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SAP AG (SAP)
NYSE:SAP
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SAP AG
(NYSE:SAP)
79Outperform
Positive Factors
AI and Technology
SAP is strengthening its position around AI, which is expected to boost growth and margin expansion.
Cloud Growth
SAP is well-positioned for the long term and has a high degree of potential for cloud conversion in the near to medium term.
Earnings Performance
SAP had a solid March quarter and started off the software earnings season with better-than-feared results.
Negative Factors
Currency Fluctuations
Expect FX to be a notable new headwind, with a significant incremental headwind to 2Q.
Macroeconomic Risks
Risks are associated with macro conditions, particularly new US tariffs on EU and China companies, which could delay Cloud/AI projects.
SAP AG (SAP) vs. S&P 500 (SPY)
Market Cap
$298.72B
Dividend Yield0.62%
Average Volume (3M)1.65M
Price to Earnings (P/E)89.4
Beta (1Y)0.98
Revenue Growth9.39%
EPS Growth201.10%
CountryUS
Employees108,187
SectorTechnology
Sector Strength62
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.46
Shares Outstanding1,228,504,300
10 Day Avg. Volume2,082,065
30 Day Avg. Volume1,650,366
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)8.98
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$331.09Price Target Upside19.12% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
SAP AG Business Overview & Revenue Model
Company DescriptionSAP AG (SAP), headquartered in Walldorf, Germany, is a global leader in enterprise application software, serving various industries with its comprehensive range of solutions. The company specializes in helping businesses streamline their operations through its suite of products, including enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), and human capital management (HCM) software. SAP's cloud-based offerings and intelligent technologies like artificial intelligence (AI) and machine learning further enhance its capabilities, enabling organizations to innovate and drive sustainable growth.
How the Company Makes MoneySAP AG generates revenue primarily through the sale of software licenses, cloud subscriptions, and support services. A significant portion of its income comes from its cloud business, which includes software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS) offerings. The company also earns substantial revenue from its on-premise software licenses and related support and maintenance services. Additionally, SAP has established strategic partnerships with major technology companies and consulting firms, expanding its market reach and providing integrated solutions to its clients. These collaborations, coupled with its extensive portfolio of products and services, contribute significantly to SAP's overall earnings.
SAP AG Financial Statement Overview
Summary
SAP demonstrates strong financial health with consistent revenue growth and solid cash flow generation. Despite the increase in debt and a recent net income decline, the company's financial foundation remains robust, supporting its growth trajectory in the competitive software industry.Income Statement
SAP's income statement shows strong performance with a consistent revenue growth trend over the years. The Gross Profit Margin and Net Profit Margin have remained healthy, indicating effective cost management and profitability. EBIT and EBITDA margins are robust, reflecting operational efficiency. However, the decline in net income from 2023 to 2024 is a concern that needs monitoring.85
Very Positive
Balance Sheet
The balance sheet reflects a stable financial position with a solid equity base. The Debt-to-Equity ratio is manageable, suggesting prudent leverage. The Return on Equity remains strong, indicating good returns for shareholders. The Equity Ratio is healthy, showing a strong asset base. However, the increase in total debt from 2023 to 2024 requires attention to ensure long-term solvency.78
Positive
Cash Flow
SAP's cash flow statement indicates strong operating cash flows, with a positive Free Cash Flow, supporting future growth investments. The Free Cash Flow to Net Income ratio remains favorable, demonstrating cash generation capability. While the Free Cash Flow growth rate dipped from 2023 to 2024, the overall cash flow health remains robust.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 34.18B | 31.21B | 30.87B | 27.84B | 27.34B | Gross Profit |
| 24.93B | 22.60B | 21.94B | 19.89B | 19.45B | EBIT |
| 4.67B | 5.79B | 4.67B | 2.88B | 6.62B | EBITDA |
| 6.47B | 7.50B | 6.48B | 8.92B | 8.26B | Net Income Common Stockholders |
| 3.12B | 6.14B | 2.28B | 5.26B | 5.14B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 11.24B | 11.28B | 9.86B | 11.66B | 6.95B | Total Assets |
| 74.12B | 68.33B | 72.16B | 71.17B | 58.48B | Total Debt |
| 10.65B | 8.79B | 14.37B | 15.15B | 15.95B | Net Debt |
| 1.04B | 666.00M | 5.37B | 6.25B | 10.64B | Total Liabilities |
| 28.31B | 24.93B | 29.31B | 29.65B | 28.55B | Stockholders Equity |
| 45.44B | 43.16B | 40.13B | 38.85B | 29.71B |
| Cash Flow | Free Cash Flow | |||
| 4.42B | 5.55B | 4.77B | 5.42B | 6.38B | Operating Cash Flow |
| 5.22B | 6.33B | 5.65B | 6.22B | 7.19B | Investing Cash Flow |
| -667.00M | 906.00M | 667.00M | -3.06B | -2.99B | Financing Cash Flow |
| -3.40B | -7.73B | -6.34B | -56.00M | -4.00B |
SAP AG Technical Analysis
Positive
277.95
Price Trends
270.24
Positive
265.10
Positive
243.22
Positive
Market Momentum
-0.03
Negative
60.45
Neutral
86.44
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAP, the sentiment is Positive. The current price of 277.95 is above the 20-day moving average (MA) of 260.63, above the 50-day MA of 270.24, and above the 200-day MA of 243.22, indicating a bullish trend. The MACD of -0.03 indicates Negative momentum. The RSI at 60.45 is Neutral, neither overbought nor oversold. The STOCH value of 86.44 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SAP.
SAP AG Risk Analysis
SAP AG disclosed 13 risk factors in its most recent earnings report. SAP AG reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
SAP AG Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $164.11B | 54.86 | 17.43% | 0.62% | 13.73% | 9.93% | |
79 Outperform | $298.72B | 89.42 | 12.81% | 0.62% | 9.39% | 201.10% | |
76 Outperform | $257.40B | 41.60 | 10.26% | 0.60% | 8.72% | 51.47% | |
76 Outperform | $63.71B | 122.50 | 6.15% | ― | 16.94% | -62.24% | |
75 Outperform | $195.67B | 128.32 | 16.86% | ― | 21.01% | -20.93% | |
61 Neutral | $59.91B | ― | -32.59% | ― | 23.19% | 11.01% | |
59 Neutral | $10.72B | 10.22 | -6.67% | 3.02% | 7.42% | -11.38% |
* Technology Sector Average
Performance Comparison
SAP
SAP AG
277.95
95.83
52.62%
INTU
Intuit
624.12
-10.15
-1.60%
CRM
Salesforce
267.85
-6.29
-2.29%
WDAY
Workday
239.53
-9.24
-3.71%
NOW
ServiceNow
945.26
224.10
31.07%
TEAM
Atlassian
228.68
51.61
29.15%
SAP AG Earnings Call Summary
Earnings Call Date: Apr 22, 2025 | % Change Since: 10.12% | Next Earnings Date: Jul 22, 2025
Earnings Call Sentiment Positive
SAP reported strong growth in cloud backlog and operating profit, alongside major customer wins and product innovations like the Business Data Cloud. However, potential challenges from macroeconomic conditions and slight deceleration in cloud revenue were noted. Overall, the sentiment is positive with a strong start to the fiscal year despite external uncertainties.Highlights
Strong Cloud Backlog and Revenue Growth
Current cloud backlog expanded 29% to €18.2 billion in Q1, and quarterly cloud revenue is now close to the €5 billion mark, showing a 26% increase.
High Operating Profit and Margin Improvement
Operating profit was up 58% in Q1 and cloud gross margin improved by 2.6 percentage points to 75%.
Significant Customer Wins Across Industries
Major deals in automotive with Hyundai, Kia, and Mazda, and other sectors including HUGO BOSS, Tyson Foods, and the German Federal Employment Agency.
Product Innovation with Business Data Cloud
Launch of SAP Business Data Cloud, with strong pipeline development and partnerships, notably with Databricks.
Solid Regional Performance
SAP's cloud revenue performance was particularly strong in APJ and EMEA and robust in the Americas region with outstanding performances in Brazil, Chile, Germany, and others.
Increased Productivity and Cost Efficiency
AI tools such as Joule for Consultants and Developers increased productivity significantly, with consultants saving up to 90 minutes per day.
Lowlights
Challenges from Macroeconomic Conditions
Despite strong performance, the volatile macro environment and potential trade disputes pose risks to pipeline conversion rates.
Transactional Cloud Revenue Decline
Transactional cloud revenues in Q1 were back to a slight decline, indicating exposure to macroeconomic conditions.
Cloud Revenue Deceleration
Cloud revenue growth decelerated slightly from Q4, affected by the timing of deal ramp-ups and transactional apps.
Company Guidance
During the first quarter of 2025, SAP demonstrated strong performance amid a challenging macroeconomic environment, with key metrics reflecting their resilience and strategic transformation. SAP's current cloud backlog increased by 29% to €18.2 billion, while cloud revenue approached the €5 billion mark, showing a 26% growth. The company reported a 58% rise in operating profit, with the cloud gross margin improving by 2.6 percentage points to 75%. Predictable revenue now constitutes 86% of total revenue, setting a foundation for sustained double-digit growth. SAP's total revenue reached €9 billion, up 11%, and the cloud ERP suite maintained strong momentum with a 33% increase, accounting for 85% of total cloud revenue. Operating cash flow surged by 31% to €3.8 billion, and free cash flow rose by 36% to €3.6 billion. Basic IFRS earnings per share increased to €1.52, and non-IFRS earnings per share to €1.44. Despite uncertainties in the global economy and potential trade disputes, SAP remains confident in its 2025 outlook, supported by solid pipeline prospects and the relevance of its solution portfolio.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.