SAP's Q1 Earnings & Revenues Up Y/Y on Cloud Demand, Stock Up

SAP SE SAP reported first-quarter 2025 non-IFRS earnings per share (EPS) of €1.44 ($1.51), which increased 79% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $1.39.

Driven by momentum in the cloud business, SAP reported total revenues on a non-IFRS basis of €9.01 billion ($9.48 billion), which increased 12.1% year over year (up 11% at constant currency or cc). The Zacks Consensus estimate was pegged at $9.78 billion.

Management emphasized that the first quarter marked a strong start to the year despite a highly volatile environment, with robust revenue growth and significant expansion in operating profit. These results reflect SAP’s disciplined cost management and focused execution. While encouraged by the positive momentum, management maintained a cautious outlook, reaffirming its commitment to safeguarding profitability and cash flow throughout the remainder of the year.

Following the results, shares are up 9% in the pre-market trading session today. In the past year, the stock has soared 46.7% against the Zacks Computer – Software industry’s decline of 6.6%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Cloud Results

The current cloud backlog — a key indicator of go-to-market success in cloud business — surged 28% (up 29% at cc) to €18.2 billion.

On a non-IFRS basis, the Cloud and software segment (88.1% of total revenues) registered revenues of €7.94 billion, rising 14% year over year (up 13% at cc).

Cloud revenues were €4.99 billion, up 27% year over year (up 26% at cc) on a non-IFRS basis, powered by a solid 34% growth (up 33% at cc) in Cloud ERP Suite revenues, reaching €4.25 billion. The suite accounted for 85% of total cloud revenues, highlighting its growing significance as a core driver of the company’s overall cloud growth.

Non-IFRS software licenses revenues declined 10% year over year (both at normal and cc) to €0.18 billion.

Services business (11.9% of total revenues) posted revenues of €1.07 billion, falling 1% year over year (down 2% at cc).

Expanding Clientele Bodes Well

In the first quarter, SAP saw strong global momentum for its "RISE with SAP" offering, with notable customers, including HUGO BOSS, Hyundai Motor Company, Kia Corporation, Mazda Motor, Tyson Foods and others choosing the solution to drive end-to-end business transformations. Several companies, such as Climeworks, LG Energy Solution and Samyang Foods, went live on SAP S/4HANA Cloud, while brands like Gymshark and VFS Global adopted "GROW with SAP" to quickly implement cloud ERP with agility and innovation.

Key wins across SAP's broader solution portfolio included Booking, The Kraft Heinz Company, NEC Corporation and WEG. Additionally, Alfred Ritter, Parle Biscuits and Deutsche Bahn were among those that went live on SAP solutions during the quarter.

SAP’s cloud revenue growth was especially strong in the APJ and EMEA regions and robust in the Americas, with standout performances from Brazil, Germany, India, South Korea and Spain.

SAP SE Price, Consensus and EPS Surprise

SAP SE price-consensus-eps-surprise-chart | SAP SE Quote

On Feb. 13, 2025, SAP introduced SAP Business Data Cloud, a solution designed to unify SAP and third-party data across organizations, enabling better decision-making and supporting reliable artificial intelligence (AI) development. On Feb. 20, 2025, SAP proposed a dividend of €2.35 per share for fiscal 2024, a 6.8% increase over the previous year’s regular dividend, subject to approval at the AGM on May 13, 2025.

Margin Details

Non-IFRS gross profit of €6.63 billion increased 15% from the year-ago quarter (up 14% at cc).

Non-IFRS Cloud gross profit increased 31% year over year to €3.75 billion (up 30% at cc). Non-IFRS Cloud gross margin was 75%.

Non-IFRS operating profit of €2.46 billion increased 60% from the year-ago quarter’s figure (up 58% at cc). The uptick is fueled by operational efficiencies achieved through the successful execution of the 2024 transformation program.

Balance Sheet & Cash Flow

As of March 31, 2025, SAP had cash and cash equivalents of €11.345 billion compared with €9.609 billion as of Dec. 31, 2024.

In the first quarter, the company generated operating cash of €3,780 million compared with €2,878 million a year ago.

In May 2023, SAP announced a repurchase program with an aggregate volume of up to €5 billion and an expiry date of Dec. 31, 2025. As of March. 31, 2025, SAP repurchased 18,985,135 shares at an average price of €164.79, totaling around €3.1 billion. The third tranche of the program was completed on April 8, 2025, adding approximately €1.5 billion to the repurchase total.

Additionally, SAP initiated a company-wide transformation program in January 2024 to enhance operational scalability and focus on key strategic growth areas. The program concluded in the first quarter of 2025, with total expenses of about €3.2 billion. Restructuring payouts included €2.5 billion in 2024, €0.3 billion in the first quarter of 2025, and a remaining €0.4 billion expected to be paid during the rest of 2025.

Outlook for 2025

Despite the prevailing dynamic environment marked by elevated uncertainty and reduced visibility, SAP remains confident in its growth trajectory and has reiterated its outlook. For the year, management continues to anticipate cloud revenues in the range of €21.6-€21.9 billion, suggesting an increase of 26-28% at cc on a year-over-year basis from €17.14 billion at cc in 2024.

Cloud and software revenues are expected in the range of €33.1-€33.6 billion, with an increase of 11-13% at cc on a year-over-year basis from €29.83 billion at cc in 2024.

It now projects 2025 non-IFRS operating profit in the range of €10.3-€10.6 billion, indicating a rise of 26-30% at cc on a year-over-year basis from €8.15 billion at cc in 2024.

Free cash flow is now estimated to be around €8 billion in actual currencies, a sharp rise from €4.22 billion in 2024.

The company also expects a stable non-IFRS effective tax rate of around 32%, slightly lower than the 32.3% recorded in 2024.

SAP’s Zacks Rank

SAP currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Computer and Technology Companies

BlackBerry Limited BB reported the fourth quarter of fiscal 2025 non-GAAP EPS of 3 cents. The figure was better than the company’s estimate of a loss of 1 cent to EPS of 1 cent. In the year-ago quarter, it reported a non-GAAP EPS of 3 cents. The Zacks Consensus Estimate was pegged at 2 cents per share.

In the past six months, shares of BB have gained 31%.

Simulations Plus, Inc. SLP reported second-quarter fiscal 2025 adjusted earnings of 31 cents per share, which fell 3% year over year. However, the figure surpassed the Zacks Consensus Estimate of 25 cents per share.
In the past six months, shares of SLP have increased 14.3%.

Badger Meter, Inc. BMI reported earnings per share (EPS) of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents.

Shares of BMI increased 11.9% in the past year.

Note: €1 = $0.950897 (period average from Jan. 1, 2025, to March 31, 2025)
         €1 = $0.924045 (as of March 31, 2025)

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