🧠 Food for thought

Implications, context, and why it matters.

SAP had a strong quarter, with a few caveats

• SAP posted solid cloud revenue, though it said growth got help from “quarter-specific effects” and should slow in the second quarter 1.
• Profit rose 17%. That gain also came from a 135 million euros (US$158 million) drop in share-based compensation expense. It stemmed from SAP’s share-price decline during the quarter, said Dominik Asam, CFO of SAP 2.
• Free cash flow fell 9% from a year earlier after a 408 million euros (US$478 million) payment tied to the Teradata settlement. Teradata sells data analytics software and had sued SAP 1.
• SAP’s 2026 outlook assumes the near-term consolidation of Reltio, a data management software company SAP is buying 1.

SAP sees AI as a way to move customers and lift margins

• SAP cast AI as a way to help customers leave older systems for newer cloud products, which could support cloud revenue.
• Running AI across mission-critical business processes needs connected data and process context. That is harder in heavily customized legacy setups, which helps explain SAP’s push toward cloud products 2.
• SAP also tied AI to better margins. Management said AI has lifted internal software developer productivity by more than 30% and improved customer support efficiency, which should let profit rise faster than costs 2.
• Management expects software pricing to move toward usage over time, though it does not see a shift on the scale of the move from on-premises software to cloud software 2.