SAP leads Europe in Market Cap after solid Q1 results

Overview

SAP began 2025 with strong momentum, delivering double-digit growth in total revenue and exceptional improvements in profitability. The company saw continued expansion in its cloud portfolio, particularly in its Cloud ERP Suite, and marked the successful conclusion of its 2024 transformation program.

CEO Christian Klein stated: “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. With a share of more predictable revenue of 86%, SAP’s business model remains resilient in uncertain times. Our AI-powered portfolio enables companies to navigate supply chain disruptions in over 130 countries and to unlock efficiencies with agility and speed.”

Q1 2025 vs. Q1 2024:

Total revenue increased to €9.01bn (+12% YoY), driven by strong cloud momentum, particularly in ERP solutions and across key regions such as APJ and EMEA.
- Cloud revenue grew to €4.99bn (+27% YoY), influenced by growth in all regions, especially in APJ (+39%) and EMEA (+30%), by strong global demand for “RISE with SAP” and “GROW with SAP” and by major client wins (such as Hyundai, HUGO BOSS, Tyson Foods or Booking.com) and cloud adoption across industries.
- Cloud ERP Suite revenue rose to €4.25bn (+34% YoY), reflecting growing traction of SAP S/4HANA Cloud and SAP’s successful vertical and regional expansion.
- Cloud and software revenue also increased to €7.94bn (+14% YoY), supported by new product innovations and broader subscription-based sales, while predictable revenue increased to 86%.
Operating profit has improved significantly, registering a value of €2.33bn (compared to -€0.79bn in Q1 2024), marked a turnaround due to conclusion of restructuring efforts and €2.2bn YoY reduction in related expenses. Non-IFRS operating profit rose +60% YoY, benefiting from efficiency gains post-transformation.
In the same way, operating margin recorded a value of 25.9% (vs. -9.8% in Q1 2024), benefited from disciplined cost controls, lower sales & marketing spend, and improved cloud gross margins.
Net income reached to €1.80bn (compared to -€0.82bn in Q1 2024), supported by margin recovery and improved cost structure post-transformation.
Basic EPS was €1.52 (vs. -€0.71 in Q1 2024), reflecting improved operating profitability and net income rebound.
Operating cash flow increased to €3.78bn (+31% YoY), driven by stronger profit generation and increased share of high-margin subscription revenue.
Free cash flow rose to €3.58bn (+36% YoY), resulted from efficiency gains and capital discipline following SAP’s 2024 transformation program.
SAP Business Data Cloud was launched in February 2025, integrating SAP and third-party data to power AI-driven decision-making.
As part of its ongoing share repurchase program (up to €5bn through end-2025), SAP had repurchased €3.1bn worth of shares by March 31, 2025. A third tranche of approx. €1.5bn was completed in April.
Additionally, SAP proposed a €2.35 per share dividend for FY2024, up 6.8% YoY, pending shareholder approval at the May 13 AGM.

SAP confirmed its full-year 2025 guidance at constant currencies, projecting cloud revenue between €21.6bn and €21.9bn, representing a year-over-year increase of 26% to 28%. Cloud and software revenue is expected to reach €33.1bn to €33.6bn, up 11% to 13%, while non-IFRS operating profit is forecasted at €10.3bn to €10.6bn, reflecting growth of 26% to 30%. Free cash flow is anticipated to be approximately €8.0bn. The company noted that growth in its current cloud backlog may slightly decelerate, and currency fluctuations could marginally impact reported results.

After a period of about a month in which the price of SAP shares on the American market was below the 50-day moving average, it experienced a fairly significant appreciation after reporting the results for the first quarter of this year, and at this moment, it seems that the stock price is breaking through the 50-day moving average, which could give a positive signal for investors, especially since the company has become the largest in terms of market capitalization at the European level. In addition, since the beginning of this year, the price of SAP shares has appreciated by approximately +9%, despite the extremely high volatility in recent months on the main global markets.