SAP SE reported fiscal 2025 fourth‑quarter revenue of €9.68 billion, a 3% year‑over‑year increase that fell short of the consensus estimate of €9.74 billion. The miss was driven by a 34% decline in legacy software license revenue, which dropped to €0.45 billion, and by one‑time restructuring charges that weighed on top‑line growth.
Non‑IFRS earnings per share were €1.62, missing the consensus estimate of €1.76 by €0.14 (about 8%). The shortfall was largely a result of the same restructuring costs and the weaker legacy license segment, which also contributed to a higher cost base and reduced operating leverage for the quarter.
Operating profit rose 27% to €2.55 billion, reflecting strong cost discipline and a shift in the revenue mix toward higher‑margin cloud services. The cloud segment grew 19% to €5.61 billion, and the current cloud backlog increased 16% to €21.05 billion, although the 25% constant‑currency growth fell slightly below analysts’ expectations of roughly 26% and SAP’s own target of 26%.
Management reiterated 2026 guidance, projecting cloud revenue of €25.8 billion to €26.2 billion and total cloud and software revenue of €36.3 billion to €36.8 billion. CEO Christian Klein emphasized that AI is a “main driver for growth” and that the company is winning deals because of AI, while CFO Dominik Asam highlighted that the quarter’s operating profit and free cash flow exceeded expectations due to disciplined spending and a high‑margin mix.
Investors reacted negatively, citing the current cloud backlog miss and the modest 2026 guidance as key concerns. Analysts noted that the 25% backlog growth, while still strong, was below the 26% target and the 26% constant‑currency growth that management had previously described as “disappointing.”
The results underscore SAP’s ongoing transition from legacy licensing to a subscription‑based cloud model. While revenue and earnings fell short of consensus, the company’s margin expansion, robust cloud growth, and strong free‑cash‑flow generation suggest that the long‑term trajectory remains intact.
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