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SAP reported a significant increase of 58% in its first-quarter operating profit year-on-year when measured in constant currency, reinforcing its projections for full-year cloud revenues. The company’s operating profit reached 2.5 billion euros (approximately $2.9 billion), exceeding analyst expectations of around 2.2 billion euros, according to data from LSEG.
Following this announcement, SAP’s shares surged by 9.3% by 8:59 a.m. in London. In addition to the profit boost, the German software leader announced an 11% rise in revenue, totaling 9 billion euros, with a notable 29% growth in its cloud backlog compared to the previous year. Earnings per share rose by an impressive 79% on an annual basis, reaching 1.44 euros.
The company reaffirmed its prediction for full-year cloud revenue, estimating it will range between 21.6 billion to 21.9 billion euros, measured in constant currency.
Christian Klein, SAP’s CEO, emphasized that these results demonstrate the effectiveness of the company’s business strategy. He stated, “Our business model remains robust even in times of uncertainty. Our AI-powered solutions help organizations manage supply chain challenges across more than 130 countries, enabling them to achieve efficiency with agility and speed.”
SAP had previously raised its outlook for the 2025 fiscal year in January, following a 25% rise in adjusted operating profit to 8.15 billion euros for the full year 2024. This announcement coincided with the completion of a comprehensive restructuring initiative undertaken by the company at the beginning of this year.
Resilience
Following SAP’s earnings release, analysts acknowledged the company’s ability to thrive in the challenging macroeconomic landscape. Deutsche Bank referred to SAP’s first-quarter performance as “a masterclass in resilience” in a communication to clients.
Highlighting the company’s capacity to endure potential economic downturns, Deutsche Bank analysts pointed to strong cost management and the ability of management to activate further cost controls if necessary, which would safeguard profitability. JPMorgan analyst Toby Ogg noted that in light of emerging warnings from the tech sector, the results underscore SAP’s strong performance, emphasizing the stability and defensive nature of the company’s earnings trajectory.
Analysts from TD Cowen shared a similarly optimistic view, increasing their price target for SAP shares from $315 to $320. Derrick Wood from TD Cowen expressed confidence in SAP’s resilience during turbulent economic conditions and predicted continued growth and margin expansion for the company’s business model.
Furthermore, Pascal Spano of German bank Metzler remarked that the recent results serve as a testament to both the company’s and its management’s capability to excel amid economic challenges. Spano highlighted that the ongoing demand for cloud revenue and the current cloud backlog remained strong across various sectors despite prevailing uncertainties.
— CNBC’s Ganesh Rao and Abby Ryanto contributed to this report.
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