By Mauro Orru


SAP shares surged after the German business-software group posted a first-quarter operating profit above analysts' expectations and backed its full-year guidance, reassuring investors that the company is ready to navigate President Trump's unpredictable tariff policies.

The company behind the Concur travel and expense-management platform gained more than $15 billion in market value Wednesday after shares in Frankfurt climbed 10%, lifting SAP's market capitalization to 268.43 billion euros ($306.56 billion). SAP last month claimed the top spot as Europe's largest company by market value, dethroning Danish pharmaceutical giant Novo Nordisk.

Reporting on a non-IFRS basis, SAP said its operating profit grew to nearly 2.46 billion euros in the quarter from 1.53 billion euros a year earlier, generating a 27.2% operating margin. Analysts had forecast an operating profit of 2.22 billion euros and an operating margin of 24.5%, according to a non-IFRS consensus provided by the company.

SAP's higher-than-expected profit comes as the tech industry faces a reckoning with President Trump's tariffs. The company is relatively insulated from tariffs since it generates revenue from cloud and software services, but it is still vulnerable to economic uncertainty that could prompt some clients to cut spending, particularly those most exposed to tariffs like carmakers.

Finance chief Dominik Asam said in an interview that a trade war risked leading to a global recession that no company could go through unscathed. "It would be naive to believe that this would not affect us at all," he said.

However, he said a full-blown trade war wasn't SAP's current planning assumption and that he hoped for an agreement, especially between the U.S. and Europe, to preserve trading relations.

SAP has been moving away from software-license sales in favor of subscription-based cloud services, banking on a more profitable and predictable model based on recurring revenue. The company's share of more predictable revenue grew to 86% in the quarter from 84% a year earlier.

"It was a very painful journey," Asam said. "Before, we had an upfront licensing model, which was notoriously difficult to predict," he said, because customers could decide when to buy licenses, creating volatility for SAP. Now, with a subscription model, the company is able to dilute revenue.

Asam said there had been a very slight decline in revenue from platforms like Concur that are susceptible to how much clients are willing to spend on travel. However, total revenue in the quarter increased 11% at constant currencies to 9.01 billion euros. Sales from SAP's core cloud business jumped 26% to 4.99 billion euros.

Analysts had forecast total revenue of 9.10 billion euros and cloud revenue of 5.06 billion euros, according to the non-IFRS consensus.

SAP, like other European software companies, presents its figures as two sets of numbers. One set is based on the International Financial Reporting Standards--an international accounting method that seeks to provide a global reporting standard--though analysts and investors tend to follow SAP's non-IFRS numbers, which exclude restructuring expenses and acquisition-related charges.

For the year, SAP continues to expect non-IFRS operating profit of between 10.3 billion euros and 10.6 billion euros, cloud revenue ranging from 21.6 billion euros to 21.9 billion euros and free cash flow of roughly 8 billion euros.


Write to Mauro Orru at mauro.orru@wsj.com


(END) Dow Jones Newswires

04-23-25 0522ET