Key Takeaways
- First quarter non-IFRS earnings per share reached €1.72, exceeding the €1.65 consensus forecast
- Overall revenue climbed 6% from the prior year to €9.55 billion
- Cloud segment revenue jumped 19% to €5.96 billion, beating the €5.89 billion Wall Street projection
- Cloud backlog expanded 20% to reach €21.9 billion
- The company reaffirmed its 2026 cloud revenue target of €25.8–€26.2 billion, subject to specific conditions
Shares of SAP’s American depositary receipts climbed 7.7% to $175.74 during Friday’s premarket session, bouncing back from Thursday’s 6.2% decline that followed negative sentiment across the software sector triggered by earnings reports from ServiceNow and IBM.
The European enterprise software leader delivered first quarter non-IFRS profit of €1.72 per share, surpassing the analyst consensus of €1.65. Overall revenue reached €9.55 billion, representing a 6% increase compared to the year-ago period.
The standout metric was cloud performance. Cloud revenue totaled €5.96 billion, marking a 19% year-over-year increase and slightly exceeding the €5.89 billion analyst estimate.
Additionally, the company reported a cloud backlog of €21.9 billion at quarter-end, representing a 20% growth versus the comparable quarter last year. This backlog metric provides insight into future revenue yet to be recorded.
Non-IFRS operating profit rose to €2.87 billion from €2.46 billion in the previous year, topping the €2.71 billion analyst consensus.
Thursday’s 6.2% drop in SAP shares occurred amid a broader software sector downturn. The sector faced pressure following results from IBM and ServiceNow that disappointed investors, despite both companies delivering respectable quarterly performance.
Friday’s premarket strength indicates investors responded more positively to SAP’s specific results.
2026 Guidance Maintained With Caveats
SAP reaffirmed its 2026 cloud revenue forecast ranging from €25.8 billion to €26.2 billion. The company also indicated that total revenue growth in constant currencies should mirror 2025 levels, with stronger growth anticipated in 2027.
However, two key conditions accompany this guidance. First, SAP must successfully complete its pending acquisition of Reltio, a data management company, with closing expected during the second or third quarter. Second, tensions in the Middle East must not escalate further.
CFO Dominik Asam highlighted disruption at the Strait of Hormuz as a particular concern. “We don’t see too long of a continuation of the shutdown of the Strait of Hormuz,” he explained to Barron’s, emphasizing that extended disruption could impact worldwide supply chains and economic expansion.
With characteristic understatement, he remarked: “In such a meltdown scenario, SAP is probably the lesser of your concerns in terms of exposure in capital markets.”
Cloud Segment Powers Growth Trajectory
SAP’s cloud division has served as the primary growth driver for multiple years, benefiting significantly from enterprise adoption of artificial intelligence technologies. The 19% first quarter revenue increase extends this momentum.
The €21.9 billion cloud backlog represents committed future revenue that remains to be recognized on financial statements.
SAP holds the position of Europe’s most valuable technology company by market capitalization, with a valuation of $192.38 billion as of Thursday’s market close.
The Reltio transaction, unveiled in March, awaits regulatory approval and is projected to finalize during the second or third quarter of 2026.
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