SAP reported a stellar performance in Q1, with operating profit jumping 58% year-on-year in constant currency. The company achieved an operating profit of 2.5 billion euros ($2.9 billion), exceeding analysts’ expectations. Revenue grew by 11%, reaching 9 billion euros, driven largely by its cloud services.
Shares of SAP rose 10.6% on Wednesday following the strong results, with the company’s cloud backlog growing 29% year-on-year. Earnings per share surged 79%, reaching 1.44 euros.
CEO Christian Klein on Tariff Uncertainty
In a conversation with CNBC’s “Squawk Box Europe,” SAP CEO Christian Klein addressed the challenges businesses are facing due to new U.S. tariffs. Klein highlighted that SAP’s software is more essential than ever as companies navigate global supply chain disruptions caused by trade tensions.
“Our software is now more relevant than ever,” Klein explained, noting that SAP’s solutions help companies maintain resilient supply chains and manage costs amidst geopolitical uncertainty. SAP operates in over 130 countries, providing critical tools to businesses dealing with tariff impacts.
SAP Maintains Optimistic Outlook for 2025
Despite the uncertainty surrounding trade policies, SAP has reaffirmed its full-year forecast, with cloud revenue expected to be between 21.6 and 21.9 billion euros in constant currency. The company’s robust growth in cloud services, which accounts for 86% of total revenue, offers strong predictability for future earnings.
Klein remained confident in SAP’s outlook, emphasizing the company’s resilient business model. “We have strong recurring revenue, which makes us confident in our ability to meet our goals for the year,” Klein said.
Analysts Praise SAP’s Resilience
Following SAP’s impressive Q1 results, analysts expressed confidence in the company’s ability to navigate economic headwinds. Deutsche Bank analysts called the results a “masterclass in resilience,” noting SAP’s ability to manage costs and maintain profitability during global uncertainty.
“SAP’s strong cost discipline and flexibility allow it to weather potential downturns,” said JPMorgan analyst Toby Ogg. Ogg highlighted that SAP’s consistent growth and defensive earnings position it well against macroeconomic challenges.
TD Cowen analysts also raised their price target for SAP, citing the company’s solid growth and margin expansion prospects.
Cloud Growth Driving Long-Term Confidence
SAP’s cloud business remains the backbone of its growth, with strong demand for its cloud solutions across various industries. Klein highlighted that the cloud backlog continues to show good momentum, driven by demand for digital solutions in the face of global uncertainty.
“The momentum in cloud revenue and the growth in our cloud backlog give us confidence in SAP’s long-term prospects,” Klein said, emphasizing the company’s focus on delivering reliable, recurring revenue.
As the global economy faces heightened trade tensions, SAP’s cloud-based solutions position the company well to continue delivering growth and value to its customers.
