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SAP AG (SAP)
NYSE:SAP
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SAP AG
(NYSE:SAP)
Rating:78Outperform
Price Target:
$353.00
▲(14.38%Upside)
Positive Factors
AI Integration
SAP is strengthening its position around AI, which is expected to boost growth and margin expansion.
Cloud Conversion
SAP is experiencing growing momentum in cloud migrations, with potential for a significant uplift opportunity from its on-prem base.
Earnings Performance
SAP had a solid March quarter, surpassing expectations and providing better-than-feared results in the software earnings season.
Negative Factors
FX Trends
FX-driven revisions could pose a headwind for the stock, affecting financial estimates negatively.
Tariff Uncertainties
Risks are associated with new US tariffs on EU and China companies, potentially delaying Cloud/AI projects.
SAP AG (SAP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$352.83B
Dividend Yield0.86%
Average Volume (3M)1.06M
Price to Earnings (P/E)58.6
Beta (1Y)0.96
Revenue Growth9.39%
EPS Growth201.10%
CountryUS
Employees108,187
SectorTechnology
Sector Strength93
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.63
Shares Outstanding1,228,504,300
10 Day Avg. Volume942,381
30 Day Avg. Volume1,060,444
Financial Highlights & Ratios
PEG Ratio0.96
Price to Book (P/B)6.63
Price to Sales (P/S)0.00
P/FCF Ratio55.45
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$327.60Price Target Upside6.15% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
SAP AG Business Overview & Revenue Model
Company DescriptionSAP AG is a German multinational software corporation that specializes in enterprise software to manage business operations and customer relations. The company is best known for its ERP (Enterprise Resource Planning) software, which integrates various business functions into a unified system. SAP operates in sectors such as financial services, manufacturing, consumer industries, and public services, offering a suite of applications that enable organizations to conduct advanced analytics, manage supply chains, and streamline operations.
How the Company Makes MoneySAP AG primarily makes money through the sale of software licenses, cloud subscriptions, and support services. The company's revenue model includes traditional on-premise software licenses, which involve a one-time fee and ongoing maintenance charges, as well as cloud-based offerings that generate recurring subscription fees. Key revenue streams include SAP's flagship ERP solutions, such as SAP S/4HANA, as well as other software products for analytics, human resources, and customer experience management. Additionally, SAP partners with other technology firms to expand its market reach and enhance its product offerings, contributing to its earnings. The shift towards cloud-based solutions has become increasingly significant for SAP's growth strategy, as it aligns with industry trends towards digital transformation.
SAP AG Key Performance Indicators (KPIs)
Any
Cloud Backlog
Reflects the total value of future cloud service contracts, providing insight into anticipated revenue streams and the strength of customer demand for SAP's cloud offerings.
Reflects the total value of future cloud service contracts, providing insight into anticipated revenue streams and the strength of customer demand for SAP's cloud offerings.
Data provided by:
Main Street Data
Main Street DataSAP AG Earnings Call Summary
Earnings Call Date:Apr 22, 2025
(Q1-2025)
| % Change Since: 23.04%|
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.Q1-2025 Updates
Positive Updates
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.
Negative Updates
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.SAP AG Financial Statement Overview
Summary
SAP demonstrates strong financial health with consistent revenue growth, efficient operations, and solid cash flow. While debt increase and net income decline are concerns, overall financial stability supports growth.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 |
| EBITDA | 6.47B | 7.50B | 6.48B | 8.92B | 8.26B |
| Net Income | 3.12B | 6.14B | 2.28B | 5.26B | 5.14B |
Balance Sheet | |||||
| Total Assets | 74.12B | 68.33B | 72.16B | 71.17B | 58.48B |
| Cash, Cash Equivalents and Short-Term Investments | 11.24B | 11.28B | 9.86B | 11.66B | 6.95B |
| Total Debt | 10.65B | 8.79B | 14.37B | 15.15B | 15.95B |
| 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
308.61
Price Trends
299.42
Positive
284.25
Positive
265.99
Positive
Market Momentum
2.44
Negative
58.57
Neutral
53.39
Neutral
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 308.61 is above the 20-day moving average (MA) of 300.60, above the 50-day MA of 299.42, and above the 200-day MA of 265.99, indicating a bullish trend. The MACD of 2.44 indicates Negative momentum. The RSI at 58.57 is Neutral, neither overbought nor oversold. The STOCH value of 53.39 is Neutral, 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 | $208.08B | 60.70 | 17.84% | 0.55% | 14.99% | 12.89% | |
78 Outperform | $352.83B | 58.59 | 12.81% | 0.86% | 9.39% | 201.10% | |
77 Outperform | $246.25B | 40.29 | 10.31% | 0.65% | 7.97% | 14.85% | |
74 Outperform | $200.31B | 130.20 | 16.86% | ― | 21.01% | -20.93% | |
72 Outperform | $60.05B | 125.20 | 5.70% | ― | 15.38% | -67.58% | |
67 Neutral | $49.41B | ― | -34.33% | ― | 19.12% | -161.42% | |
59 Neutral | €3.07B | 11.57 | -8.77% | 2.83% | 5.08% | -50.65% |
* Technology Sector Average
Performance Comparison
SAP
SAP AG
308.61
112.62
57.46%
INTU
Intuit
755.37
121.99
19.26%
CRM
Salesforce
259.88
13.98
5.69%
WDAY
Workday
230.89
0.31
0.13%
NOW
ServiceNow
959.15
220.38
29.83%
TEAM
Atlassian
190.62
14.52
8.25%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.