Software giant SAP’s shares surge 9.3% after first-quarter profit beat

SAP on Wednesday posted a 58% year-on-year jump in first-quarter operating profit in constant currency, also confirming its outlook for full-year cloud revenues.

SAP’s operating profit hit 2.5 billion euros ($2.9 billion) in the first quarter, compared with analysts expectations near 2.2 billion euros, according to LSEG data.

Shares of the company popped 9.3% by 8:59 a.m. in London on Wednesday.

The German software giant, which last month overtook Novo Nordisk to become Europe’s most valuable public company, said revenue had jumped 11% to 9 billion euros, with its cloud backlog up 29% year-on-year. Earnings per share jumped 79% on an annual basis to 1.44 euros.

SAP also said it continues to expect full-year cloud revenue to fall in the range of 21.6 billion euros to 21.9 billion euros in constant currency this year.

The company’s CEO Christian Klein said in a statement that the results showed “our success formula is working.”

“SAP’s business model remains resilient in uncertain times,” he said. “Our AI-powered portfolio enables companies to navigate supply chain disruptions in over 130 countries and to unlock efficiencies with agility and speed.”

SAP had upgraded its full-year outlook for 2025 back in January, after its adjusted operating profit rose 25% to 8.15 billion euros in full-year 2024. The company completed a company-wide restructuring program in the first quarter of this year.

Reacting to SAP’s earnings update on Wednesday, analysts praised the company’s endurance in the current macro-economic environment. In a note to clients on Wednesday, Deutsche Bank analysts labeled SAP’s first-quarter results as “a masterclass in resilience.”

Noting that they expected the firm to weather any downturn that may hit the global economy, the German lender’s analysts touted “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.

“Overall, with warnings starting to materialise in the technology sphere and in light of SAP shares being -22% from the peak, this is a strong set of results and illustrates the resilience and defensiveness of SAP’s earnings trajectory,” JPMorgan analyst Toby Ogg said in a note on Wednesday.

Analysts from TD Cowen echoed the positive sentiment, raising their price target to $320 from $315 per share.

“We remain constructive on SAP’s ability to weather through choppy macro conditions and for the model to continue to see growth acceleration alongside ample margin expansion,” said the investment bank’s Derrick Wood.

German bank Metzler’s Pascal Spano also suggested that the latest results are indicative of the company and management’s ability to outperform in a downturn.

“Cloud revenue and Current Cloud Backlog continue to see good momentum, posting solid demand across all verticals despite current uncertainties,” Spano told clients in a note after the results were released.

— CNBC’s Ganesh Rao and Abby Ryanto contributed to this report.