Driven by AI, cloud revenue grew well in the first quarter, with Europe's largest software company SAP's financial report meeting expectations
SAP, the largest software company in Europe, announced its first-quarter financial report, showing a 25% year-on-year growth in cloud computing revenue to 3.9 billion euros, in line with expectations. SAP stated that the backlog of cloud computing orders increased by 28% to 14.2 billion euros, setting a record for the fastest growth in history. The company's CEO stated that looking ahead, SAP has strong growth momentum in business AI and cloud services. In addition, SAP is integrating artificial intelligence tools into its products and has invested in several startups. As for the stock price, SAP's US stocks rose by 1.4%
Europe's largest software company SAP said on Monday that, calculated at fixed exchange rates, its adjusted cloud revenue in the first quarter increased by 25% year-on-year to 3.9 billion euros. This figure is in line with the average analyst expectations.
Recently, SAP has been focusing on moving customers from its traditional on-premise software to the cloud, while also offering business AI services to increase attractiveness. This year, SAP has offered existing customers discounts of up to 50% to promote the transition to a subscription model, thereby increasing average customer spending.
SAP stated that its current cloud backlog (an indicator of cloud revenue to be recognized in the next 12 months) grew by 28% to 14.2 billion euros at fixed exchange rates, setting a record for the fastest growth in history.
SAP CEO Christian Klein said in a statement, "We had a strong start to 2024 and are confident in achieving our full-year targets. Looking ahead, we have strong growth drivers - cross-selling of business AI, cloud service portfolio, and winning new customers in the mid-market."
At the same time, SAP has followed industry trends by integrating AI tools into almost all of its products. As part of this strategy, the company has invested in several startups, including Aleph Alpha GmbH, Anthropic PBC, and Cohere.
In response to the increased focus on growth areas such as cloud technology and artificial intelligence, SAP announced a restructuring plan in January. Due to this plan resulting in related expenses of 2.2 billion euros, the company's operating profit was affected, leading to a loss of 787 million euros for the period.
On April 22nd, SAP's US stock closed up 1.4% at $178.18, and rose 2.4% after hours. So far this year, the stock has risen by 18%.
