SAP beats first-quarter estimates as cloud demand drives profit growth

SAP’s latest quarter showed that enterprise customers are still willing to spend on mission-critical cloud software even as the broader economy softens. The German software group said first-quarter profit rose 17%, helped by a 19% increase in cloud revenue to 5.96 billion euros, and investors sent its U.S.-listed shares up 5.4% after the results.

For SAP, the more important signal was not just the beat but the durability of demand. Revenue for the three months ended March 31 rose 6% to 9.56 billion euros, while non-IFRS operating profit climbed to 2.87 billion euros. Current cloud backlog, a key measure of contracted future business, reached 21.9 billion euros, up 20% reported and 25% at constant currencies. Cloud ERP Suite revenue rose 23% reported and 30% at constant currencies, showing that the core software migration story is still intact.

The comparison with a year earlier highlights how much the cloud business has expanded. In the first quarter of 2025, SAP reported cloud revenue of 4.99 billion euros and current cloud backlog of 18.2 billion euros, alongside non-IFRS operating profit of 2.5 billion euros. Since then, the company has also built on a strong 2025, when cloud revenue rose 23% at constant currencies and total cloud backlog reached a record 77 billion euros.

That resilience matters because SAP is not operating in a calm environment. Chief Financial Officer Dominik Asam said the company has stayed focused on managing costs and preserving profitability as the macroeconomic and geopolitical backdrop has become more complex and uncertain. SAP kept its full-year cloud-growth outlook at 23% to 25%, but tied that forecast to de-escalation in the Middle East conflict, a reminder that war is now a variable in corporate budgeting, procurement and supply-chain planning. The company also said total revenue growth in 2026 should remain at similar levels to 2025 and accelerate in 2027.

The numbers suggest that corporate technology spending is still being protected where it matters most. SAP’s results point to customers continuing to fund cloud migration, business software and AI-linked products even as executives remain cautious elsewhere. That was reinforced earlier this year, when SAP said Business AI was included in two thirds of its fourth-quarter cloud order entry, and when it launched a new two-year share repurchase program of up to 10 billion euros after full-year 2025 results. With a virtual annual general meeting set for May 5, SAP will face more questions about whether that protected spending holds if macro uncertainty deepens further.