SAP's Q1 Earnings & Revenues Up Y/Y on Cloud Demand, Stock Up

Core Insights - SAP SE reported a strong first-quarter 2025 with non-IFRS EPS of €1.44 ($1.51), a 79% increase year-over-year, surpassing the Zacks Consensus Estimate of $1.39 [1] - Total non-IFRS revenues reached €9.01 billion ($9.48 billion), reflecting a 12.1% year-over-year growth, although slightly below the Zacks Consensus estimate of $9.78 billion [1][2] - The cloud business was a significant driver of growth, with cloud revenues increasing 27% year-over-year to €4.99 billion, supported by a 34% growth in Cloud ERP Suite revenues [4] Revenue Performance - Non-IFRS Cloud and software segment revenues accounted for 88.1% of total revenues, totaling €7.94 billion, a 14% increase year-over-year [4] - Non-IFRS software licenses revenues declined 10% year-over-year to €0.18 billion, while services revenues fell 1% to €1.07 billion [5] Cloud Business Highlights - The cloud backlog surged 28% to €18.2 billion, indicating strong market demand [3] - SAP's "RISE with SAP" offering gained traction with notable clients such as HUGO BOSS and Hyundai Motor Company [6] - Cloud revenue growth was particularly strong in the APJ and EMEA regions, with significant contributions from Brazil, Germany, India, South Korea, and Spain [9] Profitability and Margins - Non-IFRS gross profit increased 15% to €6.63 billion, with Cloud gross profit rising 31% to €3.75 billion, resulting in a Cloud gross margin of 75% [11] - Non-IFRS operating profit rose 60% to €2.46 billion, driven by operational efficiencies from the 2024 transformation program [11] Financial Position - As of March 31, 2025, SAP had cash and cash equivalents of €11.345 billion, up from €9.609 billion at the end of 2024 [12] - Operating cash flow for the first quarter was €3.78 billion, compared to €2.88 billion in the previous year [12] Share Repurchase and Transformation Program - SAP initiated a share repurchase program of up to €5 billion, with €3.1 billion repurchased by March 31, 2025 [13] - A company-wide transformation program concluded in Q1 2025, with total expenses of approximately €3.2 billion [14] 2025 Outlook - SAP anticipates cloud revenues between €21.6 billion and €21.9 billion, representing a year-over-year increase of 26-28% [15] - Total cloud and software revenues are expected to be in the range of €33.1 billion to €33.6 billion, with a projected increase of 11-13% [16] - Non-IFRS operating profit is forecasted to be between €10.3 billion and €10.6 billion, indicating a rise of 26-30% [16]