Business software maker SAP on Friday reported first-quarter revenue above analysts’ expectations, backed by growth in its cloud business but lowered its outlook for the year due to the divestment of its Qualtrics unit.
SAP, which in January announced plans to cut 3,000 jobs as it looked to cut costs, foresees no more restructuring this year and plans to use artificial intelligence technologies like generative AI in its products.
While tougher economic conditions have riled big technology companies, SAP has still been able to grow its revenue by 10 percent in the first quarter to EUR 7.44 billion (roughly Rs. 60,700 crore), beating a company-provided consensus.
It said it was working with Microsoft-backed OpenAI‘s chatbot ChatGPT that can provide human-like responses to questions.
We were studying ChatGPT for quite a while… we have built over 50 AI use cases, embedding them with our technology,” CEO Christian Klein said in an interview. Those use cases will be available to customers next month after its annual Sapphire conference, he said.
SAP also has an internal committee with customers, researchers and analysts to check for biases in AI use cases and guard against potential misuse of the technology, Klein said.
Revenue from SAP’s lucrative cloud business grew 24 percent year-on-year, broadly in line with consensus. SAP has already discounted subsidiary Qualtrics’ profits, which it divested last month, from the current earnings report.
For the year, SAP expects non-IFRS operating profit in the range of EUR 8.6 million – EUR 8.9 billion (roughly Rs. 70 crore to Rs. 73 crore), EUR 200 million (roughly Rs. 1,600 crore) less than before. Cloud revenue forecast is seen down by EUR 1.3 billion (roughly Rs. 10,700 crore) to between EUR 14 and EUR 14.4 billion (roughly Rs. 1,14,900 crore to Rs. 1,18,100 crore).
“Underlying guidance is essentially unchanged, although updated to reflect the disposal of Qualtrics,” Jefferies analysts wrote in a client note.
© Thomson Reuters 2023
