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Shares in SAP surged more than 10 per cent on Wednesday after the German software group posted first-quarter earnings that beat analysts’ forecasts, boosted by a pivot to cloud services and sweeping cost cuts.
Europe’s biggest company by market capitalisation reported adjusted operating profit of €2.5bn on Tuesday evening, exceeding analysts’ consensus of €2.2bn and marking a 60 per cent year-on-year increase.
The strong performance helped SAP claw back some of the €50bn in market value lost since its February peak amid investor jitters over global trade tensions.
Despite the volatility, SAP retains its status as Europe’s most valuable listed company, ahead of Denmark’s Novo Nordisk and France’s LVMH.
SAP chief executive Christian Klein told analysts that demand for its supply chain and financial planning tools remained strong as clients navigated shifting tariffs, regulatory changes and cost-efficiency drives.
“Customers seek our advice and solutions in uncertain times,” said Klein, adding that the company’s order pipeline for the year “continues to look very solid”.
The group is in the midst of a strategic pivot from traditional software licence sales to cloud-based subscriptions, which offer more predictable and recurring revenues.
SAP’s current cloud backlog — a metric tracking contractually committed cloud revenue over the next 12 months — rose 29 per cent year on year on a constant currency basis to €18.2bn.
Klein noted that automotive groups including Hyundai, Kia and Mazda — one of the sectors hardest hit by trade friction — had signed up for SAP’s cloud migration services during the quarter.
Deutsche Bank analysts said these conversions were “a testament to SAP’s resilience in providing key solutions to cost savings and productivity enhancements, whether it’s in supply-chain optimisation or AI”. In a client note, analysts described SAP as exhibiting “strength and resilience despite peak macro uncertainty”.
SAP has just completed a €3bn AI-focused restructuring programme, which has included thousands of job cuts over the past year.
The company reaffirmed its 2025 targets, forecasting cloud revenue growth of 26 to 28 per cent to between €21.6bn and €21.9bn, and adjusted operating profit growth of 26 to 30 per cent to between €10.3bn and €10.6bn.
Although SAP has so far avoided direct exposure to US tariffs, Klein acknowledged the geopolitical risks. “Everyone is keeping a close eye on what happens in the next 90 days,” he said, referring to the temporary suspension of tariffs by US President Donald Trump.
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