German tech giant SAP on Tuesday upgraded its financial outlook for the full year as artificial cloud computing and artificial intelligence operations fueled growth.
Europe’s largest software maker now expects operating profit on a constant currency basis in 2025 to be between 10.3 billion euros ($10.7 billion) to 10.6 billion euros, up from a previous target of 10.2 billion euros. The firm also expects an acceleration in cloud revenue growth.
Adjusted operating profit rose 25% to 8.15 billion euros in 2024, above the 22% increase flagged in a company-compiled analyst poll.
Revenue from the firm’s core cloud and software businesses rose 11% for the period, also slightly ahead of consensus estimates.
CFO Dominik Asam told CNBC’s “Squawk Box Europe” on Tuesday that the company is running “very much according to plan,” as this year’s outperformance already ticks all the boxes of their 2025 “ambition” plan set out in October 2020.
“We have all reasons to be optimistic on executing on these targets,” Asam added.
Analysts at JPMorgan said the upgrade was ahead of expectations. Shares of the firm hovered around the flatline in the morning and was last trading down 0.9%.
DeepSeek is ‘very good news’
Chinese startup DeepSeek’s AI app this week sparked concerns over competitiveness in artificial intelligence leading to a major market sell-off.
Asam told CNBC the developments from DeepSeek were actually “good news” for SAP.
AI is becoming a key part of the business, with the tech accounting for half of SAP’s cloud order entry in the fourth quarter, CEO Christian Klein said in Tuesday’s release. SAP’s position in data and “Business AI” gives the firm “additional confidence” in driving growth through 2027, Klein said.
Asam added that the firm is always looking to upgrade its systems, and that it’s situated in a way to be able to quickly capitalize on new innovations. As long as the technology is relevant, reliable and responsible, the more choice SAP has to improve its AI hub, the CFO said.
“So I’m not concerned about that. On the contrary, competition, innovation on that front is extremely helpful for creating better products for our customers,” Asam said.