Shares of enterprise software company SAP popped on better-than-expected first-quarter earnings. While SAP stock climbed, Wall Street analysts mulled the implications for other software makers amid growing worries over a global economic downturn.
The Germany-based company reported earnings after the market close on Tuesday. Further, SAP maintained its guidance for the fiscal year.
Some analysts expect a few software companies to lower their financial outlooks when they report earnings in April and May.
Heading into the SAP earnings report, analysts were concerned about the company's U.S. federal business, currency exchange rates and the impact of Trump administration trade tariffs on its customer base.
SAP Shifts To Cloud Services
"SAP had a solid March quarter and started off the software earnings season with better-than-feared results," said BMO Capital Markets analyst Keith Bachman in a report. "However, our view is that SAP's results and guidance will probably be better than many if not most of our coverage universe, helped by improving solution portfolio and ongoing cloud conversions."
Wall Street analysts have focused on the software maker's progress in converting its on-premise customer base over to cloud computing services.
For the quarter ending March 31, SAP earnings came in at 1.44 euros per share on an adjusted basis. Revenue climbed 12% to 9.01 billion euros. Analysts had estimated adjusted EPS of 1.31 euros per share on revenue of 9.06 billion euros.
Cloud computing revenue rose 27% to 4.99 billion euros vs. estimates of 5.04 billion euros.
SAP reports its own financial metric called Current Cloud Backlog, or CCB. It refers to the amount of revenue a software company expects to recognize in the future from contracts with customers. In Q1, CCB rose 28% to 18.2 billion euros, in-line with views.
"Management indicated that cloud growth was slightly softer than expected due to a lag in timing of go-lives from its large Q4 bookings quarter, but that this is expected to be re-couped in Q2 and drive some re-acceleration," said TD Cowen analyst Derrick Wood in a report.
He added: "With SAP forecasting solid growth durability in current conditions, we expect a relief rally."
SAP Stock Retreats From All-Time High
On the stock market today, NYSE-listed SAP stock rose 9.1% to 275.47 in early trading as other technology stocks also gained. In 2025, SAP stock had retreated 7% as of Tuesday's regular session. Shares have pulled back from an all-time high of 293.70 set in mid February.
Meanwhile, the software maker hosts an analyst day on May 21.
Like Oracle, SAP is moving away from software-licenses sales to subscription-based cloud services.
Further, SAP stock holds a Relative Strength Rating of 91 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
