SAP SE (NYSE: SAP), a global leader in enterprise applications, recently unveiled an impressive set of financial results for the first quarter of 2025, ended March 31. With a marked increase in cloud revenue, solid growth in total revenue, and significant gains in profitability, SAP has demonstrated resilience and strategic efficiency in a volatile market environment.
SAP SE Earnings Overview
In Q1 2025, SAP reported noteworthy earnings driven by strong performances across its cloud and software segments. The company achieved an IFRS operating profit of €2.33 billion and a non-IFRS operating profit of €2.46 billion, reflecting an increase of 60% from the previous year. This impressive growth was facilitated by a decrease in restructuring expenses and the successful execution of SAP's 2024 transformation program. CEO Christian Klein emphasized the resilience of SAP's business model, which thrives on a high share of predictable revenue and leverages an AI-powered portfolio to manage global challenges in supply chain management.
Key Financial Metrics
Below are the key financial metrics for SAP SE in Q1 2025, including year-over-year comparisons:
| Financial Metric | Q1 2025 | Q1 2025 YoY % Change |
|---|---|---|
| Total Revenue (€ billion) | 9.01 | +12% |
| Cloud Revenue (€ billion) | 4.99 | +27% |
| Cloud ERP Suite Revenue (€ billion) | 4.25 | +34% |
| IFRS Operating Profit (€ billion) | 2.33 | +35.7 ppt |
| Non-IFRS Operating Profit (€ billion) | 2.46 | +60% |
| IFRS Earnings per Share (EPS, €) | 1.52 | - |
| Non-IFRS EPS (€) | 1.44 | +79% |
Note: ppt = percentage points.
SAP's robust financial performance is a testament to its strategic emphasis on cloud solutions and operational efficiencies. Dominik Asam, CFO of SAP, acknowledged the strong start to 2025 and stressed the importance of maintaining momentum amidst continued market unpredictability.
Revenue Breakdown by Segment
Below is a breakdown of SAP's revenue performance across its major segments for Q1 2025:
| Segment | Revenue (€ billion) | YoY % Change |
|---|---|---|
| Cloud Revenue | 4.99 | +27% |
| Software Licenses Revenue | 0.18 | -10% |
| Cloud and Software Revenue | 7.94 | +14% |
| Services Revenue | 1.07 | -1% |
The robust growth in cloud revenue, coupled with a decline in traditional software licenses revenue, underscores SAP's strategic shift towards cloud-based offerings. The Cloud ERP Suite's revenue increased by 34%, highlighting the company's successful reinforcement of its cloud infrastructure. Although services revenue showed a slight decline, the overall cloud and software segment outpaced expectations with a 14% rise.
Key Developments
SAP's operational highlights for Q1 2025 include substantial advancements in cloud solutions and expansions into new markets. The introduction of SAP Business Data Cloud in February signals SAP's commitment to seamless data integration and AI-driven decision-making. Furthermore, significant customer wins across diverse industries and continued adoption of "RISE with SAP" and "GROW with SAP" illustrations demonstrate SAP's strength in facilitating enterprise business transformation.
Executive Comments
Commenting on the company's success, CEO Christian Klein remarked: "Q1 once again underlines that our success formula is working. Current cloud backlog expanded 29% at constant currencies and total revenue saw a double-digit increase. Our AI-powered portfolio enables companies to navigate supply chain disruptions in over 130 countries."
CFO Dominik Asam added: "Q1 marks a solid start to the year in a highly volatile environment, with strong total revenue growth and outstanding operating profit expansion."
Dividends and Share Repurchases
SAP proposed a dividend of €2.35 per share for the fiscal year 2024, representing a 6.8% increase from the previous year. The proposal remains subject to shareholder approval at the upcoming Annual General Meeting on May 13, 2025. Additionally, SAP's share repurchase program, announced in May 2023, continued execution with a purchased volume of approximately €3.1 billion by March 31, 2025.
SAP SE Stock Forecast
Considering SAP's strong Q1 2025 performance, the ongoing strategic shift towards cloud offerings, and the strengthening profitability of operations, forecasts suggest a bullish outlook. High stock projections are estimated at €180 within the next 12 months, driven by continued growth in cloud revenue and the successful execution of strategic initiatives. Conversely, challenges such as market volatility and currency fluctuations could see a lower stock estimate of €155.
In conclusion, SAP SE has effectively leveraged its cloud competencies and operational efficiencies to deliver strong Q1 2025 results, setting a positive trajectory for the remainder of the year. Despite a challenging business environment, SAP remains well-positioned to achieve its ambitious outlook for 2025, thanks to its innovative solutions and robust financial strategy.
