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SAP's Q3 Earnings Beat on Solid Top-Line Growth, 2025 Outlook Revised
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Key Takeaways
SAP's Q3 non-IFRS EPS rose 29% year over year to 1.59 euros, driven by strong cloud and AI demand.
Cloud revenues climbed 22% to 5.29B euros, with Cloud ERP Suite up 26% and backlog up 23%.
SAP raised its 2025 profit and cash flow outlook, with free cash flow expected up to 8.2B euros.
SAP SE ((SAP - Free Report) ) reported third-quarter 2025 non-IFRS earnings of €1.59 ($1.86) per share, climbing 29% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.69.
Driven by robust cloud growth, disciplined cost control and expanding AI capabilities, SAP reported total revenues on a non-IFRS basis of €9.08 billion ($10.6 billion), representing a 7% year-over-year increase (up 11% at constant currency or cc). The Zacks Consensus Estimate was pegged at $10.56 billion.
The strong performance reflects not only heightened demand but also increased customer adoption of SAP’s Business Suite, Business Data Cloud, AI-enabled solutions and integrated platform innovations. Management noted strong adoption across SAP’s portfolio and a robust fourth-quarter pipeline that supports its aspirations for accelerating total revenue growth through 2027 against broader macroeconomic swings.
Cloud First Strategy Drives Growth
The current cloud backlog — a key indicator of go-to-market success in cloud business — surged 23% (up 27% at cc) to €18.8 billion.
On a non-IFRS basis, the Cloud and software segment (88.3% of total revenues) registered revenues of €8.02 billion, rising 8% year over year (up 12% at cc).
Cloud revenues were €5.29 billion, up 22% year over year (up 27% at cc) on a non-IFRS basis, powered by solid 26% growth (up 31% at cc) in Cloud ERP Suite revenues, reaching €4.59 billion. Software licenses and support revenues totaled €2.72 billion, which decreased 11% (down 9% at cc) year over year. Non-IFRS software license revenues of €0.16 billion declined 43% (down 42% at cc).
Services business (11.7% of total revenues) posted revenues of €1.06 billion, up 2% year over year (up 6% at cc).
Expanding Clientele Bodes Well
In the third quarter, organizations worldwide continued to adopt the “RISE with SAP” program to support their comprehensive business transformations. Notable adopters included Alphabet, ANA HOLDINGS, BarmeniaGothaer, Computacenter, DXC Technology, Endress+Hauser, Ericsson, Jack Wolfskin, Japan Aviation Electronics Industry, JK Tyre & Industries, JYSK, The Magnum Ice Cream Company, Maple Leaf Foods, NIPPON EXPRESS HOLDINGS, Olam Food Ingredients, Otto Aerospace, STIHL, Takeda Pharmaceuticals, Tapestry, Vale Base Metals and Zalaris.
In the reported quarter, BMW, City of Charlottesville, The Clorox Company, Country Fire Authority, La Trobe University, Nestlé, NYK Line and PwC went live on SAP S/4HANA Cloud.
“GROW with SAP” was implemented by ABB, ArborGen, Kodiak AI, Konecta, Noventa, Perplexity and VidaVeg.
SAP secured significant customer wins across its solution portfolio, with new or expanded engagements from leading organizations such as BREITLING, Canton of Bern, Derbyshire County Council, Grupo Boticário, Panasonic, Schwarz Group, Sysmex Corporation, Tata Consultancy Services and Volkswagen Mexico.
Major global brands across various industries, including Aeropuertos Argentina, The Australian Postal Corporation, HiPP, Landis+Gyr and Rieter, chose SAP’s solutions.
SAP’s cloud revenue growth was especially strong in the APJ and EMEA regions and robust in the Americas, with standout performances from Brazil, Germany, France, India, Italy and South Korea.
Margin Details
Non-IFRS gross profit of €6.7 billion increased 7% from the year-ago quarter (up 11% at cc).
Non-IFRS Cloud gross profit increased 24% year over year to €3.97 billion (up 28% at cc). Non-IFRS cloud gross margin rose 1.3 percentage points to 75.1%.
SAP's non-IFRS operating profit rose 14% (up 19% at cc) to €2.57 billion, with a margin increase to 28.3%.
Balance Sheet & Cash Flow
As of Sept. 30, 2025, SAP had cash and cash equivalents of €9.9 billion compared with €7.94 billion as of June 30.
In the third quarter, the company generated operating cash of €1.5 billion, up 7% year over year. Free cash flow, a key metric of operational strength, rose 5% to €1.27 billion during the quarter.
SAP also concluded its €5 billion share repurchase program, initiated in 2023. By Aug. 13, 2025, the company had purchased 26,010,591 shares at an average price of €188.24, amounting to €4.9 billion in total.
Additionally, SAP initiated a company-wide transformation program in January 2024 to enhance operational scalability and focus on key strategic growth areas. The program concluded in the first quarter of 2025, with total expenses of about €3.2 billion. Restructuring payouts included €2.5 billion in 2024, €0.7 billion in the first nine months of 2025 and a remaining €0.1 billion expected to be paid in the fourth quarter of 2025.
Updated Financial Outlook for 2025
SAP has revised its full-year 2025 guidance, raising expectations for profitability and free cash flow while maintaining a conservative stance on cloud revenue. SAP expects cloud revenue near the low end of its €21.6–€21.9 billion range, up 26–28% from 2024 at cc.
It expects non-IFRS operating profit near the high end of €10.3–€10.6 billion, up 26–30% from 2024 at cc. SAP expects free cash flow of €8–€8.2 billion, up from €4.22 billion in 2024, slightly above the prior guidance of €8 billion.
Management continues to expect cloud and software revenue of €33.1–33.6 billion, up 11–13% at cc from €29.83 billion in 2024. SAP expects current cloud backlog growth to slightly decelerate in 2025 as the cloud business scales.
America Movil, S.A.B. de C.V. ((AMX - Free Report) ) reported net income per ADR of 40 cents for third-quarter 2025 compared with 11 cents reported in the prior-year quarter. The earnings figure surpassed the Zacks Consensus Estimate of 36 cents. Net income in the quarter was Mex$22,700 million or Mex$0.38 per share against a net loss of Mex$6,427 million or Mex$0.10 per share in the year-ago quarter.
BlackBerry Limited ((BB - Free Report) ) reported second-quarter fiscal 2026 non-GAAP EPS of 4 cents. The figure beat the company’s estimate of breakeven to EPS of 1 cent. In the year-ago quarter, it reported a non-GAAP EPS of breakeven. The Zacks Consensus Estimate was pegged at 1 cent. Quarterly total revenues of $129.6 million exceeded its guidance ($115-$125 million) and were up 3% year over year.
Badger Meter, Inc. ((BMI - Free Report) ) reported earnings per share (EPS) of $1.19 for third-quarter 2025, which surpassed the Zacks Consensus Estimate by 7.2%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of $1.08. Quarterly net sales were $235.7 million, up 13.1% from $208.4 million in the year-ago quarter, driven by higher utility water sales. The Zacks Consensus Estimate was pegged at $229.4 million.
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SAP's Q3 Earnings Beat on Solid Top-Line Growth, 2025 Outlook Revised
Key Takeaways
SAP SE ((SAP - Free Report) ) reported third-quarter 2025 non-IFRS earnings of €1.59 ($1.86) per share, climbing 29% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.69.
Driven by robust cloud growth, disciplined cost control and expanding AI capabilities, SAP reported total revenues on a non-IFRS basis of €9.08 billion ($10.6 billion), representing a 7% year-over-year increase (up 11% at constant currency or cc). The Zacks Consensus Estimate was pegged at $10.56 billion.
The strong performance reflects not only heightened demand but also increased customer adoption of SAP’s Business Suite, Business Data Cloud, AI-enabled solutions and integrated platform innovations. Management noted strong adoption across SAP’s portfolio and a robust fourth-quarter pipeline that supports its aspirations for accelerating total revenue growth through 2027 against broader macroeconomic swings.
Cloud First Strategy Drives Growth
The current cloud backlog — a key indicator of go-to-market success in cloud business — surged 23% (up 27% at cc) to €18.8 billion.
On a non-IFRS basis, the Cloud and software segment (88.3% of total revenues) registered revenues of €8.02 billion, rising 8% year over year (up 12% at cc).
Cloud revenues were €5.29 billion, up 22% year over year (up 27% at cc) on a non-IFRS basis, powered by solid 26% growth (up 31% at cc) in Cloud ERP Suite revenues, reaching €4.59 billion. Software licenses and support revenues totaled €2.72 billion, which decreased 11% (down 9% at cc) year over year. Non-IFRS software license revenues of €0.16 billion declined 43% (down 42% at cc).
Services business (11.7% of total revenues) posted revenues of €1.06 billion, up 2% year over year (up 6% at cc).
Expanding Clientele Bodes Well
In the third quarter, organizations worldwide continued to adopt the “RISE with SAP” program to support their comprehensive business transformations. Notable adopters included Alphabet, ANA HOLDINGS, BarmeniaGothaer, Computacenter, DXC Technology, Endress+Hauser, Ericsson, Jack Wolfskin, Japan Aviation Electronics Industry, JK Tyre & Industries, JYSK, The Magnum Ice Cream Company, Maple Leaf Foods, NIPPON EXPRESS HOLDINGS, Olam Food Ingredients, Otto Aerospace, STIHL, Takeda Pharmaceuticals, Tapestry, Vale Base Metals and Zalaris.
In the reported quarter, BMW, City of Charlottesville, The Clorox Company, Country Fire Authority, La Trobe University, Nestlé, NYK Line and PwC went live on SAP S/4HANA Cloud.
“GROW with SAP” was implemented by ABB, ArborGen, Kodiak AI, Konecta, Noventa, Perplexity and VidaVeg.
SAP secured significant customer wins across its solution portfolio, with new or expanded engagements from leading organizations such as BREITLING, Canton of Bern, Derbyshire County Council, Grupo Boticário, Panasonic, Schwarz Group, Sysmex Corporation, Tata Consultancy Services and Volkswagen Mexico.
SAP SE Price, Consensus and EPS Surprise
SAP SE price-consensus-eps-surprise-chart | SAP SE Quote
Major global brands across various industries, including Aeropuertos Argentina, The Australian Postal Corporation, HiPP, Landis+Gyr and Rieter, chose SAP’s solutions.
SAP’s cloud revenue growth was especially strong in the APJ and EMEA regions and robust in the Americas, with standout performances from Brazil, Germany, France, India, Italy and South Korea.
Margin Details
Non-IFRS gross profit of €6.7 billion increased 7% from the year-ago quarter (up 11% at cc).
Non-IFRS Cloud gross profit increased 24% year over year to €3.97 billion (up 28% at cc). Non-IFRS cloud gross margin rose 1.3 percentage points to 75.1%.
SAP's non-IFRS operating profit rose 14% (up 19% at cc) to €2.57 billion, with a margin increase to 28.3%.
Balance Sheet & Cash Flow
As of Sept. 30, 2025, SAP had cash and cash equivalents of €9.9 billion compared with €7.94 billion as of June 30.
In the third quarter, the company generated operating cash of €1.5 billion, up 7% year over year. Free cash flow, a key metric of operational strength, rose 5% to €1.27 billion during the quarter.
SAP also concluded its €5 billion share repurchase program, initiated in 2023. By Aug. 13, 2025, the company had purchased 26,010,591 shares at an average price of €188.24, amounting to €4.9 billion in total.
Additionally, SAP initiated a company-wide transformation program in January 2024 to enhance operational scalability and focus on key strategic growth areas. The program concluded in the first quarter of 2025, with total expenses of about €3.2 billion. Restructuring payouts included €2.5 billion in 2024, €0.7 billion in the first nine months of 2025 and a remaining €0.1 billion expected to be paid in the fourth quarter of 2025.
Updated Financial Outlook for 2025
SAP has revised its full-year 2025 guidance, raising expectations for profitability and free cash flow while maintaining a conservative stance on cloud revenue. SAP expects cloud revenue near the low end of its €21.6–€21.9 billion range, up 26–28% from 2024 at cc.
It expects non-IFRS operating profit near the high end of €10.3–€10.6 billion, up 26–30% from 2024 at cc. SAP expects free cash flow of €8–€8.2 billion, up from €4.22 billion in 2024, slightly above the prior guidance of €8 billion.
Management continues to expect cloud and software revenue of €33.1–33.6 billion, up 11–13% at cc from €29.83 billion in 2024. SAP expects current cloud backlog growth to slightly decelerate in 2025 as the cloud business scales.
SAP’s Zacks Rank
SAP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performances of Other Firms
America Movil, S.A.B. de C.V. ((AMX - Free Report) ) reported net income per ADR of 40 cents for third-quarter 2025 compared with 11 cents reported in the prior-year quarter. The earnings figure surpassed the Zacks Consensus Estimate of 36 cents. Net income in the quarter was Mex$22,700 million or Mex$0.38 per share against a net loss of Mex$6,427 million or Mex$0.10 per share in the year-ago quarter.
BlackBerry Limited ((BB - Free Report) ) reported second-quarter fiscal 2026 non-GAAP EPS of 4 cents. The figure beat the company’s estimate of breakeven to EPS of 1 cent. In the year-ago quarter, it reported a non-GAAP EPS of breakeven. The Zacks Consensus Estimate was pegged at 1 cent. Quarterly total revenues of $129.6 million exceeded its guidance ($115-$125 million) and were up 3% year over year.
Badger Meter, Inc. ((BMI - Free Report) ) reported earnings per share (EPS) of $1.19 for third-quarter 2025, which surpassed the Zacks Consensus Estimate by 7.2%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of $1.08. Quarterly net sales were $235.7 million, up 13.1% from $208.4 million in the year-ago quarter, driven by higher utility water sales. The Zacks Consensus Estimate was pegged at $229.4 million.