(Bloomberg) — SAP AG’s cloud-based revenue rose 25% in the second quarter, as demand for services that run artificial intelligence applications rose and the company signed up more customers for its software.
The Walldorf-based company said in a statement on Monday that its fourth-quarter adjusted cloud revenue rose 25 percent at constant exchange rates from a year earlier to 4.15 billion euros ($4.52 billion), well above the average forecast of 4.16 billion euros of analysts surveyed by Bloomberg.
SAP's efforts to move customers away from on-premise licenses and towards cloud subscription models have insulated it from the weaknesses of the software industry. The AI boom has mostly helped hardware and semiconductor companies, leading to disappointing forecasts this year from peers including Salesforce and Workday.
“Our cloud growth momentum remains strong,” CEO Christian Klein said in a statement. “Given our progress and strong pipeline, we are confident we can accelerate our revenue growth through 2027.”
SAP shares closed at $200.47 in New York and rose about 4.5% in after-hours trading. The company's American depositary receipts have risen 30% so far this year.
The company reaffirmed its 2024 guidance and slightly raised its outlook for 2025. SAP now expects non-IFRS operating profit to be about €10.2 billion, down from €10 billion previously.
SAP reassured investors last month by suggesting continued demand for its services, and the wealth of data it has from its enterprise customers means it's well-positioned to benefit from companies' AI investments, according to Bloomberg Intelligence analysts.
SAP is using AI tools to drive its cloud business, where average spend per customer is expected to rise, to encourage customers to switch. The company's current cloud backlog grew 28% quarter-over-quarter to €14.8 billion, up 28% at constant exchange rates.
Europe's largest software company has stepped up its focus on AI as a key growth area and announced restructuring plans in January that will affect 9,000-10,000 jobs, up from an initially planned 8,000.
SAP said its restructuring charges for the first half of the year were 2.9 billion euros, bringing total costs related to the program to about 3 billion euros. The company had previously estimated costs at about 2 billion euros.
(Updated to add share in fifth paragraph.)
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