Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Saplea's first quarter profit tot analyst estimates, even as the
Speaker 2: software giants closely watched cloud software revenue came in slightly
Speaker 2: below projects and joining mean now is Kristin Glight, the
Speaker 2: CEO of SAP Christin I've been looking through the analyst
Speaker 2: notes broadly positive in terms of the reaction. Of course,
Speaker 2: trade gate is flagging some pretty decent upside for the
Speaker 2: stock this morning. To what extent is the business contained
Speaker 2: going forward given the trade tensions, given the challenging macroeconomic environment,
Speaker 2: some unlysts saying there is reassurance in these results, that
Speaker 2: is that sustained through the future quarters.
Speaker 1: Do you think, yeah, good morning, Tom. Yeah.
Speaker 3: Indeed, SEP had a very very good start into the year.
Speaker 3: We posted swan Q one results and look out also
Speaker 3: at the resiliency behind the numbers. I mean, when you
Speaker 3: look at our corn cloud backlock, it's up twenty nine percent.
Speaker 3: That gives us high predictabile also for the next twelve months.
Speaker 3: Next one is recovering revenue to share is about eighty
Speaker 3: six percent. And you know when you have a recovering
Speaker 3: revenue share of eighty six percent. Again you have hy
Speaker 3: predictability how you can deliver your total revenue and then
Speaker 3: finally operating profit up fifty eight percent. We are driving
Speaker 3: also a lot of transformation inside a SPAI makes us
Speaker 3: more deficient in coding software, delivering software, and that is
Speaker 3: also now paying off. And these will be also impacting
Speaker 3: our total business. And that's why we confirmed our guidance
Speaker 3: for the year.
Speaker 2: Christine, the US is your most important market. What would
Speaker 2: a recession in the US mean for your business there
Speaker 2: and for your customers and clients.
Speaker 3: Look, I was just last week in the United States
Speaker 3: and talk to many customers, which all is also impacted
Speaker 3: already by tariffs. I mean when they're talking to sp
Speaker 3: what they need is software to helping to manage those
Speaker 3: tariffs in sometimes over one hundred and certain countries in
Speaker 3: the world, they need software from a SAP on the
Speaker 3: supply chain side to make them more resilient. That's why
Speaker 3: we see currently still also a very strong pipeline in
Speaker 3: the United States. Now, obviously it's hard to predict what
Speaker 3: will happen in the next ninety days, so that's when
Speaker 3: we are moving into a recession. Of course, no company
Speaker 3: is completely a moon against the recession. But again, what
Speaker 3: we see in the market, what customers are telling us
Speaker 3: is that SEP is very very relevant, especially in times
Speaker 3: like that.
Speaker 2: And so to be clear, Christian, you're not seeing evidence,
Speaker 2: significant evidence yet of customers and clients in the US
Speaker 2: A wels we're pulling back on spending at this point.
Speaker 1: No pullback on spending on on SAP.
Speaker 3: I mean, obviously, what they are telling me is, Christian,
Speaker 3: helped me to drive productivity, give me more AI on
Speaker 3: asset management, on supply chain, how can I automate several
Speaker 3: tasks in my back office functions? I mean, that is
Speaker 3: of course what they are now more and more asking for.
Speaker 3: Given you know that they are under financial pressure, but
Speaker 3: what we are not seeing yet is that they are
Speaker 3: actually delaying projects or even cutting projects.
Speaker 2: You're also a big vendor to the US government. Have
Speaker 2: you seen any impact from the cuts by by Doge
Speaker 2: and Musk's team there has had an impact on SAP
Speaker 2: at all in the US?
Speaker 3: Are we actually working together really well with many agencies
Speaker 3: in the United States. We are helping them actually again
Speaker 3: to drive more productivity, to deliver more outcome for the
Speaker 3: US citizens. And so the collaboration is tired is good.
Speaker 3: And actually what they also like is when when it
Speaker 3: comes to AI and our so uncloud in Washington that
Speaker 3: we are also driving a lot of investments, you are
Speaker 3: to help them on detche and again to drive more productivity.
Speaker 2: Christ do you expect personally do you expect a recession?
Speaker 2: And if so and if not, are you preparing what
Speaker 2: steps are you taking to mitigate a slowdown and glow growth?
Speaker 3: But Tom, look, it's so hard to predict. I mean,
Speaker 3: how often did you wake up in the morning in
Speaker 3: the last weeks and thought, oh, now everything you know
Speaker 3: turns more to the negative side. The next day it's
Speaker 3: actually more positive. So it's so hard to predict. You know,
Speaker 3: all what I can do as the CEO of SEP
Speaker 3: we have very very relevant technology. We need to help
Speaker 3: our customers to overcome, you know, those types of uncertainty.
Speaker 1: This is what I can focus on.
Speaker 3: And so far, so good, and we remain confident for
Speaker 3: the rest of the year.
Speaker 2: You touch on AI and I know it's an important
Speaker 2: part of the business. You're integrating it and you're shipping
Speaker 2: it as well. Christian, just broadly, where do you think
Speaker 2: Europe stands in the competitive race on AI? Versus China
Speaker 2: versus the US.
Speaker 3: I mean, Tom, when I see something very positive out
Speaker 3: of the last weeks, you know, geopolitical wise, that is
Speaker 3: definitely that Europe is coming together more strongly. Also with
Speaker 3: regard to AI, I see strong will now to cut regulations,
Speaker 3: to harmonize regulations, and that is what Europe needs. We
Speaker 3: cannot regulate before we innovate, and we are shipping so
Speaker 3: many AI use cases, but we are facing in every
Speaker 3: country so many regulations, which is hard to make business
Speaker 3: for our customers enterire CP. And we see very positive
Speaker 3: signs now coming from Brussels that we will see a
Speaker 3: more united Europe also with regard to digital, so that
Speaker 3: I see really as a positive.
Speaker 2: So you're seeing those signs and you're seeing those positive
Speaker 2: changes coming through from Brussels. How big is the gap now,
Speaker 2: the lag between Europe, for example in the US and China.
Speaker 2: When do you see in what time frames you see
Speaker 2: that being closed if these changes are made.
Speaker 3: And when I look at our auto industry, when I
Speaker 3: look at chemical retail and comparedis you know to our
Speaker 3: customers in China and the United States, I mean there's
Speaker 3: definitely a gap.
Speaker 1: What we need in Europe.
Speaker 3: Is not like trying desperate, you know, to bring up
Speaker 3: another AI company. What we need is to apply AI
Speaker 3: to be more stronger, more competitive in the industries we
Speaker 3: are strong at. And I see now a lot of
Speaker 3: companies here in Europe really moving forward on transforming their
Speaker 3: business model, infusing AI to drive productivity, to drive more
Speaker 3: healthier quos. So I'm seeing that and I'm really hopeful
Speaker 3: in the next twelve to twenty four months, when I
Speaker 3: look at our plans and those ones of our customers
Speaker 3: in Europe, that we can certainly shrink the gap to
Speaker 3: other companies around the world.
Speaker 2: Christian Clients, CEO of SAP, thank you very much indeed
Speaker 2: on the first quarter profit be and the expectations around
Speaker 2: Europe and AI