SAP to embed ChatGPT in products as quarterly revenue beats estimates

2:38 pm Friday, April 21st, 2023

By Andrey Sychev and Supantha Mukherjee

(Reuters) – Business software maker SAP on Friday reported first-quarter revenue above analysts’ expectations, backed by growth in its cloud business but lowered its outlook for the year due to the divestment of its Qualtrics unit.

SAP, which in January announced plans to cut 3,000 jobs as it looked to cut costs, foresees no more restructuring this year and plans to use artificial intelligence technologies like generative AI in its products.

While tougher economic conditions have riled big technology companies, SAP has still been able to grow its revenue by 10% in the first quarter to 7.44 billion euros ($8.2 billion), beating a company-provided consensus.

It said it was working with Microsoft Corp-backed OpenAI’s chatbot ChatGPT that can provide human-like responses to questions.

We were studying ChatGPT for quite a while… we have built over 50 AI use cases, embedding them with our technology,” CEO Christian Klein said in an interview. Those use cases will be available to customers next month after its annual Sapphire conference, he said.

SAP also has an internal committee with customers, researchers and analysts to check for biases in AI use cases and guard against potential misuse of the technology, Klein said.

Revenue from SAP’s lucrative cloud business grew 24% year-on-year, broadly in line with consensus. SAP has already discounted subsidiary Qualtrics’ profits, which it divested last month, from the current earnings report.

For the year, SAP expects non-IFRS operating profit in the range of 8.6-8.9 billion euros, 200 million euros less than before. Cloud revenue forecast is seen down by 1.3 billion euros to between 14 and 14.4 billion euros.

“Underlying guidance is essentially unchanged, although updated to reflect the disposal of Qualtrics,” Jefferies analysts wrote in a client note.

($1 = 0.9126 euros)

(This story has been corrected to say that AI use cases, not products, will be available from next month, in paragraph 5)

(Reporting by Andrey Sychev and Supantha Mukherjee; Editing by Miranda Murray and Emelia Sithole-Matarise)