SAP beats Q1 estimates; to use ChatGPT to provide innovative customer solutions

SAP, the German business software company, reported first-quarter revenue that exceeded analysts' expectations, largely driven by growth in its cloud business. Despite the challenging economic climate that has affected many other tech firms, SAP has managed to achieve a 10 per cent increase in revenue during the first quarter, reaching 7.44 billion euros. This revenue figure surpasses the company's consensus estimate. 

The company is attributing the growth in its cloud business, which grew 24 per cent year-on-year, to its ability to provide innovative solutions that meet customer needs.

Although SAP lowered its outlook for the year due to the divestment of its Qualtrics unit, it still foresees a strong year ahead. SAP's non-IFRS operating profit is now expected to be between 8.6-8.9 billion euros, 200 million euros less than previously forecasted. The cloud revenue forecast is also expected to be lower by 1.3 billion euros, ranging between 14 and 14.4 billion euros. Jefferies analysts wrote in a client note that "underlying guidance is essentially unchanged, although updated to reflect the disposal of Qualtrics."

SAP is planning to use artificial intelligence technologies like generative AI in its products to continue to provide innovative solutions that meet customer needs. The company has already developed over 50 AI use cases, and they will be available to customers next month after its annual Sapphire conference. In an interview, CEO Christian Klein said that SAP is working with Microsoft Corp-backed OpenAI's chatbot ChatGPT, which can provide human-like responses to questions.

To ensure the responsible development and implementation of its AI solutions, SAP has established an internal committee comprising customers, researchers, and analysts. This committee's objective is to identify and prevent biases in AI use cases and safeguard against possible misuse of the technology.

Although SAP announced plans in January to cut 3,000 jobs as part of its cost-cutting strategy, the company has said that it is not planning any further restructuring this year.

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