Frederic Boulan

Frederic Boulan asked about SAP's AI traction, specifically the percentage of existing cloud customers using their AI offering, the revenue uplift from early adopters, and concerns about customers potentially using alternative AI tools instead of SAP's core ERP or HCM solutions.

Answer

CEO Christian Klein reported a ninefold increase in Joule adoption and that approximately 60% of cloud customers actively use SAP AI, with 20% in progress. He highlighted SAP's unique value proposition with business data and context for high-value AI, citing examples of winning deals due to AI. CFO Dominik Asam pointed to SAP's 27% constant currency SaaS/PaaS growth (over 30% in USD) as evidence of winning in the AI market.

Frederic Boulan inquired about SAP's AI traction, specifically the percentage of existing cloud customers currently utilizing SAP's AI offerings and the revenue uplift observed from early adopters. He also addressed concerns about AI risks, asking if customers are beginning to use non-SAP tools for needs previously met by SAP's core ERP or HCM products.

Answer

CEO Christian Klein reported a ninefold increase in Joule customer adoption and stated that approximately 60% of cloud customers are actively using SAP AI, with another 20% in progress. He clarified that SAP is winning deals because of AI, not losing them, by combining LLMs with SAP's AI foundation and business data to deliver high-value use cases, citing examples in cashflow management, personalized shopping, and last-mile delivery. CFO Dominik Asam added that SAP's Q4 constant currency SaaS and PaaS growth of 27% (over 30% in USD) demonstrates its competitive strength in AI, outperforming many competitors.

Frederic Boulan with Bank of America inquired about SAP's competitive position against Oracle, particularly in light of Oracle's pivot towards infrastructure offerings, and how SAP views its own strategic positioning.

Answer

Christian Klein, CEO of SAP, stated that SAP's strategy of focusing on value creation at the upper part of the stack (software and cloud solutions) with strong infrastructure partners is proven and effective, eliminating the need to build data centers. He emphasized using LLMs rather than training them, and partnering with LLM providers to build applied AI agents on SAP's platform. Dominik Asam, CFO of SAP, added that infrastructure as a service is a small part of SAP's cloud revenues and highlighted that SAP's cloud ERP suite growth of 31% constant currency is even higher in U.S. dollars, outperforming competitors.

Frederic Boulan from Bank of America questioned SAP's competitive standing against Oracle, particularly in light of Oracle's strategic shift towards infrastructure offerings, and sought an update on SAP's positioning.

Answer

CEO Christian Klein stated that SAP's focus remains on value creation at the upper part of the stack (software and cloud solutions), leveraging infrastructure partners rather than building data centers. He emphasized SAP's winning formula of apps, high-quality data (BDC), and applied AI, which is resonating with customers. CFO Dominik Asam added that SAP's cloud ERP suite growth, when converted to USD, shows even stronger market share gains compared to competitors.

Frederic Boulan of Bank of America sought more detail on the prudent macro outlook, specifically how demand is affecting the Current Cloud Backlog (CCB) for the rest of the year, given headwinds in the US public sector and manufacturing.

Answer

CEO Christian Klein noted that while the slight CCB deceleration was expected, H2 confidence is supported by strong pipeline coverage equivalent to the prior year. However, he highlighted uncertainty around closing mega-deals due to elongated approval cycles in sectors impacted by trade policy concerns. He stressed the resiliency of SAP's broad portfolio as a buffer.

Frederic Boulan of Bank of America asked about the outlook for EBIT and free cash flow, the drivers of the strong Q1 cloud margin, and future plans for capital returns after the current buyback program.

Answer

CFO Dominik Asam attributed the broad margin improvement to efficiencies across G&A, R&D, and selling expenses. He confirmed the current €5 billion share repurchase will be completed and stated that future capital allocation will involve either M&A at reasonable valuations or a new capital return program, supported by strong cash generation.

Frederic Boulan of BofA Securities asked for the specific drivers of the Cloud ERP Suite's acceleration, whether SAP is ahead of its Current Cloud Backlog (CCB) target, and for an outlook on cloud gross margin evolution.

Answer

CEO Christian Klein attributed Cloud ERP growth to large customer RISE deals, strong net-new wins, and platform ecosystem extensions. CFO Dominik Asam noted that CCB growth is on the right trajectory for the 2025 ambition, even with headwinds from the transactional business. He added that the cloud gross margin is on a clear path toward the 75% ambition for 2025, driven by scale and operational efficiencies.

Frederic Boulan asked for clarification on the commentary that Q4 is 'decisive' for 2025 cloud growth, noting the contrast between the bullish tone and tougher upcoming comparisons.

Answer

CEO Christian Klein explained that Q4 is always SAP's largest quarter for bookings, and while the pipeline is strong, execution is paramount. CFO Dominik Asam added that the comment is an acknowledgment of the difficult market others are reporting. He stressed that while SAP is not currently seeing those issues, the company wants to remain prudent and not get 'carried away' before results are delivered.