Company Reports

SAP is the world’s largest provider of enterprise application software and global market leader in enterprise resource planning software. The company earns revenue by selling subscriptions for its various cloud-based software-as-a-service products as well as licenses and maintenance fees for on-premises software, which are now being largely phased out. Besides its core ERP products such as S/4HANA, SAP offers well-known back-office software products such as Concur for travel and expense management and Ariba for procurement.

SAP's second-quarter results were in line with the company-compiled consensus on revenue but missed on EPS due to higher-than-expected operating costs. However, current cloud backlog growth was strong. Shares were up 3% in after-hours trading.

SAP's first-quarter results beat the company-compiled consensus on the top and bottom line. However, a deceleration in growth was flagged for the second quarter, and the 2026 outlook commentary was modestly softened. Shares were up 6% intraday.

SAP is the world’s largest provider of enterprise application software and global market leader in enterprise resource planning software. The company earns revenue by selling subscriptions for its various cloud-based software-as-a-service products as well as licenses and maintenance fees for on-premises software, which are now being largely phased out. Besides its core ERP products such as S/4HANA, SAP offers well-known back-office software products such as Concur for travel and expense management and Ariba for procurement.

SAP's fourth-quarter results and 2026 guidance were broadly in line with the company-compiled consensus. However, the current cloud backlog growth of 25% at constant currencies was lower than expected. Shares were down 10% in intraday trading after the results.

SAP's third-quarter results were broadly in line with company-compiled consensus, and 2025 guidance was basically maintained. Management's confidence going into 2026 appears strong. Shares were down around 2% intraday.

SAP's second-quarter results were in line with company-compiled consensus, and 2025 guidance was maintained. However, the sales cycle elongated in certain sectors. Shares were down 4% intraday.

SAP is the world’s largest provider of enterprise application software and global market leader in enterprise resource planning software. The company earns revenue by selling subscriptions for its various cloud-based software-as-a-service products as well as licenses and maintenance fees for on-premises software, which are now being largely phased out. Besides its core ERP products such as S/4HANA, SAP offers well-known back-office software products such as Concur for travel and expense management and Ariba for procurement.

SAP is the world’s largest provider of enterprise application software and global market leader in enterprise resource planning software. The company earns revenue by selling subscriptions for its various cloud-based software-as-a-service products as well as licenses and maintenance fees for on-premises software, which are now being largely phased out. Besides its core ERP products such as S/4HANA, SAP offers well-known back-office software products such as Concur for travel and expense management and Ariba for procurement.

SAP's EPS was well above company-compiled consensus and the company remained confident on 2025 guidance despite current economic uncertainties. Shares were up 9% intraday.

We've changed our view on SAP after transferring coverage to a new analyst. SAP is the global market leader in enterprise resource planning software.

SAP is the world’s largest provider of enterprise application software and global market leader in enterprise resource planning software. The company earns revenue by selling subscriptions for its various cloud-based software-as-a-service products as well as licenses and maintenance fees for on-premises software, which are now being largely phased out. Besides its core ERP products such as S/4HANA, SAP offers well-known back-office software products such as Concur for travel and expense management and Ariba for procurement.

We are raising our fair value estimate for SAP to EUR 150 per share from EUR 141 per share after the firm reported third-quarter results well above our expectations and an upped outlook for the remainder of the year. Cloud ERP strength was largely due to existing and net new customer wins. Despite the pleasing results from the quarter and rosier outlook, we still view shares as overvalued. We ultimately remain cautious as there are still significant ways to go in converting legacy customers over to the cloud, which carries the risk of customers jumping the SAP ship altogether, even if SAP is retaining a solid base of customers on the way.

SAP is a best-in-breed enterprise resource planning provider and holds dominant market share in global ERP software. However, SAP is phasing out its support of its on-premises ERP software such that by 2040 all of its ERP customers will need to shift to a cloud solution. We think that this vulnerability is a significant threat to SAP’s switching costs, as competitors like Workday offer compelling cloud ERP solutions, while forced migration opens up opportunity to question a company’s best fit for ERP needs. In turn, we believe SAP’s narrow moat, derived from its switching costs, is trending negative. However, it is still early in SAP's transition of on-premises users to the cloud, which leads us to believe its negative trend could be prolonged.

SAP reported a solid second quarter, with cloud revenue continuing to increase forcefully. Despite management’s outlook remaining unchanged, we are increasing our fair value estimate to EUR 141 per share from EUR 132 for this narrow-moat name. We have moderately raised our midcycle operating margin assumptions based on a more precise roadmap for operational efficiencies. Despite our fair value adjustments, we view the stock as overvalued—as we believe SAP’s ERP market share will continue to decline due to fiercer competition from the likes of Workday.

SAP is a best-in-breed enterprise resource planning provider and holds dominant market share in global ERP software. However, SAP is phasing out its support of its on-premises ERP software such that by 2040 all of its ERP customers will need to shift to a cloud solution. We think that this vulnerability is a significant threat to SAP’s switching costs, as competitors like Workday offer compelling cloud ERP solutions, while forced migration opens up opportunity to question a company’s best fit for ERP needs. In turn, we believe SAP’s narrow moat, derived from its switching costs, is trending negative. However, it is still early in SAP's transition of on-premises users to the cloud, which leads us to believe its negative trend could be prolonged.

We maintain our fair value estimate for narrow-moat SAP at EUR 132 per share after the firm reported a robust first quarter that topped our revenue and margin expectations. Management reaffirmed 2024 guidance and reiterated its 2025 ambition, which we believe are supported by continued strategic pivots toward the cloud and business artificial intelligence, or AI, segments. Overall, we see results as solid and a continuation of recent trends. Although we continue to expect some churn due to forced cloud migration, we maintain our belief in SAP’s strong suite of offerings and the inherent switching costs associated with core software systems. Shares already incorporate the full benefits of the cloud transition and are overvalued, in our opinion.

We are raising our fair value estimate for SAP to EUR 132 from EUR 119 after the firm reported a strong fourth quarter, beating our EPS expectations. Longer term, we continue to believe SAP’s otherwise strong switching costs will be restored once the bulk of enterprise workloads have moved to the cloud. However, we think the firm will experience an uptick in churn over the next 10 years as cloud migrations give way to rethinking IT strategies and software vendors. Management provided solid 2024 guidance as well as reiterating its 2025 targets, which we expect to be supported through its transformation roadmap involving greater strategic investment toward cloud and Business AI. While shares were up around 7% after these results, we still view the shares as overvalued.

SAP is a best-in-breed enterprise resource planning provider and holds dominant market share in global ERP software. However, SAP is phasing out its support of its on-premises ERP software such that by 2040 all of its ERP customers will need to shift to a cloud solution. We think that this vulnerability is a significant threat to SAP’s switching costs, as competitors like Workday offer compelling cloud ERP solutions, while forced migration opens up opportunity to question a company’s best fit for ERP needs. In turn, we believe SAP’s narrow moat, derived from its switching costs, is trending negative. However, it is still early in SAP's transition of on-premises users to the cloud, which leads us to believe its negative trend could be prolonged.

We are maintaining our fair value estimate for SAP at EUR 119 per share after the firm reported mixed third-quarter results, with revenue coming in under expectations combined with earnings per share beating our forecast. With the long term in focus, we continue to believe SAP’s otherwise strong switching costs will be restored once the major shift of enterprise workloads to the cloud is concluded. However, we think the firm will experience an uptick in churn over the next 10 years as cloud migrations give way to rethinking software vendors. Still, not all looks bleak for SAP in the years ahead. Even with increased churn, we expect healthy revenue growth over the next 10 years (aided by new software functionalities) along with ample operating margin expansion as cloud profitability improves with scale. Altogether, shares are up 4% upon results, leaving shares fairly valued, in our view.