SAP lead­er­ship announced fourth-quar­ter and full-year finan­cial results for 2025, with CEO Chris­t­ian Klein report­ing strong prof­it growth and cash gen­er­a­tion while empha­siz­ing the trans­for­ma­tive poten­tial of AI and telling investors that ​“2026 will be the year AI deliv­ers enter­prise-scale return on invest­ment.” Despite top-line and prof­itabil­i­ty beats, SAP’s share price declined sharply on earn­ings day — in some mar­kets mark­ing the largest sin­gle-day drop since 2020 — as investors focused on near-term cloud back­log dynamics. 

Assess­ing the fourth-quar­ter per­for­mance, SAP lead­er­ship report­ed €9.7 bil­lion in total rev­enue, up 9%, and €5.6 bil­lion in cloud rev­enue, up 26%, while Cloud ERP Suite rev­enue reached €4.9 bil­lion, up 23%. Oper­at­ing prof­it for the quar­ter rose to €2.55 bil­lion, up 27%, while the share of more pre­dictable rev­enue increased by 3% to 84%. 

SAP’s own key met­ric of ​“cur­rent cloud back­log,” a close­ly watched mea­sure reflect­ing con­tract­ed future sales that SAP expects to book over the next 12 months, grew by 16% in the fourth quar­ter to €21.1 bil­lion and was up 25% at con­stant cur­ren­cies. Klein had ear­li­er said that SAP was tar­get­ing 26% growth and that 25% would be a ​“dis­ap­point­ment” dur­ing the pre­vi­ous earn­ings call in Octo­ber. He explained dur­ing the Q4 earn­ings call that large trans­for­ma­tion­al deals with cloud rev­enue ramps in future years — in addi­tion to sov­er­eign deals with ter­mi­na­tion claus­es — weighed cur­rent-cloud-back­log growth down by 1 per­cent­age point. 

The full year saw €36.8 bil­lion in total rev­enue, up 11%, and €21 bil­lion in cloud rev­enue, up 26%. Total cloud back­log now stands at €77.3 bil­lion, up 30%, which Klein tout­ed as a ​“record” fig­ure, with Cloud ERP Suite rev­enue also reach­ing €18.1 bil­lion, up 32%. For the full year, oper­at­ing cash flow was up 76% to €9.2 bil­lion and free cash flow increased by 95% to €8.2 billion.

Key take­aways from the Jan. 29 earn­ings call, investor tele­con­fer­ence, and Wall Street’s reaction: 

• Cloud rev­enue grew 26% year-over-year in Q4, con­tin­u­ing SAP’s shift toward recur­ring sub­scrip­tion rev­enue, while soft­ware license rev­enue fell 34%.
• Total rev­enue increased 9%, reflect­ing cloud growth off­set by declines in tra­di­tion­al soft­ware licenses.
• IFRS oper­at­ing prof­it rose 27%, dri­ven by cloud gross mar­gin expan­sion and dis­ci­plined cap­i­tal allocation.
• Free cash flow improved sharply, year over year, sup­port­ed by high­er oper­at­ing prof­it and dis­ci­plined cap­i­tal allocation.
• Total cloud back­log reached €77 bil­lion at year-end, up 30% at con­stant cur­ren­cies, set­ting a record for SAP.
• Near­ly half of SAP’s cloud order entry this year was for pub­lic cloud, with the rate of cus­tomers opt­ing for pub­lic cloud grow­ing five times faster than pri­vate cloud in 2025.
• More than two thirds of cloud orders closed in the fourth quar­ter includ­ed Busi­ness AI (up 20% from the pre­vi­ous quar­ter), as cus­tomer adop­tion of Joule grew nine­fold through­out 2025.
• AI and SAP Busi­ness Data Cloud fac­tored into many larg­er deals val­ued upward of €5 mil­lion; larg­er deals of this kind con­tributed a record 71% to SAP’s total cloud order entry in the fourth quar­ter, per CFO Dominik Asam.
• SAP shares fell more than 15% in ear­ly trad­ing, mark­ing their steep­est one-day decline since 2020, as investors indi­cat­ed dis­ap­point­ment in SAP’s slow­er-than-expect­ed cur­rent cloud back­log growth and slight­ly low­ered fore­cast for this met­ric in future quar­ters. Microsoft stock fell sim­i­lar­ly ear­li­er in the week after cloud growth slowed slight­ly, mir­ror­ing a sim­i­lar slump for ServiceNow.
• SAP report­ed €3.38 bil­lion in net liq­uid­i­ty and announced a two-year share buy­back pro­gram worth €10 billion. 

Cur­rent Cloud Back­log Sets ​‘Strong Foun­da­tion’ for 2027 

One of Wall Street’s most watched long-lead indi­ca­tors, total cloud back­log reached €77 bil­lion at year-end, up 30% at con­stant cur­ren­cies, set­ting a record for SAP and rein­forc­ing the strength and dura­tion of its con­tract­ed future rev­enue streams. 

“Q4 was a strong cloud quar­ter, with book­ings result­ing in 30% total cloud back­log growth to a record €77 bil­lion,” Klein said in an offi­cial state­ment. ​“The sig­nif­i­cant cur­rent cloud back­log growth in Q4 has laid a strong foun­da­tion for accel­er­at­ing total rev­enue growth through 2027.” 

Cur­rent cloud back­log, a near­er-term view of future con­tract­ed rev­enue, grew 25% at con­stant cur­ren­cies, a slight decel­er­a­tion com­pared with pri­or peri­ods but still a healthy expan­sion against a larg­er base.  Klein told ana­lysts that fourth-quar­ter book­ings per­for­mance exceed­ed SAP’s inter­nal expec­ta­tions but explained that a high­er share of very large trans­for­ma­tion deals includ­ed ​“more back-end-loaded ramps,” lim­it­ing their con­tri­bu­tion to the near-term CCB met­ric (which only encom­pass­es the next 12 months). Klein also cit­ed an increase in gov­ern­ment con­tracts, which are not fac­tored into such cal­cu­la­tions giv­en that such deals must by law include ter­mi­na­tion-for-con­ve­nience clauses. 

“While we even over­per­formed on book­ings and are very sat­is­fied with the out­come of Q4, the com­bi­na­tion of both effects result­ed in a one per­cent­age point dif­fer­ence to what we expect­ed,” Klein said. 

Look­ing to the future, Klein pro­ject­ed con­fi­dence in SAP’s poten­tial rev­enue accel­er­a­tion through 2027, cit­ing 30% growth in total cloud back­log. ​“In short, we have a sig­nif­i­cant amount of our future cloud rev­enue in the books,” he said. ​“Giv­en the ramps of the large deals over the next four years, we are increas­ing­ly build­ing a strong foun­da­tion for total rev­enue accel­er­a­tion through 2027.” 

CFO Dominik Asam said the CCB growth rate rep­re­sent­ed ​“a more pro­nounced slow­down than we had antic­i­pat­ed,” cit­ing longer nego­ti­a­tion and deploy­ment time­lines for sov­er­eign SaaS cus­tomers as well as larg­er-scale deals tak­ing longer to ramp up. How­ev­er, he added, these large deals account for a ​“sig­nif­i­cant amount of [SAP’s] future cloud rev­enue,” fur­ther con­tribut­ing to the company’s con­fi­dence in pre­dict­ing rev­enue accel­er­a­tion through 2027. 

SAP fore­cast con­tin­ued cloud growth of 23 – 25% in 2026 while slight­ly low­er­ing its guid­ance for cur­rent cloud back­log expan­sion. That said, the com­pa­ny expects total rev­enue growth to accel­er­ate through 2027 as more cus­tomers migrate to the cloud before sup­port dead­lines for on-premis­es solu­tions start to take effect at the end of 2027, and before extend­ed main­te­nance options expire in 2030. 

SAP’s Accel­er­at­ing Cloud Busi­ness Ben­e­fits from AI Boost 

Cloud growth con­tin­ues to pro­pel SAP for­ward, as the com­pa­ny fur­ther pur­sues its busi­ness trans­for­ma­tion toward cloud ser­vices’ recur­ring sub­scrip­tion rev­enue and away from on-premis­es soft­ware licens­es. Fourth-quar­ter cloud rev­enue increased by 26%, while Cloud ERP Suite rev­enue was up 23%. 

AI fea­tures were includ­ed in more than two-thirds of cloud orders booked in the fourth quar­ter, accord­ing to Klein, mark­ing a 20% increase from the pre­vi­ous quar­ter. 90% of the 50 largest deals closed dur­ing this peri­od includ­ed either AI or SAP Busi­ness Data Cloud. Klein also report­ed that the num­ber of cus­tomers using Joule, SAP’s gen­er­a­tive-AI copi­lot, grew nine­fold through­out 2025. Said Klein: 

The for­mu­la for gain­ing real val­ue from AI as an enter­prise is becom­ing clear. It’s impor­tant to reimag­ine first how AI will change exist­ing busi­ness mod­els and mis­sion-crit­i­cal busi­ness process­es. To boost process automa­tion and effi­cien­cy, AI agents must be embed­ded in busi­ness process­es and trained with con­text-rich busi­ness data that is not avail­able to large lan­guage mod­el providers. This is a unique com­bi­na­tion only SAP can deliv­er, because our busi­ness suite pro­vides us with access to the world’s largest vol­ume of busi­ness data, and we direct­ly infuse our agen­tic AI lay­er in the most mis­sion-crit­i­cal busi­ness process­es of a company. 

Dur­ing the earn­ings call and sub­se­quent investor tele­con­fer­ence, Klein sought to down­play some investors’ con­cerns that, amid the emer­gence of AI pro­gram­ming tools, cus­tomers might seek to cre­ate alter­na­tives to enter­prise-grade appli­ca­tions like those made and sold by SAP. ​“Many cus­tomers have seen that an LLM alone is not enough,” he said. ​“They need mod­ules, busi­ness data, and con­text to build high-val­ue AI use cas­es and derive busi­ness value.” 

Key Q4 Cus­tomer Wins Include Siemens, adi­das, L’Oréal, Snowflake 

In the fourth quar­ter, Siemens lever­aged Joule for Con­sul­tants and report­ed sav­ing its con­sul­tants around 25% week­ly work­ing time. Addi­tion­al Busi­ness AI cus­tomers of note includ­ed Tech Mahin­dra, Mon­delēz, Kirin, and Sun Chem­i­cal; Klein sin­gled out Ger­man health­care com­pa­ny Fre­se­nius and the Bosch Group as Busi­ness AI cus­tomers aim­ing to ​“sus­tain­ably improve patient care” and ​“boost inno­va­tion across all four of its busi­ness sec­tors,” respectively. 

Cus­tomers that select­ed RISE with SAP in the fourth quar­ter includ­ed adi­das, L’Oréal, H&M Group, Deloitte, Pirelli, RTX, Nokia, Chae­bol, and the U.S. Navy. Toy­ota and Daim­ler Truck expand­ed their exist­ing invest­ments in RISE, while Lock­heed Mar­tin went live on RISE in one of its busi­ness areas and will next adopt SAP’s human cap­i­tal man­age­ment solutions. 

SAP Sig­navio wins includ­ed KPMG, Snowflake, and large Ger­man retail­er Müller. Klein also point­ed to SAP’s suc­cess in the pub­lic sec­tor as evi­dence of its con­tin­ued via­bil­i­ty, not­ing the close of a new One­Gov agree­ment with the U.S. Gen­er­al Ser­vices Admin­is­tra­tion and with HM Rev­enue and Cus­toms (HMRC) in the U.K. 

Even out­side of these pub­lic-sec­tor deals, Klein indi­cat­ed that Q4 saw an over­all uptick in large deals, assess­ing that cus­tomers are increas­ing­ly opt­ing to build up SAP invest­ments across line-of-busi­ness areas such as sup­ply chain, HR, CX, and pro­cure­ment, to gain matu­ri­ty in SAP Busi­ness Suite writ large: 

The vast major­i­ty of our cloud cus­tomers are expand­ing their SAP foot­print across the SAP Busi­ness Suite. They now clear­ly see the val­ue of best-of-suite over best-of-fleet, espe­cial­ly in the age of AI. So they lever­age the best-of-suite not only to run their busi­ness process­es end-to-end, but they also seek a har­mo­nized data plat­form that pro­vides the foun­da­tion for high-val­ue busi­ness AI. As a result, in Q4 alone, almost two-third of our deals exceed­ing €1 mil­lion involved four or more lines of busi­ness, a remark­able increase of 25 per­cent­age points.

Ana­lysts Respond to the Earn­ings 

In the ana­lyst com­mu­ni­ty, SAP’s finan­cial results were met pos­i­tive­ly, while Wall Street’s response was gen­er­al­ly seen as an over­re­ac­tion to the slight­ly slowed growth SAP report­ed in one key met­ric despite beat­ing esti­mates in many others. 

“10 years ago, SAP was held to this dou­ble stan­dard of need­ing to be prof­itable like an on-premis­es com­pa­ny while grow­ing like a com­pa­ny, and today in 2026 [SAP] has to grow like NVIDIA — like a hard­ware AI com­pa­ny — while mak­ing the num­bers of a cloud com­pa­ny,” said Joshua Green­baum, Prin­ci­pal at Enter­prise Appli­ca­tions Con­sult­ing. ​“Wall Street is com­plete­ly dis­con­nect­ed from the real­i­ty of how enter­prise soft­ware works.” 

Added Jon Reed, Co-Founder of Dig­i­nom­i­ca: ​“Pub­lic cloud rev­enues are surg­ing right now, for SAP, post­ing 5x growth ver­sus pri­vate; it’s out­pac­ing the pri­vate-cloud growth, and that — to me — is the best news for SAP, and the biggest miss Wall Street is mak­ing here. The pub­lic-cloud sto­ry is a bet­ter sto­ry all the way around for cus­tomers, in terms of the abil­i­ty to absorb new func­tion­al­i­ty, stay cur­rent, inte­grate with oth­er soft­ware, and have that end-to-end expe­ri­ence with less friction.” 

SAP field­ed ques­tions dur­ing the investor tele­con­fer­ence around the poten­tial threat that advances in AI pro­gram­ming pos­es to enter­prise SaaS offer­ings. Klein respond­ed by point­ing to SAP’s dom­i­nant posi­tion in cre­at­ing a busi­ness data foun­da­tion as evi­dence that LLMs alone can­not dri­ve val­ue for cus­tomers. ​“We are win­ning deals because of AI; we are not los­ing deals because of AI,” he said. 

“Ser­vi­ceNow recent­ly took a sim­i­lar type of pound­ing from the mar­ket, and Microsoft’s stock went down recent­ly — and this is where I get frus­trat­ed with Wall Street,” Reed not­ed. ​“They’re try­ing to con­trast the growth of AI with the growth of soft­ware, and they’re buy­ing into the idea that soft­ware is threat­ened by AI, but investors don’t under­stand AI well enough to be mak­ing those sorts of assessments.” 

Green­baum not­ed that the focus on a near-miss in cur­rent cloud back­log growth came at the expense of a deep­er dis­cus­sion on the earn­ings call about the busi­ness val­ue SAP can dri­ve more over­ar­ch­ing­ly for enter­prise cus­tomers. ​“Whether that’s sup­ply chain logis­tics, pro­cure­ment, or ware­house, SAP has got some great new prod­ucts: Finan­cial Intel­li­gence, Sup­pli­er Intel­li­gence, Tau­lia, Sup­ply Chain Col­lab­o­ra­tion, and Busi­ness Net­work,” he said. ​“This absolute imper­a­tive the busi­ness world is fac­ing — to deal with chaos and com­plex­i­ty — is some­thing SAP does a real­ly good job of help­ing cus­tomers solve.”