SAP defies the economic downturn

SAP has made a good start to the 2025 financial year. The German software group reported revenue of just over €9 billion for the first quarter, 12% more than in the same quarter last year. Cloud revenue increased by 27 percent to almost €5 billion. SAP achieved an adjusted operating profit of €2.45 billion, an increase of 60 percent compared to the first quarter of 2024 and significantly more than analysts had expected. The bottom line was a profit of just under €1.8 billion, after the software manufacturer posted a loss of €824 million in the same quarter of the previous year due to one-off effects.

“The first quarter shows once again that our formula for success is working,” said CEO Christian Klein. With a share of more predictable revenues of 86 percent, SAP’s business model remained resilient despite uncertain times.

Unstable environment

CFO Dominik Asam spoke of a “solid start to the year in an extremely volatile environment.” The results are proof of SAP’s cost discipline and the targeted implementation of its own strategy. However, the CFO urged caution: “Even if we are encouraged by this dynamic development, we are always keeping an eye on the wider environment and remain vigilant for the rest of the year.”

SAP has now completed the restructuring program announced in January 2024 and affecting around 10,000 jobs, it said. It put the total cost of the program at €3.2 billion, of which €2.8 billion was already booked in the 2024 financial year and in the first quarter of the current year. Further payments of around €400 million euros are expected in the course of 2025. SAP said it now employs 108,187, compared to 108,133 a year ago.

The company confirmed its forecasts for the current financial year, “even if the current environment is characterized by high dynamics and uncertainty and further development is therefore difficult to assess.” It expects cloud revenue of €21.6 billion to €21.9 billion in 2025, compared to €17.1 billion last year. It expects the currency-adjusted operating result to be between €10.3 billion and €10.6 billion, compared to €8.15 billion in 2024.

The US is still SAP’s biggest market

However, the erratic financial policy of new US President Donald Trump, which is weakening the dollar in particular, is also likely to have consequences for SAP. In view of the exchange rate fluctuations, SAP expects growth in cloud revenue to be two percentage points lower. Growth in operating profit is expected to be one percentage point lower, it said.

The US is the most important single market for SAP. In the first quarter of 2025, the company recorded sales of almost €3 billion in the US. By comparison, it reported sales of just under €1.4 billion for Germany, and over €4 billion for the EMEA region as a whole.