- SAP raises 2025 operating profit forecast by €200 million.
- The increase follows the expansion of its AI-focused restructuring initiative.
- New forecast: €10.2 billion non-IFRS operating profit, up from €10 billion.
- Restructuring now expected to impact 9,000 to 10,000 employees.
- SAP aims to align headcount with strategic growth areas, notably Business AI.
- Significant Q2 developments include enhanced AI features, new partnerships with IBM and AWS, and a 25% year-over-year increase in cloud revenue.
- Positive feedback and growing customer adoption highlight SAP’s strong AI positioning.
Main AI News:
In a strategic move to leverage artificial intelligence (AI) for operational efficiency, SAP has revised its 2025 operating profit forecast upward by €200 million. The update follows the ongoing implementation of the company’s AI-centric restructuring initiative, launched seven months ago.
SAP CEO Christian Klein announced during the company’s quarterly earnings call on July 22 that the expansion of their transformation program is driving this optimistic adjustment. “We have pursued our transformation with precision, recruiting only for essential skill sets,” Klein stated. “Our increased program scope allows us to elevate our Ambition 2025 bottom line projection by approximately €200 million.”
The enterprise software giant now anticipates non-IFRS operating profit to reach €10.2 billion (approximately $11.1 billion) in 2025, an increase from the earlier forecast of €10 billion (around $10.9 billion). This revision reflects SAP’s intensified focus on Business AI and operational efficiencies, alongside a transformative operational overhaul.
Initially, SAP’s restructuring plan, announced in January, aimed to emphasize Business AI and strategic growth sectors while optimizing operational efficiency. The company projected a reduction of 8,000 employees through retraining or voluntary exits. However, the scope has expanded, with the expected impact now between 9,000 and 10,000 employees to align skillsets with future needs.
As SAP reinvests in strategic growth areas, particularly Business AI, it anticipates its headcount by the end of 2024 to align closely with its 2023 levels. The restructuring program is slated for completion in early 2025.
In conjunction with these developments, SAP has also made notable advancements in AI during Q2. These include enhanced AI features in supply chain solutions, a broadened collaboration with IBM featuring new generative AI capabilities, and an extended partnership with Amazon Web Services (AWS) focusing on cloud ERP and AI offerings.
Klein highlighted positive market reception for SAP’s AI-infused products, noting that the company is increasingly recognized as a major AI player. The firm’s AI strategy has been instrumental in securing quarterly deals. Additionally, SAP reported a 25% year-over-year growth in cloud revenue, surpassing the 10% increase in total revenue.
“Despite the industry’s volatility, our growth trajectory remained robust in Q2,” Klein concluded. “Customer migration to the cloud continues to accelerate, driven by the enhanced appeal of SAP’s Business AI capabilities.”
Conclusion:
SAP’s upward revision of its profit forecast underscores the significant impact of its AI-driven restructuring program. By intensifying its focus on Business AI and expanding strategic partnerships, SAP is not only enhancing its operational efficiency but also positioning itself as a formidable player in the AI sector. The company’s ability to boost its profit outlook amidst industry volatility reflects a robust market confidence in its strategic direction and technological advancements. This positions SAP favorably in the competitive landscape, potentially setting a precedent for other enterprises leveraging AI for operational and financial gains.
