SAP - Nobody likes SAP, or maybe as an investment?

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SAP SE is a German multinational software company founded in 1972 in Walldorf, Baden-Württemberg. Originally known as Systemanalyse und Programmentwicklung (System Analysis and Program Development), the company is now the world’s leading software manufacturer specializing in Enterprise Resource Planning (ERP). The company’s story began when five IBM engineers decided to start their own company after IBM obtained the rights to Scientific Data Systems’ software.

SAP’s first customer was a German subsidiary of Imperial Chemical Industries, and the company developed software for them primarily for payroll and accounting. Unlike IBM, SAP stored data directly in an electronic system, which enabled real-time data processing without mechanical punch cards.

The company’s growth was rapid. In 1981, the name was changed to the acronym Systeme, Anwendungen und Produkte in der Datenverarbeitung (Systems, Applications, and Products in Data Processing), or SAP.

SAP is part of the DAX and Euro Stoxx 50 stock indices and is the largest non-American software company by revenue. SAP is also the world’s third-largest publicly traded software company by revenue. The company is the largest German company by market capitalization.

SAP’s product range covers a wide variety of software, such as ERP systems, Customer Relationship Management (CRM), Human Capital Management (HCM), Product Lifecycle Management (PLM), and Supply Chain Management (SCM). Additionally, SAP offers cloud-based systems and its own databases, such as SAP HANA, as well as programming environments like SAP AppGyver. With these products, SAP helps companies manage their business operations and customer relationships more efficiently.

The company has regional offices in 180 countries and more than 111,961 employees.

Investor’s Perspective

SAP is an established ruler with a strong financial position, but its products are—at least for a large group of people—a fun subject for memes. In my own bubble, it’s considered somewhat poor, but on the other hand, the only option for various reasons. The company has managed to adapt to the changing market situation and transition to cloud services. This has brought growth opportunities, but also increased competition.

SAP’s strengths include:

  • SAP is well-known and is the market leader.
  • The company has a broad customer base across different industries, which reduces risk.
  • SAP consistently generates positive cash flow, which supports dividend policy (@Mirko_Sampo_IR, @Pohjolan_Eka and @Verneri_Pulkkinen) and investments.

Points to consider:

  • The market is competitive, and the threat of new players exists.
  • Yes, there is some truth to those SAP memes! :rage: (how long can SAP stay like that :frowning: )
  • Global fluctuations can affect companies’ willingness to invest and SAP’s business in general.
  • SAP’s ability to stay up to date with technological developments is important for maintaining competitiveness… how about those meme-like features? :frowning:
  • Is the stock expensive…?

SAP is an established company that offers stability and growth opportunities for investors. I wonder if some human-friendly system will eventually replace this “engineer monster”? :frowning:

Reading Material

2023
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https://x.com/Quality_stocksA/status/1816790037956112461

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Q2/2024

https://x.com/CataPaul2/status/1815851628995428855

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Inderesin kahvihuone (Osa 9)
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An SAP employee mentioned that an IBM employee proposed the idea to IBM, but management kicked the eccentric inventor out of the meeting room. The inventor got some friends to join him, and so 5 employees resigned and started their own business. And the rest is history.

Oh, I should also add that SAP’s P/E is nearing a hundred. People believe there’s gold at the edge of the cloud.

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It looks like SAP’s results are coming out today.

https://x.com/ConsensusGurus/status/1847639560093614501
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https://x.com/PiQSuite/status/1848221767078494470
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And there they are. :slight_smile:

SAP SE’s sales grew 25 percent in the third quarter as the company aims to shift customers from traditional on-premise systems to cloud services. Cloud sales rose to 4.35 billion euros in a year, which was nearly in line with analyst forecasts.

SAP has succeeded despite the challenging economic situation, as more and more customers are moving to cloud services where SAP is able to offer AI-based business solutions. CEO Christian Klein aims to further accelerate the transformation with an AI strategy. (Note from Alokas: but if you click slightly wrong in the program once, it crashes easily and doesn’t work like other programs)

The company’s management has changed frequently, and the company is also facing an investigation in the United States into whether it may have engaged in price-fixing with a reseller.

https://x.com/EconomyApp/status/1848461212155097271

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Too little is said about European wonders; based on my own experiences, SAP is indeed a marvel, but it has also been one in a positive way as an investment.

Olli also spent about seven minutes going through it in his earnings week summary, and the video should start at exactly the right spot once you click it open:

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SAP’s business has undergone a significant transformation in recent years. The company’s revenue has increasingly shifted from traditional software to cloud services; in just five years, cloud services have grown to account for half of SAP’s total revenue.

SAP’s CEO has emphasized that customers want to simplify their operations and leverage best practices. Cloud services offer companies the opportunity to streamline their operations and reduce costs.

While sales of traditional software continue, the growth of cloud services has been remarkable. According to SAP, this trend will continue in the future as companies increasingly seek flexible and scalable solutions.

https://x.com/Quartr_App/status/1853908093806993577

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A two-month-old review of SAP as an investment, luckily it’s not a review from a user’s perspective. :cowboy_hat_face:

https://x.com/DutchInvestors/status/1857167084742144401
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Here’s a quick analysis of SAP, including, for example, presentations of figures. :slight_smile:

https://x.com/towardsfinance/status/1881439481045348366
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TD Cowen upgraded SAP’s stock recommendation to “Buy” and its target price to $305.

Analysts believe in SAP’s growth and margin improvement until 2027, especially due to demand for Cloud ERP and the role of AI.

SAP also benefits from the phasing out of legacy products and new AI-powered services. The Q4 report is expected to show significant cloud services growth.

This article is not behind a paywall.

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SAP just published its results. :slight_smile:

JPMorgan reported that SAP announced strong results, particularly regarding cloud services growth and its predictive order backlog, which exceeded expectations.

SAP raised its 2025 targets, indicating continued strong growth. Analysts expect further discussion and concrete details on cloud services growth, AI development, and profitability outlooks.

https://x.com/Quality_stocksA/status/1884147248000385413
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Kurssien ja niiden muutosten kyselyt, kauhistelut ja hehkuttelut (Osa 3)
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SAP’s Q1 results showed strong growth in cloud services, whose order backlog grew significantly.

Total revenue and operating profit also grew by double digits, and the company’s management emphasized the importance of cloud services and AI-powered solutions in an uncertain market situation, while keeping cost discipline and the “protection” :smiley: of profit at the core.

https://x.com/Earnings_Time/status/1914777105084432501

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A single highlight from SAP’s performance. :slight_smile:

https://x.com/finchat_io/status/1914780253693862113

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SAP, which produces torture software, has succeeded in its cloudification, as their cloud torture operations have grown from a quarter to a half in five years.

https://x.com/Quartr_App/status/1915044339409207495

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SAP CEO Christian Klein interviewed by Nicolai Tangen of the Norwegian Oil Fund (duration 57 min)

Tangen mentions that the fund’s SAP ownership is approximately 20,000 NOK/1700€ per Norwegian.

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This would fit into a more general thread as well.

The tweet thread below discusses how SAP is a good example of an innovator’s “problem” – when the old business model generates strong results and embarking on change feels illogical. Moving to the cloud was mandatory, but it still led to a drop in stock price and internal friction.

Strategy might look good on slides, but execution is often painful.

The thread states how a truly renewing company needs a clear direction, support from its own personnel, and the ability to withstand the initial shock. Ideas bought from outside don’t carry far – change must come from within.

https://x.com/tropicalvalue/status/1920803820738682934

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Rest of the tweet thread

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Here’s a fresh and concise overview of SAP. :slight_smile:

https://x.com/towardsfinance/status/1927097438780748163
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SAP’s results were okay, cloud services drove good growth. Cloud-based ERP solutions and order backlog grew significantly, in addition, the company’s operating profit improved clearly and results exceeded expectations. According to SAP, customer demand has remained strong and the company has succeeded in keeping costs under control.

According to CEO Christian Klein, SAP’s AI solutions, such as Joule and Business Data Cloud, strengthen the company’s product portfolio and readiness for a constantly evolving business world. CFO Dominik Asam, in turn, emphasized a strong second quarter but remains cautiously optimistic about the rest of the year due to geopolitical risks.

https://x.com/search?q=%24SAP&src=typed_query&f=top
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Company Materials

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Here’s another story about SAP and its results.

SAP reported in the second quarter of the beginning of the year that deals progressed slower than normal, especially due to the uncertain US customs policy. Customers postponed decisions, but on the other hand, a new trade agreement with Japan brings cautious optimism for the rest of the year, according to the company. The company, in any case, reiterated its full-year outlook, even though the operating environment is exceptionally unstable at the moment.

The story also states that SAP’s results fell slightly short of expectations, but demand for cloud services remained strong. The company has focused on artificial intelligence and cloud migration and has gained significant new customers. A negative factor was currency fluctuations, especially the weak dollar, which nevertheless weighed on the results because a large part of SAP’s revenue comes from the United States.

https://www.cnbc.com/2025/07/23/germanys-sap-flags-us-trade-hit-but-says-japan-deal-gives-hope.html

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The following announcement is already news: SAP has launched an expanded Sovereign Cloud solution that strengthens Europe’s digital sovereignty and also supports AI innovations.

Customers can choose from flexible deployment models that ensure data security and compliance with regulatory requirements. The company’s investment seems quite substantial, meaning SAP is investing over 20 billion euros in the region’s digital resilience.

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SAP’s stock rose as the company announced a collaboration with OpenAI to develop an AI service aimed at the German public sector.

“OpenAI for Germany” combines SAP’s application expertise and OpenAI’s technology, with the goal of improving the daily work of public administration employees securely and with data sovereignty in mind. Implementation is planned for next year.

The initiative supports Germany’s national AI ambitions, which target AI-driven value creation of up to 10% of GDP by 2030. SAP recently announced an investment of more than €20 billion to strengthen Germany’s digital sovereignty.

https://www.investing.com/news/stock-market-news/sap-stock-rises-after-openai-partnership-for-german-public-sector-93CH-4253216

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