SAP's Trading Volume Drops 47.81% Ranking 314th Despite Cloud Revenue Surge

On June 27, 2025, SAP's trading volume reached €294 million, a 47.81% decrease from the previous day, ranking 314th in the day's market activity. SAP's stock price rose by 1.88%, marking the second consecutive day of gains, with a total increase of 2.66% over the past two days.

SAP is undergoing a significant transformation, shifting its focus from traditional on-premise software to a cloud-based subscription model. This strategic move has resulted in cloud revenue accounting for 86% of total revenue, with margins expanding to 75% in the first quarter of 2025. This transition is part of SAP's broader goal to dominate the $600 billion enterprise software market by 2027, leveraging AI-driven innovation and customer retention.

SAP's cloud transition has been marked by significant cost-cutting measures, including the elimination of 10,000 jobs, which has reduced costs by €3.2 billion. This restructuring has allowed the company to reallocate resources to high-margin cloud initiatives. In the first quarter of 2025, cloud revenue surged by 26% to €4.99 billion, with the Cloud ERP Suite growing by 34% to €4.25 billion. This suite, which integrates financials, supply chain, and customer relationship management (CRM), now accounts for 85% of cloud revenue, highlighting SAP's strength in integrated enterprise solutions.

SAP's cloud backlog, a measure of deferred revenue, has increased to €18.2 billion, up 29% year-on-year, indicating sustained demand. This backlog is crucial as it flows through the income statement with minimal incremental costs, driving margin expansion. SAP's non-IFRS operating profit jumped 58% in the first quarter to €2.5 billion, a direct result of this structural shift.

SAP's next frontier is AI, with its Joule platform now boasting over 1,600 skills and 400 AI use cases. This platform is being integrated into its ERP and CRM tools to automate workflows, predict supply chain disruptions, and personalize customer experiences. The Business Data Cloud, launched in early 2025, unifies SAP and third-party data into a semantic layer, creating a “single source of truth” for enterprises. This integration has already led to early wins, such as reducing customer support resolution times by 40% via AI-driven self-service.

Despite its strong cloud metrics, SAP's valuation remains a puzzle. At a forward P/E of 15x, it trades at a discount compared to peers like Microsoft and Oracle. This is partly due to lingering concerns about its on-premise legacy, with nearly half its customers still on outdated systems. However, SAP's strategy to push these customers to cloud contracts, offering 2–5x revenue uplift, is a long-term tailwind. The company's free cash flow, expected to hit €8.0 billion by 2025, further supports its valuation. With a dividend yield of 1.2% and a €5 billion share buyback program, SAP is returning capital to investors while scaling its cloud business.