Shares in SAP were up 5% today, hitting an all-time high of €221 after the German software company raised its full-year targets on a strong cloud business in the third quarter.
Cloud revenue grew 27%, adjusted for currency effects, to €4.35 billion in the third quarter, boosted by a 36% rise in sales of Cloud ERP Suite resource planning software.
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 last night.
With its guidance for 2025 unchanged, Barclays analysts wrote in a note that "even the new guide looks conservative".
They added that management "encouragingly" spoke on this conservatism.
SAP's operating profit grew by 28% to €2.24 billion, exceeding expectations, helped by cost-cutting and a comparatively low number of new hires, CFO Dominik Asam said.
The company expects the cost of its restructuring to come at around €3 billion as it evaluates up to 10,000 jobs out of its 100,000 total headcount to prepare for the era of AI.
On this basis, the Walldorf-based group nudged up its full-year cloud and software revenue target to €29.5-29.8 billion from €29-29.5 billion.
It now sees 2024 operating profit at €7.8 billion, up from a forecast of €7.6-7.9 billion.
JPM analysts see SAP's performance as "a read-across to the health of Enterprise IT spending and specifically software within that," pointing to rivals Oracle, Workday and Microsoft.
