SAP SE engages in the provision of enterprise application software and software-related services. It operates through the following segments: Applications, Technology, and Support; Qualtrics; and Services. The Applications, Technology, and Services segment includes sale of software licenses, support offerings, and cloud subscriptions. The Qualtrics segment sells experience management cloud solutions. The Services segment offers professional services, premium support services, implementation services for software products, and education services on the use of products. The company was founded by Hasso Plattner, Klaus Tschira, Claus Wellenreuther, Dietmar Hopp, and Hans-Werner Hector on April 1, 1972 and is headquartered in Walldorf, Germany.
COMMENTARY
Market Review
Global equities were volatile in April, beginning the month with a sharp sell-off following the announcement of sweeping US tariffs. Markets recovered strongly into month-end as geopolitical concerns eased and investor focus returned to earnings and macro fundamentals. Growth stocks outperformed value by a wide margin, reversing March’s sharp rotation and supporting a more favourable backdrop for the Fund’s positioning. A weaker US dollar detracted from performance in Australian dollar terms.
Inflation trends continued to moderate, particularly in the US, where price pressures eased and consumer spending remained firm. A weaker US dollar and softer commodity prices further supported financial conditions. European data was more mixed, with business surveys pointing to slower growth and retail sales losing momentum. In China, economic indicators improved modestly, though consumption remained subdued amid ongoing weakness in the property sector.
Against this backdrop, Axiom continues to focus on dynamic growth businesses with upward earnings revisions. As broad economic growth moderates, the team expects market leadership to shift further towards companies with strong fundamentals, pricing power, and earnings resilience rather than macro-driven cyclicals.
Portfolio Commentary
The Fund outperformed its benchmark in April, supported by strong stock selection in communication services, health care, and industrials. Conversely, financials and consumer staples detracted from relative performance.
Netflix, a global streaming provider, contributed positively after reporting strong first-quarter results and raising full-year guidance. ServiceNow, a US-based enterprise software company, beat expectations with robust forward metrics and encouraging commentary on AI platform adoption. SAP, a German enterprise software provider, rallied on stronger-than-expected cloud backlog and conservative guidance that positions it for future upgrades.
On the negative side, Meta Platforms, a US-based digital advertising and social media company, declined on concerns around reduced advertising budgets from China-based retailers, which proved overstated following solid quarterly results. Amazon, a global e-commerce and cloud provider, also detracted on tariff and budget concerns, despite reporting solid retail results and steady AWS growth. Alibaba, a Chinese technology group, underperformed amid rising trade tensions.
A new position was initiated in Tradeweb Markets, a global financial technology firm that operates electronic marketplaces for trading fixed income, ETFs, derivatives, and other instruments. Axiom sees strong growth potential as electronic trading adoption increases, particularly in less liquid markets. The company is also well-positioned to benefit from structural changes in market infrastructure and growing demand for efficient, transparent execution during periods of heightened volatility. Residual positions in Isetan Mitsukoshi and Vertiv were exited after modest rebounds.
Stock-level changes included net additions to Deutsche Boerse, a European market infrastructure provider, Spotify, a global audio streaming platform, and TJX, a leading US off-price retailer. The position in Deutsche Boerse was increased following its recent initiation. Spotify was added opportunistically amid market volatility, with recent pricing changes and potential regulatory shifts underappreciated by the market. TJX was increased based on weekly credit card data indicating strong sales momentum and the potential for further upside as consumers shift to more affordable retailers in response to tariff uncertainty.
Positions in Meta Platforms, Amazon, and Chipotle, a US fast-casual restaurant chain, were trimmed to manage risk. Chipotle was reduced following softer sales comps, though the long-term investment case remains intact.
No positions received MSCI ESG rating changes during the month, and there were no ESG-specific engagements. However, several management calls are scheduled in the months ahead as part of ongoing stewardship efforts.