SAP Raises Financial Outlook on Cloud Growth Surge
Software giant SAP, the largest in Europe, has revised its financial projections upwards, citing robust cloud revenue growth. The company anticipates operating profit in 2025 to range between €10.3 billion and €10.6 billion (US$10.75 billion - $11.06 billion), adjusted for currency fluctuations.
SAP had previously projected an operating profit of approximately €10.2 billion for 2025, along with total revenue surpassing €37.5 billion and cloud revenue exceeding €21.5 billion. The company now anticipates cloud revenue to slightly exceed these targets, projecting a range of €21.6 billion to €21.9 billion for the year.
In the fourth quarter, cloud revenue surged 27% after adjusting for currency effects, reaching €4.71 billion and surpassing analyst consensus estimates of €4.67 billion. Combined cloud and software revenue for the quarter grew 11% (constant currency) to €8.27 billion, outperforming analyst expectations of €8 billion.
Adjusted for special items, quarterly operating income increased 24% to €2.44 billion in the fourth quarter, exceeding analyst consensus of €2.25 billion.
As SAP prepares for the advent of artificial intelligence, it has previously announced that up to 10,000 of its 100,000 employees are under review, anticipating restructuring costs around €3 billion. On Monday, SAP's shares experienced a decline alongside other European tech stocks, as concerns about the profitability of AI and related investments weighed on investor confidence following the wavering popularity of a popular Chinese discount AI model.