- Zach Frye
- Reading Time: 4 minutes
Unpacking SAP’s Q1 Earnings and the Implications for Customer Cloud Evaluations
SAP announced another strong quarter despite turbulent macroeconomic conditions and growing uncertainty around tariffs. More notably for customers, SAP continued expanding its Cloud Suite of services, further complicating Cloud Transformation evaluations.
Success with increased RISE adoption, the rollout of additional Cloud packages, and looming Perpetual Maintenance cliffs only strengthen SAP’s leverage. This makes the development and execution of an integrated evaluation approach more critical than ever. Below are the key takeaways organizations must consider when evolving their SAP strategy.
SAP’s Strong Q1 Financial Performance
SAP’s “AI-First” and “Suite-First” strategy—with RISE at the core—is clearly resonating in the market, as shown by its strong financial results:
- 29% increase in current Cloud backlog
- 27% increase in Cloud revenue
- 11% increase in total revenue / Cloud revenue
- 2% increase in predictable revenue (now at 86%)
SAP CEO Christian Klein stated that SAP’s “AI-powered portfolio is amplifying cloud momentum”—a statement validated by these metrics.
RISE Adoption Growth in EMEA and APJ
RISE adoption continues to rise, with over 1,400 new customers in the past year (a 26% increase) and over 6,800 global customers in total. EMEA and APJ drove most of the Q1 growth, with notable wins in the automotive sector, including Hyundai, Kia, and Mazda.
In contrast, SAP continues to see slower RISE adoption in the Americas. This aligns with feedback from North American executives who are concerned about RISE’s operating model and reluctant to cede further operational control to SAP. Customers also cite inflexible infrastructure and overlapping functionality across the growing array of RISE commercial packages, product suites, and services. This is likely a key indicator behind SAP’s recent flurry of executive changes.
Leadership Stability in Question: More Changes to Come?
The Americas’ underperformance may explain SAP’s recent leadership shake-ups, though these were notably absent from the Q1 earnings report and investor call.
Earlier this year, SAP announced that Jan Gilg would lead the Americas, and Manos Raptopoulos would oversee EMEA, MEE, and APAC. Since then, however, several key leaders in North America have exited, including:
- Lloyd Adams, former President of SAP North America (March 2025)
- Andy Canham, former Managing Director of Canada (April 2025)
These changes have disrupted SAP’s customer advocacy structure and slowed RISE adoption in the region. Although Christian Klein was asked about these developments, he did not address them during the Q&A session, nor were they mentioned in the published report.
This silence suggests more changes could be coming as Gilg enters his first full quarter in charge. The next several months will be pivotal—not only for monitoring impacts on account support but also for seizing likely shifts in sales tactics and incentives aimed at boosting RISE adoption in the Americas.
SAP’s “Suite-First” Strategy Brings More Complexity, Not Less
In our recent SAP webinar, we discussed the growing challenges of evaluating SAP Cloud Transformation options. Since then, SAP has announced more Cloud Suite offerings under the “Suite-First” umbrella, including:
- Business Data Cloud (BDC)
- Flexible Cloud Addendum
- Cloud ERP Private package
Keeping pace with SAP’s rapid expansion of product suites and commercial offerings is increasingly difficult. While these were referenced in the earnings call, SAP did not provide enough detail for customers to fully evaluate commercial and operational impacts—critical for building sound business cases.
At February’s “Business Unleashed” event, SAP introduced a revamped Business Suite designed to integrate AI, data, and more efficient processes. BDC will replace Datasphere as the suite’s foundation.
Klein acknowledged that BDC will carry a 10–20% premium over current Datasphere pricing. He justified the increase by citing the value added from SAP’s new partnership with Databricks, which will provide data platform services to enable seamless integration of SAP and non-SAP data. The program received significant attention during the investor Q&A, signaling its importance to SAP’s future strategy.
Separately, SAP recently announced a new Cloud ERP Private package, though no commercial or technical details were provided during the earnings call. We expect this package will target on-prem customers, offering enhanced business applications and tools to accelerate transformation.
Klein also briefly mentioned a new Flexible Cloud Addendum, but details were minimal. Our review suggests that it includes a “Public Cloud Exchange Option,” allowing customers to switch from private to public cloud during the contract term.
Customers Maintenance Support Concerns Were Unanswered
SAP did not address one of the most pressing issues for many customers: the sunsetting of Perpetual Maintenance and software.
Many organizations that have not yet moved to RISE are facing quickly approaching Mainstream Maintenance deadlines for ECC and S/4 Perpetual licenses. SAP is leveraging this as a sales tactic to push customers toward RISE and AI adoption.
It’s crucial for customers to fully understand their support options and the associated financial and technical impacts. This knowledge ensures that cloud transformation decisions are made on your terms—not SAP’s.
Preparing for Sapphire 2025
SAP’s annual Sapphire conference is around the corner. Organizations should prepare by identifying the most relevant questions and challenges to raise with SAP representatives.
We expect SAP to showcase AI and BDC success stories and to announce additional AI-focused innovations—teased by Klein during the earnings call.
Be sure to press SAP on:
- Support options and timelines
- Clarifying the value and distinctions between its expanding Cloud Suite offerings
- Commercial and relationship incentives available to support your cloud transformation journey
As SAP’s offerings continue to evolve, customers must remain vigilant, informed, and proactive. Understanding the implications of SAP’s earnings, product updates, and leadership changes is key to navigating the complex Cloud Transformation landscape.
