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SAP SE (SAP +9%) is making a big move today following its Q1 report last night. The enterprise software giant reported a huge EPS beat although revenue was light. Given the macro uncertainty, we think investors were pleased to see SAP reaffirm some important full year cloud metrics.

• In Q1, revenue rose 12.1% (+11% CC) yr/yr to €9.01 bln. Cloud and software revenue was up 14% (+13% CC) to €7.94 bln while Services revenue was down 1% (-2% CC) to €1.07 bln. Drilling down a bit, cloud revenue was up an impressive 27% (+26% CC) to €4.99 bln while Cloud ERP Suite revenue was up 34% (+33% CC) to €4.25 bln. Cloud revenue continued to grow strongly, even as the base has expanded. Overall, the share of more predictable revenue is now at 86% of total revs. Looking ahead, its current cloud backlog grew by an impressive 28% (+29% CC) to €18.20 bln.
• SAP said its cloud revenue performance was particularly strong in APJ and EMEA and robust in the Americas region. Brazil, Chile, Germany, India, Italy, South Korea, and Spain had outstanding performances, while Canada, China, France, Japan, Singapore, and the US were particularly strong.
• SAP concedes that uncertainty in the market remains high and no one can really predict how the global economy will develop throughout 2025. However, SAP cited its highly resilient business model and its excellent market position as a source of strength. Also, while not providing specific revenue and EPS guidance, SAP noted that its pipeline for the year continues to look very solid. Also, it argues that no other tech company can offer the same suite of services at scale.
• In terms of the outlook, SAP reaffirmed FY25 guidance for cloud revenue at €21.6-21.9 bln (+26-28% CC). It also reaffirmed FY25 guidance for cloud and software revenue at €33.1-33.6 bln (+11-13% CC). While its pipeline remains healthy, SAP concedes that conversion rates could be hurt by further deceleration of current trade disputes.

Given the macro uncertainty, we think investors are very happy to see SAP reported a solid EPS beat, especially after EPS misses in back-to-back quarters in Q3 and Q4. Even more importantly, we think SAP's decision to reaffirm FY25 guidance across several metrics was very reassuring to investors. The company could have easily lowered guidance given the macro pressures. The stock has come under pressure since mid-February, along with the overall market, so this report was some much-appreciated good news. Finally, we think SAP's report/guidance bodes well for peer IBM, which is set to report Q1 results today after the close.