Key Highlights
- First-quarter non-IFRS earnings per share reached €1.72, surpassing the analyst consensus of €1.65
- Overall revenue climbed 6% year-over-year, reaching €9.55 billion
- Cloud segment revenue jumped 19% to €5.96 billion, exceeding the Street’s €5.89 billion projection
- Cloud order backlog expanded 20% to €21.9 billion
- Management reaffirmed 2026 cloud revenue targets of €25.8–€26.2 billion, subject to Middle East stabilization and deal completion
Shares of SAP climbed 7.7% to $175.74 during Friday’s premarket session, bouncing back from Thursday’s 6.2% decline that followed broader software sector weakness triggered by earnings reports from ServiceNow and IBM.
The Europe-based enterprise software leader posted first-quarter non-IFRS profit of €1.72 per share, exceeding the €1.65 consensus forecast. Overall revenue reached €9.55 billion, representing a 6% increase compared to the prior-year period.
The standout metric was cloud performance. Revenue from cloud services totaled €5.96 billion, marking a 19% year-over-year increase and narrowly beating the €5.89 billion estimate from analysts.
Additionally, the company reported a cloud backlog valued at €21.9 billion at quarter-end, reflecting 20% growth versus the same quarter last year. This metric provides visibility into future revenue streams yet to be recorded.
Non-IFRS operating income rose to €2.87 billion from €2.46 billion in the year-ago quarter, topping the €2.71 billion consensus projection.
Thursday’s 6.2% drop in SAP shares occurred amid widespread software sector weakness. The selloff followed earnings releases from IBM and ServiceNow that disappointed investors despite presenting respectable financial results.
Friday’s premarket strength indicates that traders responded positively to SAP’s quarterly performance when evaluated independently.
Annual Guidance Reaffirmed With Caveats
Management reiterated its 2026 cloud revenue forecast of €25.8 billion to €26.2 billion. The company also indicated that constant-currency total revenue growth should mirror 2025 levels, with stronger momentum anticipated in 2027.
Two important qualifications accompany this guidance. First, SAP’s pending acquisition of data management company Reltio must successfully close, which is anticipated during the second or third quarter. Second, geopolitical tensions in the Middle East must not intensify.
CFO Dominik Asam specifically identified potential disruption in the Strait of Hormuz as a concern. “We don’t see too long of a continuation of the shutdown of the Strait of Hormuz,” he explained to Barron’s, warning that extended disruption could impact international 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 Operations Remain Core Growth Driver
SAP’s cloud division has served as the primary growth catalyst for multiple years, partially propelled by enterprise artificial intelligence implementation. The 19% revenue expansion in the first quarter maintains this trajectory.
The €21.9 billion cloud backlog represents committed future revenue that remains to be recognized on financial statements.
SAP holds the position as Europe’s most valuable technology company, with a market capitalization of $192.38 billion based on Thursday’s closing price.
The Reltio transaction, unveiled in March, awaits regulatory approval and is projected to finalize during the second or third quarter of 2026.
