SAP (SAP) Q4 2025 earnings summary

Executive summary

• Achieved record Q4 and FY2025 results, with cloud backlog reaching €77.3 billion, up 30% year-over-year, and strong customer retention and low churn.

• Cloud transformation and AI adoption accelerated, with over two-thirds of Q4 cloud order entry including business AI and 90% of top 50 deals involving AI or Business Data Cloud.

• Exceeded non-IFRS operating profit and free cash flow outlooks for FY2025, with robust performance across all regions.

• Announced a new €10 billion share repurchase program to start in February 2026 and complete by end of 2027.

• Internal AI transformation aims for €2 billion in cost efficiencies by 2028, targeting 15%-20% of addressable costs.

Financial highlights

• FY2025 cloud revenue rose 23% to €21.02 billion (26% at constant currencies); Cloud ERP Suite revenue up 32% and now represents 86% of total cloud revenue.

• Total revenue for FY2025 reached €36.8 billion, up 8% year-over-year (11% at constant currency).

• IFRS operating profit up 111% to €9.83 billion; non-IFRS operating profit up 28% to €10.42 billion.

• Free cash flow up 95% to €8.24 billion, at the high end of guidance.

• Non-IFRS basic EPS rose 36% to €6.15.

Outlook and guidance

• FY2026 guidance: cloud revenue €25.8–26.2 billion (+23–25% at constant currencies), total revenue €36.3–36.8 billion (+12–13%), non-IFRS operating profit €11.9–12.3 billion (+14–18%), free cash flow ~€10 billion.

• Effective tax rate (non-IFRS) expected at ~29%.

• Total revenue growth anticipated to accelerate through 2027, supported by strong backlog and large deal ramps.

• Non-IFRS operating profit growth expected to significantly outpace revenue growth, with expense-to-revenue ratio trending toward the lower end of 80%-90%.

• Current cloud backlog growth to slightly decelerate in 2026.