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.”