The world of enterprise AI is dominated by American names from microsoft to sales forceBut Europe has an important player that is advancing strongly in that space: SAP.
In an exclusive interview with CNBC’s “Europe Early Edition,” SAP CEO Christian Klein said AI is “the number one reason” customers sign deals with the company.
“After we close the fourth quarter, actually, 80 or 85% of our revenue for next year is already done. So, [a] “We have a good pipeline for the fourth quarter and with that, when we close the year, our clients, also our investors, can expect that there will also be very positive production,” he stated.
SAP’s cloud backlog rose 23% in the third quarter to $18.8 billion, the company said in an earnings report released late Wednesday.
“I was pretty optimistic last night and I’m still optimistic because the pipeline looks good,” Klein said. “In fact, we now have our biggest quarter ever.”
Revenue rose 7% to 9.08 billion euros ($10.53 billion), slightly below expectations of 9.15 billion euros, according to consensus figures compiled by LSEG. However, it saw 22% gains in its cloud revenue, with Klein citing rising data and AI cloud market share as the reason for the revenue increase.
Deutsche Bank said the company remains a “top pick” in the European global software and technology sector, however, noting that SAP is now heading towards the lower end of its cloud revenue forecast of €21.6 billion to €21.9 billion this year.
“In an environment of increasingly longer deal cycles and exits… SAP continues to perform very well, in our view, even if delays in deal closing have led the company to guide toward the lower end of its cloud revenue growth range for FY25,” Deutsche Bank analysts said in a note led by Johannes Schaller.
SAP shares initially rose 2% at the start of the trading session on Thursday, but later pared their gains to trade 2.5% lower. The stock is down 3% so far this year.
The AI ​​playbook in Europe
SAP briefly became Europe’s most valuable company in March, boosted by enthusiasm and gains on the German stock market.
The European Union has faced criticism for its legislative approach to AI, and some companies have called for deregulation in an effort to catch up in the global AI race. Klein said he’s not sure if the bloc is adopting the right strategy compared to the American approach of “give me your AI, let’s test it, let’s refine it, let’s optimize it over time.”
The CEO said he is focused on value creation and explained that it is “100%” what customers are looking for. It echoes the message of other AI companies and investors in Europe, given that the United States and China currently dominate the formation of large language models, which is the necessary infrastructure for AI. However, the general feeling is that Europe has the opportunity to be a leader in putting it into practice.
Training large language models is now a “commodity,” Klein said, adding that he expects the application of AI to become an increasing priority for companies and SAP’s bet on this will be reflected in its share price in the future.
“It’s very important that we’re not just overselling, but that we see real adoption,” Klein said.
SAP has some exposure to China through partnerships that allow it to work “in China, for China,” due to geopolitical tensions, Klein noted. The speed of AI development in the country, low regulation and talent pool make it difficult to ignore, he said.
The company offers cloud solutions, expense management and analysis, and supply chain solutions to businesses. It underwent a major restructuring in 2024 and pivoted toward artificial intelligence services, which are now used in sectors such as finance and supplier sourcing.
