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SAP's Q1 Earnings & Revenues Up Y/Y on Cloud Momentum & AI Tailwinds
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Key Takeaways
SAP reported Q1 EPS of 1.72 euros, up 20%, with revenue rising 6% year over year.
SAP's cloud revenue grew 19%, led by Cloud ERP Suite performance and backlog surge.
AI-driven enterprise strategy is boosting growth, though macro risks and slower Q2 growth are affecting it.
SAP SE (SAP - Free Report) reported first-quarter 2026 non-IFRS earnings per share (EPS) of €1.72 ($2.01), which increased 20% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $1.92.
Driven by momentum in the cloud business, SAP reported total revenues on a non-IFRS basis of €9.56 billion ($11.2 billion), which increased 6% year over year (up 12% at constant currency or cc). The Zacks Consensus Estimate was pegged at $11.3 billion.
SAP’s Business AI momentum is acting as a critical differentiator. Unlike generic AI tools, SAP is embedding AI directly into enterprise workflows, finance, supply chain, and HR, delivering real, measurable outcomes for customers. This strategy positions SAP uniquely against competitors as AI is contextualized within enterprise data. It enhances existing ERP systems, rather than replacing them and drives customer expansion within SAP’s ecosystem. Management noted that SAP is “growing faster than the market and gaining share,” suggesting AI is already translating into tangible competitive advantage.
SAP delivered these results despite a volatile macroeconomic backdrop, but the business is not immune to ongoing external pressures. Uncertainty remains elevated, and while performance has held up so far, risks persist. The company continues to execute quarter by quarter, though it is leaning on upcoming Sapphire announcements to support its push for scalable, high-value business AI.
Image Source: Zacks Investment Research
Following a strong start to 2026, shares went up 8% in the pre-market trading session today. In the past year, the stock has plunged 40.3% against the Zacks Computer – Software industry’s rise of 1.4%
Cloud Acts as the Growth Engine for SAP
The current cloud backlog — a key indicator of go-to-market success in cloud business — surged 20% (up 25% at cc) to €21.9 billion.
On a non-IFRS basis, the Cloud and software segment (89.5% of total revenues) registered revenues of €8.5 billion, rising 8% year over year (up 14% at cc).
Cloud revenues were €6 billion, up 19% year over year (up 27% at cc) on a non-IFRS basis, powered by a solid 23% growth (up 30% at cc) in Cloud ERP Suite revenues, reaching €5.2 billion. Software licenses and support revenues totaled €2.6 billion, which decreased 12% (down 8% at cc) year over year.
Services business (10.5% of total revenues) posted revenues of €1 billion, down 6% year over year (down 1% at cc).
Expanding Clientele Bodes Well
In the first quarter, SAP saw strong global momentum for its "RISE with SAP" offering, with notable customers, including AIR LIQUIDE, Aptiv, Bristol-Myers Squibb, CMS Energy, ConocoPhillips, Diehl Group, Garuda Indonesia, Hyundai Motor EU, ITU (International Telecommunication Union), Nutresa, PayPal, PinkRoccade Local Government, Schweiter Technologies, Thales and Wella.
“GROW with SAP,” which focuses on aiding smaller businesses to adopt cloud ERP solutions quickly and efficiently, was implemented by Adesso, Japan Display, OAKBERRY, while SAP’s AI and data tools were selected by Carl Zeiss, Helvetia Baloise Group, Hochland, SKF Group.
Key wins across SAP's broader solution portfolio included Apollo Tyres, Compass Group, Government Service Insurance System, Grupo Comercial Chedraui, Liebherr, Migros, Red Bull, Transport for London.
Major global brands across various industries, including Alibaba Cloud Computing, ExxonMobil, Fonterra, Norfolk Southern, Samsung Electro-Mechanics, VEKA, Volaris chose SAP solutions.
SAP’s cloud revenue growth was especially strong in the APJ and EMEA regions and robust in the Americas, with standout performances from Brazil, France, Germany, India, South Korea, Switzerland and the United Kingdom. It remained strong in the United States.
Margin Details
Non-IFRS gross profit of €7 billion increased 6% from the year-ago quarter (up 12% at cc).
Non-IFRS Cloud gross profit increased 20% year over year to €4.5 billion (up 26% at cc). Non-IFRS cloud gross margin rose 0.2 percentage points to 75.2%.
SAP's non-IFRS operating profit rose 17% (up 24% at cc) to €2.9 billion, with margin increasing to 30%.
However, some quarter-specific boosts to cloud revenue may lead to slower growth in the second quarter.
Balance Sheet & Cash Flow
As of March 31, 2026, SAP had cash, cash equivalents and other financial assets of €10.05 billion compared with €9.7 billion as of Dec. 31, 2025.
In the first quarter, the company generated operating cash of €3.5 billion compared with €3.8 million a year ago. Free cash flow, a key metric of operational strength, was €3.2 billion during the quarter, down 9%. The €408 million cash outflow related to the Teradata litigation settlement adversely impacted cash flow.
SAP is also returning significant capital to shareholders. In January 2026, SAP launched a share buyback program worth up to €10 billion, scheduled to run through Dec. 31, 2027. By April 1, 2026, the company had completed the first phase, repurchasing 16,280,097 shares at an average price of €161.16, totaling roughly €2.6 billion under the program. Buybacks, combined with growth, create a compelling total shareholder return story.
SAP’s 2026 Outlook: Growth With Caution
SAP maintained its full-year guidance but acknowledged global uncertainties. For 2026, SAP continues to guide cloud revenue of €25.8–€26.2 billion at constant currencies, implying 23–25% growth from €21.02 billion in 2025, while cloud and software revenue is expected at €36.3–€36.8 billion, up 12–13% from €32.54 billion.
Non-IFRS operating profit is projected at €11.9–12.3 billion, representing 14–18% growth from €10.42 billion, and free cash flow is targeted at around €10 billion versus €8.24 billion in 2025. SAP also expects constant-currency current cloud backlog growth to moderate slightly in 2026 from 25% in 2025.
Furthermore, SAP expects 2026 revenue growth (constant currency) to stay in line with 2025, with acceleration now pushed to 2027 rather than gradually improving each year. Operating expenses in 2027 are projected to rise at 80–90% of revenue growth. Software support revenue is set to decline faster as more customers shift to the cloud.
Uncertainties in the Middle East could pose potential downside risks if conditions worsen.
Badger Meter, Inc. (BMI - Free Report) reported EPS of 93 cents for first-quarter 2026, which missed the Zacks Consensus Estimate by 22.5%. The bottom line compared unfavorably with the year-ago quarter’s EPS of $1.30. Quarterly net sales were $202.3 million, down 9% from $222.2 million in the year-ago quarter due to delayed project deployments and weaker-than-expected short-cycle order activity. The Zacks Consensus Estimate was pegged at $230.1 million.
Simulations Plus, Inc. (SLP - Free Report) reported second-quarter fiscal 2026 adjusted earnings of 35 cents per share, surpassing the Zacks Consensus Estimate by 29%. The bottom line also compared favorably with the prior-year quarter’s 31 cents. Simulations Plus reported quarterly revenue of $24.3 million, marking an 8% year-over-year increase. This growth reflects continued demand for its core offerings, especially in drug discovery and development.
BlackBerry Limited (BB - Free Report) reported fourth-quarter fiscal 2026 non-GAAP EPS of 6 cents. The figure beat the company’s estimate of 3-5 cents. In the year-ago quarter, it reported a non-GAAP EPS of 3 cents. The Zacks Consensus Estimate was pegged at 5 cents per share. BlackBerry reported quarterly revenue of $156 million, surpassing the top end of its guidance ($138-$148 million), driven by stronger-than-expected sales across both its QNX and Secure Communications divisions. Revenue also increased 10% year over year.
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SAP's Q1 Earnings & Revenues Up Y/Y on Cloud Momentum & AI Tailwinds
Key Takeaways
SAP SE (SAP - Free Report) reported first-quarter 2026 non-IFRS earnings per share (EPS) of €1.72 ($2.01), which increased 20% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $1.92.
Driven by momentum in the cloud business, SAP reported total revenues on a non-IFRS basis of €9.56 billion ($11.2 billion), which increased 6% year over year (up 12% at constant currency or cc). The Zacks Consensus Estimate was pegged at $11.3 billion.
SAP’s Business AI momentum is acting as a critical differentiator. Unlike generic AI tools, SAP is embedding AI directly into enterprise workflows, finance, supply chain, and HR, delivering real, measurable outcomes for customers. This strategy positions SAP uniquely against competitors as AI is contextualized within enterprise data. It enhances existing ERP systems, rather than replacing them and drives customer expansion within SAP’s ecosystem. Management noted that SAP is “growing faster than the market and gaining share,” suggesting AI is already translating into tangible competitive advantage.
SAP delivered these results despite a volatile macroeconomic backdrop, but the business is not immune to ongoing external pressures. Uncertainty remains elevated, and while performance has held up so far, risks persist. The company continues to execute quarter by quarter, though it is leaning on upcoming Sapphire announcements to support its push for scalable, high-value business AI.
Image Source: Zacks Investment Research
Following a strong start to 2026, shares went up 8% in the pre-market trading session today. In the past year, the stock has plunged 40.3% against the Zacks Computer – Software industry’s rise of 1.4%
Cloud Acts as the Growth Engine for SAP
The current cloud backlog — a key indicator of go-to-market success in cloud business — surged 20% (up 25% at cc) to €21.9 billion.
On a non-IFRS basis, the Cloud and software segment (89.5% of total revenues) registered revenues of €8.5 billion, rising 8% year over year (up 14% at cc).
Cloud revenues were €6 billion, up 19% year over year (up 27% at cc) on a non-IFRS basis, powered by a solid 23% growth (up 30% at cc) in Cloud ERP Suite revenues, reaching €5.2 billion. Software licenses and support revenues totaled €2.6 billion, which decreased 12% (down 8% at cc) year over year.
Services business (10.5% of total revenues) posted revenues of €1 billion, down 6% year over year (down 1% at cc).
Expanding Clientele Bodes Well
In the first quarter, SAP saw strong global momentum for its "RISE with SAP" offering, with notable customers, including AIR LIQUIDE, Aptiv, Bristol-Myers Squibb, CMS Energy, ConocoPhillips, Diehl Group, Garuda Indonesia, Hyundai Motor EU, ITU (International Telecommunication Union), Nutresa, PayPal, PinkRoccade Local Government, Schweiter Technologies, Thales and Wella.
“GROW with SAP,” which focuses on aiding smaller businesses to adopt cloud ERP solutions quickly and efficiently, was implemented by Adesso, Japan Display, OAKBERRY, while SAP’s AI and data tools were selected by Carl Zeiss, Helvetia Baloise Group, Hochland, SKF Group.
Key wins across SAP's broader solution portfolio included Apollo Tyres, Compass Group, Government Service Insurance System, Grupo Comercial Chedraui, Liebherr, Migros, Red Bull, Transport for London.
SAP SE Price, Consensus and EPS Surprise
SAP SE price-consensus-eps-surprise-chart | SAP SE Quote
Major global brands across various industries, including Alibaba Cloud Computing, ExxonMobil, Fonterra, Norfolk Southern, Samsung Electro-Mechanics, VEKA, Volaris chose SAP solutions.
SAP’s cloud revenue growth was especially strong in the APJ and EMEA regions and robust in the Americas, with standout performances from Brazil, France, Germany, India, South Korea, Switzerland and the United Kingdom. It remained strong in the United States.
Margin Details
Non-IFRS gross profit of €7 billion increased 6% from the year-ago quarter (up 12% at cc).
Non-IFRS Cloud gross profit increased 20% year over year to €4.5 billion (up 26% at cc). Non-IFRS cloud gross margin rose 0.2 percentage points to 75.2%.
SAP's non-IFRS operating profit rose 17% (up 24% at cc) to €2.9 billion, with margin increasing to 30%.
However, some quarter-specific boosts to cloud revenue may lead to slower growth in the second quarter.
Balance Sheet & Cash Flow
As of March 31, 2026, SAP had cash, cash equivalents and other financial assets of €10.05 billion compared with €9.7 billion as of Dec. 31, 2025.
In the first quarter, the company generated operating cash of €3.5 billion compared with €3.8 million a year ago. Free cash flow, a key metric of operational strength, was €3.2 billion during the quarter, down 9%. The €408 million cash outflow related to the Teradata litigation settlement adversely impacted cash flow.
SAP is also returning significant capital to shareholders. In January 2026, SAP launched a share buyback program worth up to €10 billion, scheduled to run through Dec. 31, 2027. By April 1, 2026, the company had completed the first phase, repurchasing 16,280,097 shares at an average price of €161.16, totaling roughly €2.6 billion under the program. Buybacks, combined with growth, create a compelling total shareholder return story.
SAP’s 2026 Outlook: Growth With Caution
SAP maintained its full-year guidance but acknowledged global uncertainties. For 2026, SAP continues to guide cloud revenue of €25.8–€26.2 billion at constant currencies, implying 23–25% growth from €21.02 billion in 2025, while cloud and software revenue is expected at €36.3–€36.8 billion, up 12–13% from €32.54 billion.
Non-IFRS operating profit is projected at €11.9–12.3 billion, representing 14–18% growth from €10.42 billion, and free cash flow is targeted at around €10 billion versus €8.24 billion in 2025. SAP also expects constant-currency current cloud backlog growth to moderate slightly in 2026 from 25% in 2025.
Furthermore, SAP expects 2026 revenue growth (constant currency) to stay in line with 2025, with acceleration now pushed to 2027 rather than gradually improving each year. Operating expenses in 2027 are projected to rise at 80–90% of revenue growth. Software support revenue is set to decline faster as more customers shift to the cloud.
Uncertainties in the Middle East could pose potential downside risks if conditions worsen.
SAP’s Zacks Rank
SAP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performance of Other Companies
Badger Meter, Inc. (BMI - Free Report) reported EPS of 93 cents for first-quarter 2026, which missed the Zacks Consensus Estimate by 22.5%. The bottom line compared unfavorably with the year-ago quarter’s EPS of $1.30. Quarterly net sales were $202.3 million, down 9% from $222.2 million in the year-ago quarter due to delayed project deployments and weaker-than-expected short-cycle order activity. The Zacks Consensus Estimate was pegged at $230.1 million.
Simulations Plus, Inc. (SLP - Free Report) reported second-quarter fiscal 2026 adjusted earnings of 35 cents per share, surpassing the Zacks Consensus Estimate by 29%. The bottom line also compared favorably with the prior-year quarter’s 31 cents. Simulations Plus reported quarterly revenue of $24.3 million, marking an 8% year-over-year increase. This growth reflects continued demand for its core offerings, especially in drug discovery and development.
BlackBerry Limited (BB - Free Report) reported fourth-quarter fiscal 2026 non-GAAP EPS of 6 cents. The figure beat the company’s estimate of 3-5 cents. In the year-ago quarter, it reported a non-GAAP EPS of 3 cents. The Zacks Consensus Estimate was pegged at 5 cents per share. BlackBerry reported quarterly revenue of $156 million, surpassing the top end of its guidance ($138-$148 million), driven by stronger-than-expected sales across both its QNX and Secure Communications divisions. Revenue also increased 10% year over year.