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SAP's Q4 Earnings & Revenues Up Y/Y, Stock Down on Weak Cloud Backlog
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Key Takeaways
SAP delivered Q4 non-IFRS EPS of 1.62 euros, up 16% year over year, fueled by strong cloud bookings.
SAP Business AI featured in two-thirds of cloud order entry, highlighting AI's role in deal conversion.
SAP shares fell 18% pre-market as cloud backlog growth and 2026 cloud revenue guidance disappointed.
SAP SE (SAP - Free Report) reported fourth-quarter 2025 non-IFRS earnings per share (EPS) of €1.62, which increased 16% from the year-ago quarter.
SAP’s fourth quarter was defined by strong cloud bookings and profitability. It reported total revenues on a non-IFRS basis of €9.68 billion, which increased 3% year over year (up 9% at constant currency or cc). At the center of this performance is SAP Business AI, which has rapidly evolved from a feature set into a meaningful growth driver across the ERP suite. Two-thirds of cloud order entry included SAP Business AI, signaling AI’s growing importance in deal conversion and expansion.
For 2025, total revenue was €36.8 billion, up 8% (up 11% at cc). Predictable revenue increased to 86% in 2025, reinforcing SAP’s transformation into a high-quality recurring revenue business.
However, following the announcement, SAP’s shares plunged 18% in the pre-market trading today as its cloud backlog and 2026 cloud revenue guidance did not meet investor expectations.
Cloud Momentum Builds a Multi-Year Growth Runway
The current cloud backlog — a key indicator of go-to-market success in cloud business — surged 16% (up 25% at cc) to €21.05 billion. Large deal structures and mandatory termination clauses cut fourth-quarter cloud backlog growth by roughly 1 percentage point.
On a non-IFRS basis, the Cloud and software segment (89% of total revenues) registered revenues of €8.62 billion, rising 4% year over year (up 10% at cc).
Cloud revenues were €5.61 billion, up 19% year over year (up 26% at cc) on a non-IFRS basis, powered by solid 23% growth (up 30% at cc) in Cloud ERP Suite revenues, reaching €4.86 billion. Software licenses and support revenues totaled €3 billion, which decreased 15% (down 12% at cc) year over year. Non-IFRS software license revenues of €0.45 billion declined 34% (down 31% at cc).
Services business (11% of total revenues) posted revenues of €1.07 billion, down 4% year over year (flat at cc).
Expanding Clientele Bodes Well
Rise with SAP solution was adopted by clients, including A2A, adidas, Bertelsmann, BioNTech, Daimler Truck, Deloitte, Électricité de France, Ferring Pharmaceuticals, Fresenius Digital Technology, Galenica, H&M Group, His Majesty's Revenue & Customs, Jabil, KEBA Group, Kirin Holdings, Nokia, Pirelli, RTX, s.Oliver Group, Sigma Healthcare, Sun Chemical, Tokio Marine & Nichido Fire Insurance, Toyota, Ultragaz and Weir Group.
In the reported quarter, Dexco, Lockheed Martin, Rolls-Royce SMR and SA Power Networks went live on SAP S/4HANA Cloud.
“GROW with SAP,” which focuses on aiding smaller businesses to adopt cloud ERP solutions quickly and efficiently, was implemented by A. Darbo, BSI, FUNKE Media Group, KPMG, Müller Holding and Snowflake.
SAP secured significant customer wins across its solution portfolio, with new or expanded engagements from leading organizations such as Bank of Italy, Coop, Deutsche Bundesbank, Hilti, Marubeni IT Solutions, Mondelez International, Robert Bosch, Schaeffler Group, Tech Mahindra, XXXLutz, Zalando and Zespri Group.
Major global brands across various industries, including Fressnapf, Globe, Origin Energy, Sartorius, and WATERALIA, chose SAP 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, Canada, Germany, France, India, Italy and South Korea. It remained strong in Australia, Japan, Mexico, Saudi Arabia, Singapore and the U.S.
Margin Expansion Shows Cloud at Scale is Working
Non-IFRS gross profit of €7.2 billion increased 3% from the year-ago quarter (up 8% at cc).
Non-IFRS Cloud gross profit increased 21% year over year to €4.18 billion (up 27% at cc). Non-IFRS cloud gross margin rose 1.1 percentage points to 74.6%.
SAP's non-IFRS operating profit rose 16% (up 21% at cc) to €2.83 billion, with margin increasing to 29.2%. Non-IFRS operating profit growth took a almost €0.1 billion hit from the 2025 workforce transformation.
Balance Sheet & Cash Flow
As of Dec. 31, 2025, SAP had cash, cash equivalents and other financial assets of €11.2 billion compared with €9.9 billion as of Sept. 30, 2025.
In the fourth quarter, the company generated operating cash of €1.3 billion against an outflow of $580 million in the prior-year quarter. Free cash flow, a key metric of operational strength, was €1.03 billion during the quarter.
SAP announced a new €10 billion share repurchase program running from February 2026 through 2027. This follows roughly €8 billion in buybacks since 2020 and underscores management’s confidence in sustainable free cash flow, long-term earnings growth and shareholder value creation.
SAP’s 2024 restructuring program wrapped up in early 2025, with total costs of about €3.2 billion. Of this, €2.5 billion was paid out in 2024 and the remaining €0.8 billion in 2025. With most restructuring now behind it, SAP heads into 2026 with a leaner cost structure, better scalability and stronger operating leverage.
2026 Financial Outlook
For 2026, SAP guides cloud revenue of €25.8–€26.2 billion at constant currencies, implying 23%–25% growth from €21.02 billion in 2025, while cloud and software revenue is expected at €36.3–€36.8 billion, up 12%–13% from €32.54 billion.
Non-IFRS operating profit is projected at €11.9–12.3 billion, representing 14%–18% growth from €10.42 billion, and free cash flow is targeted at around €10 billion versus €8.24 billion in 2025. SAP also expects constant-currency current cloud backlog growth to moderate slightly in 2026 from 25% in 2025.
SAP expects constant-currency total revenue growth to accelerate through 2027, with operating expenses rising at 80%–90% of revenue growth by 2027, while the decline in constant-currency software support revenue is set to speed up as more customers migrate to the cloud.
Seagate Technology Holdings plc (STX - Free Report) reported second-quarter fiscal 2026 non-GAAP earnings of $3.11 per share, beating the Zacks Consensus Estimate of $2.83 and exceeding the high end of management’s guidance of $2.75 per share (+/- 20 cents). The company EPS of $2.03 in the prior-year quarter. Non-GAAP revenues of $2.83 billion exceeded the Zacks Consensus Estimate by 2.7%. Revenues also surpassed the guidance midpoint, increasing 22% year over year.
Simulations Plus, Inc. (SLP - Free Report) reported first-quarter fiscal 2026 adjusted earnings of 13 cents per share, lagging the Zacks Consensus Estimate by 27.8%. The bottom line also compared unfavorably with the prior-year quarter’s 17 cents. Quarterly revenues declined 3% year over year to $18.4 million, reflecting lower software revenue amid strong momentum in services. The top line beat the consensus mark by 2%. Management noted that software softness was expected due to reduced clinical operations and development activity, partially offset by increased demand for discovery-focused solutions.
BlackBerry Limited (BB - Free Report) reported third-quarter fiscal 2026 non-GAAP EPS of 5 cents. In the year-ago quarter, it reported non-GAAP EPS of 2 cents. The Zacks Consensus Estimate was pegged at 4 cents per share. BlackBerry reported quarterly revenue of $141.8 million, beating the top end of its guidance ($132-$140 million). The top line, however, dipped 1.3% year over year owing to soft sales across Secure Communications and Licensing arms. The consensus estimate was pinned at $139 million.
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SAP's Q4 Earnings & Revenues Up Y/Y, Stock Down on Weak Cloud Backlog
Key Takeaways
SAP SE (SAP - Free Report) reported fourth-quarter 2025 non-IFRS earnings per share (EPS) of €1.62, which increased 16% from the year-ago quarter.
SAP’s fourth quarter was defined by strong cloud bookings and profitability. It reported total revenues on a non-IFRS basis of €9.68 billion, which increased 3% year over year (up 9% at constant currency or cc). At the center of this performance is SAP Business AI, which has rapidly evolved from a feature set into a meaningful growth driver across the ERP suite. Two-thirds of cloud order entry included SAP Business AI, signaling AI’s growing importance in deal conversion and expansion.
For 2025, total revenue was €36.8 billion, up 8% (up 11% at cc). Predictable revenue increased to 86% in 2025, reinforcing SAP’s transformation into a high-quality recurring revenue business.
However, following the announcement, SAP’s shares plunged 18% in the pre-market trading today as its cloud backlog and 2026 cloud revenue guidance did not meet investor expectations.
Cloud Momentum Builds a Multi-Year Growth Runway
The current cloud backlog — a key indicator of go-to-market success in cloud business — surged 16% (up 25% at cc) to €21.05 billion. Large deal structures and mandatory termination clauses cut fourth-quarter cloud backlog growth by roughly 1 percentage point.
On a non-IFRS basis, the Cloud and software segment (89% of total revenues) registered revenues of €8.62 billion, rising 4% year over year (up 10% at cc).
Cloud revenues were €5.61 billion, up 19% year over year (up 26% at cc) on a non-IFRS basis, powered by solid 23% growth (up 30% at cc) in Cloud ERP Suite revenues, reaching €4.86 billion. Software licenses and support revenues totaled €3 billion, which decreased 15% (down 12% at cc) year over year. Non-IFRS software license revenues of €0.45 billion declined 34% (down 31% at cc).
Services business (11% of total revenues) posted revenues of €1.07 billion, down 4% year over year (flat at cc).
Expanding Clientele Bodes Well
Rise with SAP solution was adopted by clients, including A2A, adidas, Bertelsmann, BioNTech, Daimler Truck, Deloitte, Électricité de France, Ferring Pharmaceuticals, Fresenius Digital Technology, Galenica, H&M Group, His Majesty's Revenue & Customs, Jabil, KEBA Group, Kirin Holdings, Nokia, Pirelli, RTX, s.Oliver Group, Sigma Healthcare, Sun Chemical, Tokio Marine & Nichido Fire Insurance, Toyota, Ultragaz and Weir Group.
In the reported quarter, Dexco, Lockheed Martin, Rolls-Royce SMR and SA Power Networks went live on SAP S/4HANA Cloud.
“GROW with SAP,” which focuses on aiding smaller businesses to adopt cloud ERP solutions quickly and efficiently, was implemented by A. Darbo, BSI, FUNKE Media Group, KPMG, Müller Holding and Snowflake.
SAP SE Price, Consensus and EPS Surprise
SAP SE price-consensus-eps-surprise-chart | SAP SE Quote
SAP secured significant customer wins across its solution portfolio, with new or expanded engagements from leading organizations such as Bank of Italy, Coop, Deutsche Bundesbank, Hilti, Marubeni IT Solutions, Mondelez International, Robert Bosch, Schaeffler Group, Tech Mahindra, XXXLutz, Zalando and Zespri Group.
Major global brands across various industries, including Fressnapf, Globe, Origin Energy, Sartorius, and WATERALIA, chose SAP 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, Canada, Germany, France, India, Italy and South Korea. It remained strong in Australia, Japan, Mexico, Saudi Arabia, Singapore and the U.S.
Margin Expansion Shows Cloud at Scale is Working
Non-IFRS gross profit of €7.2 billion increased 3% from the year-ago quarter (up 8% at cc).
Non-IFRS Cloud gross profit increased 21% year over year to €4.18 billion (up 27% at cc). Non-IFRS cloud gross margin rose 1.1 percentage points to 74.6%.
SAP's non-IFRS operating profit rose 16% (up 21% at cc) to €2.83 billion, with margin increasing to 29.2%. Non-IFRS operating profit growth took a almost €0.1 billion hit from the 2025 workforce transformation.
Balance Sheet & Cash Flow
As of Dec. 31, 2025, SAP had cash, cash equivalents and other financial assets of €11.2 billion compared with €9.9 billion as of Sept. 30, 2025.
In the fourth quarter, the company generated operating cash of €1.3 billion against an outflow of $580 million in the prior-year quarter. Free cash flow, a key metric of operational strength, was €1.03 billion during the quarter.
SAP announced a new €10 billion share repurchase program running from February 2026 through 2027. This follows roughly €8 billion in buybacks since 2020 and underscores management’s confidence in sustainable free cash flow, long-term earnings growth and shareholder value creation.
SAP’s 2024 restructuring program wrapped up in early 2025, with total costs of about €3.2 billion. Of this, €2.5 billion was paid out in 2024 and the remaining €0.8 billion in 2025. With most restructuring now behind it, SAP heads into 2026 with a leaner cost structure, better scalability and stronger operating leverage.
2026 Financial Outlook
For 2026, SAP guides cloud revenue of €25.8–€26.2 billion at constant currencies, implying 23%–25% growth from €21.02 billion in 2025, while cloud and software revenue is expected at €36.3–€36.8 billion, up 12%–13% from €32.54 billion.
Non-IFRS operating profit is projected at €11.9–12.3 billion, representing 14%–18% growth from €10.42 billion, and free cash flow is targeted at around €10 billion versus €8.24 billion in 2025. SAP also expects constant-currency current cloud backlog growth to moderate slightly in 2026 from 25% in 2025.
SAP expects constant-currency total revenue growth to accelerate through 2027, with operating expenses rising at 80%–90% of revenue growth by 2027, while the decline in constant-currency software support revenue is set to speed up as more customers migrate to the cloud.
SAP’s Zacks Rank
SAP currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performances of Other Companies
Seagate Technology Holdings plc (STX - Free Report) reported second-quarter fiscal 2026 non-GAAP earnings of $3.11 per share, beating the Zacks Consensus Estimate of $2.83 and exceeding the high end of management’s guidance of $2.75 per share (+/- 20 cents). The company EPS of $2.03 in the prior-year quarter. Non-GAAP revenues of $2.83 billion exceeded the Zacks Consensus Estimate by 2.7%. Revenues also surpassed the guidance midpoint, increasing 22% year over year.
Simulations Plus, Inc. (SLP - Free Report) reported first-quarter fiscal 2026 adjusted earnings of 13 cents per share, lagging the Zacks Consensus Estimate by 27.8%. The bottom line also compared unfavorably with the prior-year quarter’s 17 cents. Quarterly revenues declined 3% year over year to $18.4 million, reflecting lower software revenue amid strong momentum in services. The top line beat the consensus mark by 2%. Management noted that software softness was expected due to reduced clinical operations and development activity, partially offset by increased demand for discovery-focused solutions.
BlackBerry Limited (BB - Free Report) reported third-quarter fiscal 2026 non-GAAP EPS of 5 cents. In the year-ago quarter, it reported non-GAAP EPS of 2 cents. The Zacks Consensus Estimate was pegged at 4 cents per share. BlackBerry reported quarterly revenue of $141.8 million, beating the top end of its guidance ($132-$140 million). The top line, however, dipped 1.3% year over year owing to soft sales across Secure Communications and Licensing arms. The consensus estimate was pinned at $139 million.