By Kit Norton
Shares of SAP took off after the closing bell on Thursday after the German tech company reported better-than-expected first-quarter profit and reiterated its 2026 cloud revenue outlook, with a caveat.
SAP's American depositary receipts advanced 6% after the closing bell on Thursday, mostly reversing a 6.2% decline to $163.25 in regular trading.
Software stocks were hit hard on Thursday as investors were quick to sell off the embattled sector following solid but unspectacular earnings reports from ServiceNow and IBM.
SAP, the owner of the Concur expense and travel management platform, reported first-quarter earnings of EUR1.72 ($2.01) a share, as revenue rose 6% from a year ago to EUR9.55 billion. Those are the set of figures that aren't based on International Financial Reporting Standards (IFRS), meaning they exclude one-off or unusual items such as restructuring costs or amortization.
Analysts were expecting non-IFRS earnings of EUR1.65 a share on revenue of EUR9.55 billion, according to a FactSet poll.
SAP's all-important cloud unit, which has benefited in recent years from the artificial-intelligence boom, logged revenue of EUR5.96 billion, up 19% from a year ago and coming in just above the EUR5.89 billion Wall Street was expecting.
The tech company added that it ended the first quarter with a cloud backlog of EUR21.9 billion, up 20% compared with a year ago.
"This performance is supported by our momentum in Business AI as we are already delivering real outcomes for customers today. We are growing faster than the market and are gaining share as customers expand across our Suite and with our AI solutions," CEO Christian Klein said in the earnings release.
The company continues to expect 2026 cloud revenue of between EUR25.8 billion and EUR26.2 billion. At the midpoint, that's just above the EUR25.62 billion that analysts had been forecasting. However, SAP said this guidance is "based on the assumption of a near-term de-escalation of the conflict in the Middle East and the imminent consolidation of Reltio."
In late March, SAP announced it has agreed to acquire Reltio, a data management software provider, with the transaction expected to close in the second or third quarter.
SAP added Thursday that it also forecasts total revenue growth, in constant currencies, in 2026 to remain at similar levels as in 2025 but that it will "accelerate" in 2027.
SAP is one of Europe's biggest tech stocks, but with a market capitalization of $204.98 billion, it's a fraction of Microsoft's $3.21 trillion market cap.
Write to Kit Norton at kit.norton@barrons.com
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(END) Dow Jones Newswires
April 23, 2026 17:24 ET (21:24 GMT)
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