SAP lowers FY cloud revenue forecast after slowing demand in Q2

Business software maker SAP on Thursday trimmed its full-year outlook for key cloud sales due to lower-than-anticipated transactional revenues in the second quarter.

“We’ve seen fewer public sector customers in Q2, also due to the geopolitical situation, but demand remains strong for H2,” Chief Executive Christian Klein said in a press call.

The company reported second-quarter revenue growth of 5%, in line with market expectations.

Cloud revenue was 3.3 billion euros in the second quarter, falling short of a median estimate of 3.4 billion euros in a company-provided consensus, while total revenue came in at 7.55 billion euros versus a median forecast of 7.6 billion euros.

“We see significant opportunities ahead, in particular through the transformative power of AI,” Klein added in a statement.

SAP expects generative AI to fundamentally change its business and has pledged to invest more than $1 billion in AI-powered technology startups via its enterprise capital firm Sapphire Ventures.

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For the full year, it lowered its cloud revenue outlook to 14.0 billion-14.2 billion euros ($15.59 billion-$15.81 billion) from 14.0 billion-14.4 billion euros, and slightly lifted its forecast for its non-IFRS operating profit to 8.65 billion-8.95 billion euros from 8.6 billion-8.9 billion.

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