SAP SE (SAP, Financial) saw a significant 9% stock increase following its Q1 earnings report. The enterprise software leader reported a substantial EPS beat, although revenue was slightly below expectations. In light of macroeconomic uncertainties, investors were likely pleased with SAP's reaffirmation of key full-year cloud metrics.
- Q1 revenue increased by 12.1% year-over-year to €9.01 billion. Cloud and software revenue rose 14% to €7.94 billion, while services revenue declined by 1% to €1.07 billion.
- Cloud revenue grew impressively by 27% to €4.99 billion, and Cloud ERP Suite revenue surged by 34% to €4.25 billion. Predictable revenue now constitutes 86% of total revenues. The current cloud backlog increased by 28% to €18.20 billion.
- Cloud revenue performance was notably strong in the APJ and EMEA regions, with robust results in the Americas. Outstanding performances were seen in Brazil, Chile, Germany, India, Italy, South Korea, and Spain.
- Despite market uncertainties, SAP emphasizes its resilient business model and strong market position. Although no specific revenue and EPS guidance was provided, SAP's pipeline for the year remains solid.
- SAP reaffirmed its FY25 guidance for cloud revenue at €21.6-21.9 billion and cloud and software revenue at €33.1-33.6 billion. However, conversion rates might be impacted by ongoing trade disputes.
Investors were likely relieved by SAP's solid EPS beat, especially after previous quarters' misses. The reaffirmation of FY25 guidance across several metrics is reassuring amid macro pressures. This positive report comes as a welcome development after recent stock pressures and may bode well for SAP's peer IBM, which is set to release its Q1 results soon.
