Stock Spotlight: SAP SE (NYSE:SAP)

About SAP SE

SAP SE, together with its subsidiaries, provides enterprise application and business solutions worldwide. It offers SAP S/4HANA that provides software capabilities for finance, risk and project management, procurement, manufacturing, supply chain and asset management, and research and development; SAP SuccessFactors solutions for human resources, including HR, time, payroll, talent and employee experience management, and analytics and planning; and spend management solutions that covers direct and indirect spend, travel and expense, and external workforce management. The company also provides SAP customer experience solutions; SAP Business Technology platform that enables customers and partners to build, integrate, and automate applications; and SAP Business Network, a business-to-business collaboration platform that helps digitalize key business processes across the supply chain and enables communication between trading partners. In addition, it offers SAP Signavio to help customers to discover, analyze, and understand their business process operations; industry solutions that provides customers and partners with industry-specific solutions; and SAP LeanIX to visualize their as-is enterprise architecture, assess interdependencies and the potential impact of IT modernization, and manage the transition toward the target landscape with established practices and a detailed roadmap. Further, the company provides WalkMe to execute workflows across various number of applications; SAP Enable Now, which offers e-learning content embedded in SAP workflows; Taulia solutions for working capital management to help businesses create and deliver the right cash flow strategy, and the flexibility to adjust it to meet liquidity challenges; and sustainability solutions and services. Additionally, it provides services and support solutions. SAP SE was founded in 1972 and is headquartered in Walldorf, Germany.

Key Stats

Source: Yahoo Finance, ASX. Data as of 30/07/25.

Growth Potential

• Leading market share positions in on-premise enterprise resources planning (ERP) and on-premise customer relationship management (CRM) markets.
• End-to-end agentic-AI provides competitive advantage and gives pricing power.
• Rapid growth in TAM (expected to grow at +17% CAGR 2025-2028 from ~$450bn as of 2025). 
• Support revenues and Cloud subscriptions provide recurring revenue (management remains optimistic of potential to drive a >5x multiplier on the €11bn of maintenance revenue over time), which gives SAP a defensive profile. 
• RISE with SAP is a platform flywheel, offering bundled cloud migrations, support, and AI integrations and as customers migrate to cloud-native infrastructure, the company benefits from increase in contract duration, stickiness and upsell potential (as customers convert from on-premise to cloud the company typically sees a 2-3x pricing uplift, with potential for up to 5x through cross-selling and expansion). 
• Strong cashflow profile with attractive capital management policy. 

Key Risks

• Slower take-up for HANA and S/4HANA. 
• Deteriorating sentiment if the global economy and IT spending weakens. 
• Market share loss in software revenue driven by cloud migration.
• Aggressive M&A with risk of overpaying.
•  Additional opex spending dampening margin expansion.
• Competition from other established players like Microsoft, Salesforce and Oracle.