Market Analysis

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Shares of SAP rose 4.4% in pre-market trading on Lang & Schwarz Tuesday after the German software giant increased its full-year targets, citing robust performance in its cloud business for the third quarter.

The company reported a 27% increase in cloud revenue, adjusted for currency fluctuations, reaching 4.35 billion euros ($4.71 billion) in Q3. This growth was driven by a 36% rise in sales of its Cloud ERP Suite resource planning program.

According to CEO Christian Klein, artificial intelligence played a significant role in this growth. He noted that approximately 30% of their cloud contracts in the third quarter incorporated AI use cases.

Operating profit climbed 28% to 2.24 billion euros, surpassing expectations, largely due to cost-cutting measures and a relatively low rate of new hires, as explained by CFO Dominik Asam.

SAP anticipates restructuring costs of around 3 billion euros as it assesses up to 10,000 of its approximately 100,000 employees in preparation for the evolving AI landscape.

In light of these developments, the Walldorf-based company has raised its full-year cloud and software revenue target to a range of 29.5 to 29.8 billion euros, up from a previous forecast of 29 to 29.5 billion euros.

The operating profit forecast for 2024 has also been adjusted to 7.8 billion euros, up from the prior estimate of 7.6 to 7.9 billion euros.

Paraphrasing text from "Reuters" all rights reserved by the original author.