Seven months after launching a restructuring program focused on artificial intelligence (AI), SAP on Monday said it was raising its 2025 operating profit target to reflect the efficiency gains it expects from the program.
“We continued to execute our transformation program with strict discipline in rehiring only those with the skill sets we needed,” SAP CEO Christian Klein said during the company’s quarterly earnings call on Monday. “As you can see, we are scaling up our program. That’s why we can announce an increase in our Ambition 2025 bottom line of around 200 million euros.”
In its earnings report on Monday, SAP said it expects non-IFRS operating profit to be 10.2 billion euros ($11.1 billion) in 2025, up from a previous forecast of 10 billion euros ($10.9 billion).
The enterprise application software company announced its restructuring plans in January, saying it would focus on business AI and other key strategic growth areas and transform its operations to gain AI-driven efficiencies. SAP added that it expects 8,000 employees to be retrained or leave the company under a voluntary separation program.
SAP said in its earnings call on Monday that it expects the restructuring to affect 9,000 to 10,000 employees as it works to ensure the company’s skill sets and resources are aligned to meet future needs. It expects its headcount at the end of 2024 to be similar to that at the end of 2023 as it reinvests in strategic growth areas, particularly business AI.
SAP expects to complete its restructuring program in early 2025, according to the release.
As SAP continued to restructure in the second quarter, it also made several other AI-related moves, according to the earnings release, including adding AI capabilities to the supply chain solutions it offers to clients, expanding collaboration with IBM including new generative AI capabilities, and expanding collaboration with Amazon Web Services (AWS) including a cloud enterprise resource planning (ERP) experience and generative AI services.
Klein said on the conference call that SAP is getting more positive feedback than ever about its products because of its business AI products, that everyone sees SAP as a leading AI company because SAP can embed AI technology into its customers’ operating systems, and that the company’s AI strategy played a key role in all the deals it closed during the quarter.
During its earnings report on Monday, SAP also announced that its cloud revenue during the quarter grew 25% compared to the same period last year, outpacing total revenue, which increased 10%.
“Our growth momentum remained strong in the second quarter despite a volatile environment in the software industry,” Klein said on the conference call. “As more customers move to the cloud, SAP’s business AI capabilities make our portfolio even more attractive.”
