Enterprise software giant SAP SE’s stock inched up in late trading today after it shook off concerns that its business might become a victim of the artificial intelligence boom by posting solid results in its latest earnings report.

The strong numbers posted by SAP today suggest that AI tools that can automate some kinds of business work and processes aren’t yet replacing its software, which spans cloud services and operating systems for large enterprises.

The company reported second-quarter earnings before certain costs such as stock compensation of €1.89 ($2.15) per share, surpassing Wall Street’s consensus estimate of €1.68 by a wide margin. Meanwhile, SAP’s revenue increased 11% from the same period one year ago, to €9.88 billion, beating the €9.85 billion analyst target.

Those numbers helped SAP post an operating profit of €4.16 billion in the quarter, up from a profit of just €3.54 billion one year ago. Investors liked what they saw, and SAP’s American depository receipts gained more than 2% in the after-hours trading session.

SAP’s cloud business unit, which is by far its largest segment, saw sales grow 24% from a year earlier. Meanwhile, its cloud backlog jumped 26% to €22.9 billion, the company said. The business has grown immensely in recent years as more of SAP’s customers shift their data from on-premises database systems to SAP’s cloud platform, which generates a recurring source of revenue. However, that shift has come at the expense of the company’s software support revenue, which declined 7% in the quarter.

Like many software companies, SAP has been under pressure for the last year amid fears that AI tools will one day, perhaps even soon, replace the need for traditional software tools. After all, why pay to use an expensive enterprise resource planning platform when you can simply have an AI coding bot create one for you for free? Fortunately for SAP, doing that isn’t nearly as simple as it seems. However, its stock has still declined 40% in the year to date, primarily on those concerns.

But SAP is trying to change the narrative, and its management insists that it can actually become one of the leading AI providers. Chief Executive Christian Klein (pictured) argued that generic AI tools simply cannot match the capabilities and reliability of SAP’s embedded AI solutions.

“Customers are choosing SAP to enable accurate and compliant AI outcomes grounded in their most critical business processes and data,” he insisted.“We delivered another quarter of strong current cloud backlog growth, up 26% at constant currencies. This performance is underpinned by our Autonomous Enterprise strategy with strong momentum across our Autonomous Suite as well as our Business AI Platform.”

SAP did not bump up its revenue guidance, instead just reiterating an earlier forecast for its full-year revenue and cash flow. However, it did reduce its guidance for non-adjusted operating profit by €100 million, following its acquisitions of Dremio Inc. and Prior Labs GmbH in May.

Photo: SAP SE