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SAP to embed ChatGPT in products as quarterly revenue beats estimates
Global Banking & Finance Review®
Company
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 it with our technology,” CEO Christian Klein said in an interview. Those products 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)
(Reporting by Andrey Sychev and Supantha MukherjeeEditing by Miranda Murray and Emelia Sithole-Matarise)
ChatGPT is an AI language model developed by OpenAI that can generate human-like text responses based on input it receives.
Cloud revenue refers to the income generated from cloud computing services, including software, storage, and infrastructure provided over the internet.
Artificial intelligence (AI) is the simulation of human intelligence processes by machines, especially computer systems, enabling them to perform tasks that typically require human intelligence.
A restructuring plan is a strategy implemented by a company to reorganize its structure, operations, or finances, often to improve efficiency or address financial difficulties.
A job cut refers to the reduction of workforce by a company, often due to financial constraints or restructuring efforts.
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