SAP cloud revenue meets estimate as AI adoption fuels demand

SAP reported first-quarter cloud revenue in line with analysts, as a boom in demand for artificial intelligence (AI) fuelled the German software company’s growth.

Adjusted cloud revenue in the quarter rose 25 per cent at constant currencies from a year earlier to 3.9 billion euros (S$5.7 billion), the Walldorf-based company said on Monday (Apr 22). That compares with the average estimate of 3.9 billion euros of analysts surveyed by Bloomberg.

Europe’s biggest software firm has been seeking to migrate customers from its legacy on-premise software to the cloud, where it is offering business AI services to sweeten the deal. This year, SAP announced discounts of as much as 50 per cent to existing clients to accelerate the shift to subscription models that lead to higher average spending per client.

“We are off to a great start in 2024 and we are confident we will achieve our goals for the year,” chief executive officer Christian Klein said. “Looking ahead, we have powerful growth drivers in place – Business AI, cross-selling across our cloud portfolio, and winning new customers, particularly in the midmarket.”

The company has joined an industrywide trend to incorporate AI tools into virtually all of its products. As part of this push, SAP has invested in startups Aleph Alpha GmbH, Anthropic PBC and Cohere.

SAP’s American depositary receipts were little changed in extended trading after rising 1.4 per cent to US$178.18 at the close in New York. The shares have gained 15 per cent so far this year. Business Times