following a jump in sales at its core cloud business and higher earnings in the third quarter. SAP Chief Executive Christian Klein said a significant part of cloud deals in the quarter included AI use cases. The company has doubled down on efforts to cash in on the technology in recent months, cementing new AI partnerships and expanding existing ones as it seeks to gain an edge over rivals. Advancements in generative AI sparked a wave of investments from tech companies jockeying for position in a rapidly evolving market that looks set to revolutionize the future of business and human labor. SAP last year made investments in three generative AI companies--Aleph Alpha, Anthropic and Cohere--and poached Walter Sun from Microsoft as its global head of AI. SAP said its cloud business had an outstanding performance in Brazil, Chile, Germany, Italy, India, Japan and Spain in the third quarter, while China, Saudi Arabia and the U.S. had also been particularly robust. Reporting on a non-IFRS basis, SAP said total revenue increased 10% at constant currencies to 8.47 billion euros. Revenue from SAP's core cloud business jumped 27% to 4.35 billion euros. Operating profit grew 28% to 2.24 billion euros. Analysts had forecast total revenue of 8.44 billion euros, cloud revenue of 4.35 billion euros and an operating profit of 2.07 billion euros, according to a non-IFRS consensus provided by the company. SAP, like other European software companies, presents its figures as two sets of numbers. One set is based on the International Financial Reporting Standards--an international accounting method that seeks to provide a global reporting standard--though analysts and investors tend to follow SAP's non-IFRS numbers, which exclude restructuring expenses and acquisition-related charges. For the year, SAP now expects non-IFRS operating profit at constant currencies between 7.8 billion and 8 billion euros, above a previous range of 7.6 billion to 7.9 billion euros. Cloud and software revenue at constant currencies should come in between 29.5 billion and 29.8 billion euros, compared with previous forecasts of 29 billion to 29.5 billion euros. Free cash flow should range from 3.5 billion to 4 billion euros, above a prior estimate of about 3.5 billion euros.