WALLDORF, Germany, Jan 28 (Reuters) - SAP, Europe's largest software maker, announced on Tuesday a more optimistic outlook for its financial performance this year, attributing it to accelerated growth in cloud computing and artificial intelligence.
The company anticipates operating profit for 2025, on a constant currency basis, to range between 10.3 billion euros and 10.6 billion euros ($10.75 billion-$11.06 billion), compared to the previously stated target of about 10.2 billion euros. Moreover, SAP aims for total revenue to exceed 37.5 billion euros, with cloud revenue surpassing 21.5 billion euros by 2025.
CEO Christian Klein stated, Our strong position in data and Business AI gives us additional confidence that we will accelerate revenue growth through 2027.
Incorporating artificial intelligence, half of the fourth-quarter cloud order entry was noted. The company's AI product, including the virtual copilot Joule, aids users in managing business tasks like overseeing purchase orders. Klein noted, About 20,000 SAP developers are already using Joule for developers. What we are seeing is they can produce code faster – by 20%.
SAP shares remained relatively stable at 1040 GMT, despite initially rising by up to 3.1%. Analysts at brokerage Stifel commended SAP for delivering another set of strong results this Q4 amidst a volatile macro environment. Cloud revenues for the year are now estimated to be slightly higher, ranging from 21.6 billion euros to 21.9 billion euros.
In the fourth quarter, cloud revenue surged by 27%, reaching 4.71 billion euros, outperforming analysts' expectations. Cloud and software revenue grew by 11% to 8.27 billion euros, also surpassing analyst consensus figures.
Quarterly operating income, adjusted for special items, rose by 24% to 2.44 billion euros in the fourth quarter, exceeding analyst expectations.
SAP is reviewing up to 10,000 jobs out of its 100,000 total headcount to adapt to the AI era, with projected restructuring costs of around 3 billion euros.
SAP shares fell on Monday, in line with other European tech stocks, following concerns about the profitability of AI investments sparked by the success of the Chinese discount AI model DeepSeek.
CEO Klein expressed confidence on Tuesday that the emergence of more cost-effective and energy-efficient AI models, like DeepSeek's agent, would boost AI adoption and drive demand for SAP's AI services.
When asked about the potential integration of DeepSeek and other China-made technology into SAP products, Klein shared that the company plans to continue providing China-made technology to its customers in China.
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