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SAP AG (SAP)
NYSE:SAP
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SAP AG
(NYSE:SAP)77Outperform
Positive Factors
Financial Performance
SAP reported strong third-quarter results, beating expectations in both earnings and revenue, which led to a 4% increase in the stock price in aftermarket trading.
Partnership and Collaboration
SAP has announced a partnership with Databricks to integrate their Data Intelligence Platform with SAP's new Business Data Cloud, aiming to address fragmented data in large enterprises.
Negative Factors
Restructuring Risks
There is potential risk of disruption from the 2024 restructuring program and the departure of Chief Revenue Officer Scott Russell.
SAP AG (SAP) vs. S&P 500 (SPY)
Market Cap
$324.73B
Dividend Yield0.62%
Average Volume (3M)1.16M
Price to Earnings (P/E)94.9
Beta (1Y)1.01
Revenue Growth9.55%
EPS Growth-2.28%
CountryUS
Employees109,973
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)2.89
Shares Outstanding1,228,504,300
10 Day Avg. Volume1,332,651
30 Day Avg. Volume1,161,838
Financial Highlights & Ratios
PEG Ratio14.79
Price to Book (P/B)N/A
Price to Sales (P/S)9.73
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$295.50Price Target Upside5.90% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
SAP AG Business Overview & Revenue Model
Company DescriptionSAP AG (SAP), headquartered in Walldorf, Germany, is a global leader in enterprise application software, serving various industries with its comprehensive range of solutions. The company specializes in helping businesses streamline their operations through its suite of products, including enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), and human capital management (HCM) software. SAP's cloud-based offerings and intelligent technologies like artificial intelligence (AI) and machine learning further enhance its capabilities, enabling organizations to innovate and drive sustainable growth.
How the Company Makes MoneySAP AG generates revenue primarily through the sale of software licenses, cloud subscriptions, and support services. A significant portion of its income comes from its cloud business, which includes software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS) offerings. The company also earns substantial revenue from its on-premise software licenses and related support and maintenance services. Additionally, SAP has established strategic partnerships with major technology companies and consulting firms, expanding its market reach and providing integrated solutions to its clients. These collaborations, coupled with its extensive portfolio of products and services, contribute significantly to SAP's overall earnings.
SAP AG Financial Statement Overview
Summary
SAP demonstrates strong financial health with consistent revenue growth, efficient operations, and robust cash flow generation. However, the increase in debt and recent decline in net income present potential risks.Income Statement
SAP's income statement shows strong performance with a consistent revenue growth trend over the years. The Gross Profit Margin and Net Profit Margin have remained healthy, indicating effective cost management and profitability. EBIT and EBITDA margins are robust, reflecting operational efficiency. However, the decline in net income from 2023 to 2024 is a concern that needs monitoring.85
Very Positive
Balance Sheet
The balance sheet reflects a stable financial position with a solid equity base. The Debt-to-Equity ratio is manageable, suggesting prudent leverage. The Return on Equity remains strong, indicating good returns for shareholders. The Equity Ratio is healthy, showing a strong asset base. However, the increase in total debt from 2023 to 2024 requires attention to ensure long-term solvency.78
Positive
Cash Flow
SAP's cash flow statement indicates strong operating cash flows, with a positive Free Cash Flow, supporting future growth investments. The Free Cash Flow to Net Income ratio remains favorable, demonstrating cash generation capability. While the Free Cash Flow growth rate dipped from 2023 to 2024, the overall cash flow health remains robust.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 29.42B | 34.18B | 31.21B | 30.87B | 27.84B | 27.34B | Gross Profit |
| 21.00B | 25.01B | 22.60B | 21.94B | 19.89B | 19.45B | EBIT |
| 4.74B | 8.25B | 5.79B | 4.67B | 2.88B | 6.62B | EBITDA |
| 7.47B | 7.08B | 7.50B | 7.33B | 7.92B | 8.26B | Net Income Common Stockholders |
| 3.93B | 3.12B | 6.14B | 2.28B | 5.26B | 5.14B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 11.24B | 11.24B | 11.28B | 9.86B | 11.66B | 6.95B | Total Assets |
| 74.12B | 74.12B | 68.33B | 72.16B | 71.17B | 58.48B | Total Debt |
| 11.45B | 11.45B | 8.79B | 14.37B | 15.15B | 15.95B | Net Debt |
| 1.84B | 1.84B | 666.00M | 5.37B | 6.25B | 10.64B | Total Liabilities |
| 28.31B | 28.31B | 24.93B | 29.31B | 29.65B | 28.55B | Stockholders Equity |
| 45.44B | 45.44B | 43.16B | 40.13B | 38.85B | 29.71B |
| Cash Flow | Free Cash Flow | ||||
| 4.29B | 4.42B | 5.55B | 4.77B | 5.42B | 6.38B | Operating Cash Flow |
| 5.20B | 5.22B | 6.33B | 5.65B | 6.22B | 7.19B | Investing Cash Flow |
| -3.05B | -667.00M | 906.00M | 667.00M | -3.06B | -2.99B | Financing Cash Flow |
| -3.11B | -3.40B | -7.73B | -6.34B | -56.00M | -4.00B |
SAP AG Technical Analysis
Neutral
279.05
Price Trends
269.01
Positive
253.29
Positive
229.95
Positive
Market Momentum
2.49
Positive
50.07
Neutral
30.28
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAP, the sentiment is Neutral. The current price of 279.05 is below the 20-day moving average (MA) of 284.39, above the 50-day MA of 269.01, and above the 200-day MA of 229.95, indicating a neutral trend. The MACD of 2.49 indicates Positive momentum. The RSI at 50.07 is Neutral, neither overbought nor oversold. The STOCH value of 30.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SAP.
SAP AG Risk Analysis
SAP AG disclosed 13 risk factors in its most recent earnings report. SAP AG reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
SAP AG Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.89T | 31.30 | 30.64% | 0.81% | 15.04% | 12.38% | |
79 Outperform | $171.61B | 57.36 | 16.92% | 0.65% | 13.73% | 9.93% | |
78 Outperform | $193.98B | 35.94 | 39.42% | ― | 11.02% | 4.96% | |
77 Outperform | $324.73B | 94.89 | 6.88% | 0.62% | 9.55% | -2.28% | |
75 Outperform | $440.44B | 38.54 | 84.57% | 0.99% | 6.40% | 12.83% | |
73 Outperform | $274.98B | 45.18 | 10.13% | 0.55% | 8.72% | 51.47% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
SAP
SAP AG
279.05
93.27
50.20%
ADBE
Adobe
446.03
-98.81
-18.14%
INTU
Intuit
598.07
-37.76
-5.94%
MSFT
Microsoft
388.61
-10.99
-2.75%
ORCL
Oracle
157.47
47.72
43.48%
CRM
Salesforce
287.34
-9.75
-3.28%
SAP AG Earnings Call Summary
Earnings Call Date: Jan 28, 2025 | % Change Since: 1.25% | Next Earnings Date: Apr 22, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant achievements in cloud growth, AI innovation, and operational efficiency, positioning SAP strongly for future growth. Despite the decrease in software licenses revenue and challenges with some customer transitions, the positive outcomes and strategic advancements suggest a predominantly positive outlook.Highlights
Record Cloud Backlog
SAP's total cloud backlog reached €63 billion at the end of 2024, a 40% increase over the previous year.
Strong Cloud Revenue Growth
Cloud revenue expanded by 27% in Q4 2024, contributing to double-digit total revenue growth for the third consecutive quarter.
AI Innovation and Adoption
Approximately half of SAP's cloud order entries in Q4 included AI use cases, demonstrating successful rollout of business AI innovations.
Customer Wins and Go-Lives
SAP secured significant deals with major companies like BP, Total Energies, BASF, IBM, and General Motors, illustrating strong market positioning.
Improved Cloud Gross Margin
Non-IFRS cloud gross margin expanded by 1.4 percentage points to 73.3% in 2024, driven by strong cloud revenue performance.
AI-Driven Operational Efficiency
SAP achieved an operational efficiency effect worth €300 million in 2024 through AI implementations, with expectations to exceed €0.5 billion in the near future.
Lowlights
Software Licenses Revenue Decrease
Software licenses revenue decreased by 21% year-on-year, reflecting a shift towards cloud-based solutions.
Increased Tax Rate
The non-IFRS tax rate for 2024 was 32%, consistent with previous guidance but contributing to higher overall tax expenses.
Challenges with Large Customer Transitions
SAP introduced a private edition option to support a few large customers facing challenges in transitioning to the cloud by the end of maintenance deadlines.
Company Guidance
During the SAP Q4 2024 earnings call, significant guidance was provided, focusing on key financial metrics and strategic directions. SAP reported a total cloud backlog of €63 billion at the end of 2024, marking a 40% increase year-on-year. This growth underscores SAP's transformation success, with cloud revenue expanding by 27% in Q4 and driving double-digit total revenue growth for the third consecutive quarter. The company achieved a total revenue of over €34 billion for the year, up by 10%, primarily fueled by the strong performance of the cloud ERP suite, which grew by 34%. The cloud gross margin improved by 1.4 percentage points to 73.3%, contributing to a 26% increase in non-IFRS operating profit, reaching €8.2 billion. SAP also highlighted an 83% recurring revenue share, indicating a more resilient growth trajectory. Looking ahead, SAP expects accelerated double-digit total revenue growth and operating profit expansion through 2027, driven by innovations in AI and strategic commercial initiatives.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.