SAP reported strong cloud growth and outlined its AI strategy at the Goldman Sachs Communacopia + Technology Conference on Tuesday, emphasizing that its enterprise context and governance framework give it an edge as companies seek to deploy AI agents.
The company's cloud customer base grew 26% in the second quarter, and CEO Christian Klein said consumption revenue is on track to reach 30% of total revenue by the end of the decade. About 60% of SAP's installed base still runs on-premises, with standard maintenance for legacy systems ending by 2030, providing a long runway for migration.
Klein pointed to significant productivity improvements from AI-assisted tools. Development teams using AI coding assistants have seen productivity gains of 30% to 35%, while finance and HR functions using Joule Work have gained up to 20%. Approximately 80,000 of SAP's more than 100,000 employees are active internal users of Joue Work, and 150 pilot customers are testing the platform.
"It's the context, it's the governance, which comes via SAP," Klein said. "You can build your own agents, partners can build agents, but it's all provided the context of SAP and governed by SAP." He added that the synergy on SAP's platform amplifies results: "One plus one is three on our platform, not one plus one is two."
SAP plans to roll out 400 AI agents in September, with another wave expected in the fall. The company tests agents against six to seven different large language models before general availability. Its ERP system contains roughly 7 million semantic triples, forming a foundation for its Business AI Platform and Autonomous Suite offerings.
The company's Business Data Cloud platform has been in development for about 18 months. SAP also noted that workforce composition changes are expected by the end of 2025, and medium-term efficiency targets stand at 2 billion euros.
SAP trades at a price-to-earnings ratio of 27.23 with diluted EPS of $7.63, and generated a gross profit margin of nearly 74% over the last twelve months. Return on equity stands at 18%, though the stock has declined 19% over the past year. Shares were quoted around $209 at the conference.
Klein also discussed the competitive landscape, mentioning peers including Oracle, Adobe, Databricks, Snowflake, Dremio, Palantir and Qualtrics, while noting ongoing partnerships with Accenture, Lockheed Martin, BMW, Infineon and Aldi.
