SAP SE (NYSE:SAP) stock rose 8.58% (As on April 23, 11:23:20 AM UTC-4, Source: Google Finance) after the company reported better-than-expected first-quarter earnings, driven by strong growth in its cloud business. SAP reported cloud revenue of €4,993 million for Q1 2025, representing a 27% year-over-year increase (26% at constant currency). The company’s cloud backlog grew to €18,202 million, up 28% (29% at constant currency), indicating strong future revenue potential. Cloud ERP Suite revenue was up 34% to €4.25 billion and up 33% at constant currencies. Software licenses revenue decreased by 10% to €0.18 billion and was down 10% at constant currencies. Cloud and software revenue was up 14% to €7.94 billion and up 13% at constant currencies. Services revenue was down 1% to €1.07 billion and down 2% at constant currencies.

Moreover, Non-IFRS cloud gross profit was up 31% to €3.74 billion and was up 30% at constant currencies. The non-IFRS cloud gross margin up 2.5 percentage points to 75.0% and up 2.6 percentage points at constant currencies. Non-IFRS operating profit was up 60% to €2.46 billion and was up 58% at constant currencies, non-IFRS operating margin increased by 8.2 percentage points to 27.2% and was up 8.1 percentage points to 27.1% at constant currencies. Both, IFRS and non-IFRS operating profit growth benefitted from the operational efficiencies realized through successful execution of the 2024 transformation program. Operating cash flow in the first quarter was up 31% to €3.78 billion and free cash flow increased by 36% to €3.58 billion. The increase was mainly attributable to the higher profitability and the positive development of working capital (outside of restructuring related impacts), which was partially offset by higher payouts for share-based compensation and restructuring.

Meanwhile, in January 2024, SAP announced a company-wide restructuring program which concluded as planned in the first quarter 2025. Restructuring payouts amounted to €0.3 billion for the first quarter 2025. Approximately €0.4 billion is expected to be paid out in the remainder of 2025.

SAP in the first quarter of FY25 has reported the adjusted earnings per share of €1.44, beating the analysts’ estimates for the adjusted earnings per share of €1.40. The company had reported the adjusted revenue growth of 12 percent to €9.01 billion in the first quarter of FY25, missing the analysts’ estimates for revenue of €9.55 billion.

The company maintained its full-year 2025 outlook, expecting cloud revenue between €21.6 billion and €21.9 billion, representing growth of 26% to 28% at constant currencies.