SAP on Wednesday posted a 58% year-on-year jump in first-quarter operating profit in constant currency, also confirming its outlook for full-year cloud revenues.
SAP’s operating profit hit 2.5 billion euros ($2.9 billion) in the first quarter, compared with analysts expectations near 2.2 billion euros, according to LSEG data.
Shares of the company popped 10.3% by 10:23 a.m. in London on Wednesday.
The German software giant, which last month overtook Novo Nordisk to become Europe’s most valuable public company, said revenue had jumped 11% to 9 billion euros, with its cloud backlog up 29% year-on-year. Earnings per share jumped 79% on an annual basis to 1.44 euros.
SAP also said it continues to expect full-year cloud revenue to fall in the range of 21.6 billion euros to 21.9 billion euros in constant currency this year.
SAP ‘more relevant than ever’ amid tariffs uncertainty
Speaking to CNBC’s “Squawk Box Europe” on Wednesday, SAP CEO Christian Klein addressed the uncertainty that new U.S. tariffs were creating for businesses around the world — including SAP’s client base.
During a visit to the U.S. last week, Klein said he spoke with customers concerned about the impact of U.S. President Donald Trump’s broad raft of duties being slapped on imports.
“What they are telling me is, ‘your software is now more relevant than ever,'” he told CNBC, adding that SAP was helping companies do business in more than 130 countries. The firm’s software gives clients the means to keep their supply chains resilient, he said, by helping them determine which of their suppliers could still deliver competitive costs.
“That gives me and the company a lot of confidence in these times when it comes to the development for the whole year and that’s why we also confirmed our guidance,” Klein said.
SAP upgraded its full-year outlook for 2025 back in January, after its adjusted operating profit rose 25% to 8.15 billion euros in full-year 2024. The company completed a company-wide restructuring program in the first quarter of this year.
On Wednesday, Klein told CNBC the growth in SAP’s cloud unit gave the company “a lot of predictability.”
“When I talk about predictability it’s not only a buzz word,” he said. “Look at our total revenue, it … consists of 86% recurring revenue. That is predictability, that is resiliency.”
“It’s very hard to predict what will happen after the 90-day pause on most of the [U.S. reciprocal] tariffs, and of course there are multiple scenarios,” he added. “But we remain optimistic given what we see in the market [and] what we hear from our customers.”
Resilience
Reacting to SAP’s earnings update on Wednesday, analysts praised the company’s endurance in the current macro-economic environment. In a note to clients on Wednesday, Deutsche Bank analysts labeled SAP’s first-quarter results as “a masterclass in resilience.”
Noting that they expected the firm to weather any downturn that may hit the global economy, the German lender’s analysts touted “the strong cost discipline and further cost levers management holds in the event of a further macro deterioration that would allow it to protect profitability.
“Overall, with warnings starting to materialise in the technology sphere and in light of SAP shares being -22% from the peak, this is a strong set of results and illustrates the resilience and defensiveness of SAP’s earnings trajectory,” JPMorgan analyst Toby Ogg said in a note on Wednesday.
Analysts from TD Cowen echoed the positive sentiment, raising their price target to $320 from $315 per share.
“We remain constructive on SAP’s ability to weather through choppy macro conditions and for the model to continue to see growth acceleration alongside ample margin expansion,” said the investment bank’s Derrick Wood.
German bank Metzler’s Pascal Spano also suggested that the latest results are indicative of the company and management’s ability to outperform in a downturn.
“Cloud revenue and Current Cloud Backlog continue to see good momentum, posting solid demand across all verticals despite current uncertainties,” Spano told clients in a note after the results were released.
— CNBC’s Ganesh Rao and Abby Ryanto contributed to this report.
