Twelve months to the day, as Europe's leading software publisher's valuation was smashing through the ceiling - and the bounds of reason - we warned of an obvious overheating and a bright-red risk of a correction.

That warning was well-timed, as SAP's market capitalization has shrunk by a third since January 29, amongst other things, weighed on by investors' sudden misgivings as they see the rise of artificial intelligence threatening the competitive position of all software publishers.

The German group's results published this morning, while displeasing the market - with the stock already down 13% an hour after the opening bell - are nonetheless fairly good. Above all, they validate the promises made by management last year, which we acknowledged at the time - it must be said - with some reservations.

FY 2025 revenue rose 8%, driven notably by price increases that the group's entirely captive customer base has not escaped. Unsurprisingly, expansion came from the cloud segment, with sales up 23%, while the licenses and maintenance segment posted a 9% drop in sales.

That will not be lost on investors watching big software publishers' valuations fall these days, particularly those whose asset portfolios appear potentially threatened by obsolescence, such as the once-untouchable Constellation Software, which completely fell off its pedestal a while back.

SAP is pairing robust revenue growth with meaningful cost-saving efforts that have lifted the operating margin to 26.7%, a level of performance the group had not seen since 2014. Is SAP making a big comeback? We are inclined to think so.

Management, which had promised to double free cash flow year-on-year, is also delivering on that pledge, even though MarketScreener analysts' in-house calculations and adjustments come in slightly below the figures communicated.

The tangible elements, however, are that SAP is distributing €2.7bn in dividends, allocating €1.9bn to share buybacks, and directing €3.2bn to debt repayments - another record amount of capital returned to shareholders, even though buybacks at high valuations could raise some eyebrows.

To place this in a long-term perspective, the other central point - and not the least - is that the group's operating profit has doubled in ten years, while its enterprise value has tripled over this period, and the number of shares outstanding has remained more or less unchanged.

In every respect, the recent market sell-off is therefore no surprise. It is gradually bringing SAP back toward valuation multiples that are close to their historical average after the frankly delirious episode that began at the end of the pandemic and ran through the past year.