SAP stock surges as solid Q1 print shows a ’masterclass in resilience’

Investing.com -- U.S.-listed shares of SAP (NYSE:SAP) surged more than 8% in premarket trading Wednesday after the German software giant reported better-than-expected first-quarter earnings, driven by strong growth in its cloud business. 

SAP posted adjusted earnings per share of €1.44, surpassing analyst estimates of €1.40. Revenue for the quarter came in at €9.01 billion, up 12% YoY but below the consensus estimate of €9.55 billion.

Cloud revenue, a key metric for SAP’s transition to a subscription-based model, jumped 27% to €4.99 billion. The company’s current cloud backlog, an indicator of future cloud revenue, grew 28% to €18.2 billion.

"Q1 once again underlines that our success formula is working," said CEO Christian Klein. "Current cloud backlog expanded 29% at constant currencies and total revenue saw a double-digit increase."

Citi analysts said SAP’s solid Q1 print is "characterized by resilient revenues and backlog growth, and disciplined execution on cost and cash."

The company maintained its full-year 2025 outlook, expecting cloud revenue between €21.6 billion and €21.9 billion, representing growth of 26% to 28% at constant currencies.

"SAP continues to be relatively insulated to the challenging macroeconomic environment, and we see management factoring prudence in the unchanged 2025 outlook," Citi analysts added, reiterating it as their top pick within EU Software (ETR:SOWGn) & Services space.

SAP’s Cloud ERP Suite revenue, which includes its core enterprise resource planning solutions, surged 34% to €4.25 billion. The share of more predictable revenue increased by 2 percentage points to 86%.

CFO Dominik Asam noted, "Q1 marks a solid start to the year in a highly volatile environment, with strong total revenue growth and outstanding operating profit expansion."

Despite the positive results, SAP remains cautious about the broader economic environment, approaching the rest of the year "with vigilance," according to Asam.

Commenting on the report, Deutsche Bank (ETR:DBKGn) analysts said SAP’s Q1 report is a "masterclass in resilience."

"Noteworthy was not only Cloud ERP suite up 33% in cc, but the strong cost discipline and further cost levers management holds in the event of a further macro deterioration, that would allow it to protect profitability," they said.

Luke Juricic contributed to this report.