Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain the expected deceleration in Current Cloud Backlog (CCB) for 2025 despite strong growth in 2024? A: Christian Klein, CEO, explained that while CCB growth was strong in 2024, a slight deceleration is expected in 2025 due to the larger base. However, with 40% of customers already moving to the cloud and high retention rates, SAP anticipates continued growth. Dominik Asam, CFO, added that the deceleration is factored into revenue projections, and the mix of revenue sources will still support overall growth.
Q: What is the outlook for support revenue in 2025 as cloud migrations continue? A: Dominik Asam, CFO, noted that while there was an increase in maintenance revenue in Q4 2024 due to specific factors, a gradual decline is expected as more customers migrate to the cloud. However, the transition from maintenance to cloud revenue is expected to be smooth, with no significant drop in support revenue.
Q: Can you clarify the reasoning behind the SAP private edition option and its impact on the installed base? A: Christian Klein, CEO, clarified that the private edition option is designed for large customers with complex landscapes who need more time to transition to the cloud. It allows them to replace third-party components and maintain compliance while moving to the cloud. This offering is not an extension of on-premise maintenance but a support for cloud migration.
Q: How is SAP's AI initiative, Joule, contributing to revenue growth? A: Christian Klein, CEO, highlighted that AI, particularly Joule, is a significant driver of new business, with 50% of Q4 deals involving AI. Joule's adoption is leading to increased cloud order entry and revenue, with a typical three-month delay from signing to revenue generation as AI use cases go live.
Q: What are the main cost levers for SAP beyond 2025, and how is the go-to-market strategy evolving? A: Christian Klein, CEO, mentioned that SAP is transforming its go-to-market strategy by leveraging partners and focusing on efficiency. The company is assigning partner-led territories and optimizing sales processes. Dominik Asam, CFO, added that AI is playing a significant role in driving efficiency, and SAP aims to maintain disciplined cost growth relative to revenue growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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