Earnings
SAP tops €10 billion in quarterly revenue for the first time and steers 2026 cloud sales to the top of its range
Current cloud backlog rose 28% to €24.1 billion and SAP's US-listed shares gained more than 4% after hours.
HedgeWeekly News Desk ·
SAP reported third-quarter revenue of €10.27 billion on Wednesday, up 13% (12% at constant currencies) and the first quarter above €10 billion, according to finance chief Dominik Asam. The figure beat the €10.10 billion analysts had forecast, Investing.com reported, and non-IFRS earnings of €1.89 a share topped the €1.83 estimate. The German software group's American depositary receipts rose more than 4% in after-hours trading in New York.
Cloud revenue grew 26% to €6.67 billion and Cloud ERP Suite revenue 29% to €5.92 billion. Current cloud backlog climbed 28% to €24.14 billion, or 26% at constant currencies, from €22.93 billion at the end of June. Non-IFRS operating profit rose 18% to €3.03 billion and free cash flow 36% to €1.72 billion. SAP said cloud growth was flattered by quarter-specific effects, mainly catch-up revenue from customers returning from financial distress, and that one-off items of about €0.1 billion had depressed the year-earlier base.
SAP now expects 2026 cloud revenue toward the upper end of its €25.8 billion to €26.2 billion range and cloud and software revenue toward the top of €36.3 billion to €36.8 billion, both at constant currencies. It kept non-IFRS operating profit guidance at €11.8 billion to €12.2 billion, a range it trimmed in July to reflect the Dremio and Prior Labs acquisitions, which cut third-quarter non-IFRS profit by €39 million. By September 30 it had repurchased about €4.2 billion of stock at an average €164.79 a share under a €10 billion programme running to the end of 2027, up from €2.6 billion at the end of June.
For European equity investors, backlog growth held at 26% at constant currencies for a second straight quarter, though SAP still guides to a slight slowdown from 2025's 25% for the full year, and part of this quarter's cloud boost came from catch-up payments that may not recur. Currency is a further drag: at end-September rates SAP estimates a 1.5 percentage point hit to full-year cloud revenue growth. The bigger signal is 2027, when SAP expects total revenue growth to accelerate and non-IFRS operating expenses to rise at only 80% to 90% of the pace of revenue, which would widen margins if delivered.