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