German software firm SAP has announced its first-quarter earnings report, which showed a 10% year-on-year revenue growth to €7.44 billion, beating the company’s expected consensus. The growth was driven by the company’s cloud business, which grew by 24% year-on-year. However, SAP has lowered its outlook for 2021 after divesting its subsidiary, Qualtrics, last month.
SAP had previously announced plans to cut costs, which led to the loss of 3,000 jobs in January. However, the company foresees no further restructuring in the current year and intends to incorporate generative artificial intelligence technology into its products. CEO Christian Klein stated that SAP had been studying OpenAI’s chatbot, ChatGPT, and plans to offer more than 50 AI use cases embedded with its technology to customers after its annual Sapphire conference next month.
SAP has an internal committee comprising customers, analysts, and researchers to check for biases in AI use cases and guard against potential misuse of the technology.
Although many technology companies have struggled in the current economic climate, SAP has managed to grow its revenue. Its cloud business has proven to be particularly lucrative, with revenues growing by 24% YoY, broadly in line with expectations.
For the year, SAP expects a non-IFRS operating profit in the range of €8.6 billion – €8.9 billion, which is €200 million less than previously forecasted, due to the Qualtrics divestment. The cloud revenue forecast is also lower, at between €14 billion and €14.4 billion, down by €1.3 billion. Despite the lowered outlook, Jefferies analysts note that the underlying guidance remains unchanged and only reflects the disposal of Qualtrics.
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