SAP closed 2025 with a €36.8 billion revenue, driven by record cloud bookings and AI innovation, while signalling a cautious yet optimistic outlook for 2026 amid strategic shifts towards cloud and AI growth.
SAP closed 2025 with revenue of €36.8 billion, an 8% increase on the prior year, driven principally by continued strength in cloud offerings even after what chief executive Christian Klein described as a “rough start to the year” at a press conference this w...
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The group reported fourth‑quarter revenue of €9.864 billion, roughly 3% higher than Q4 2024. According to SAP, cloud bookings were a standout, lifting Total Cloud Backlog by 30% to a record €77 billion. “Q4 was a strong cloud quarter, with bookings resulting in 30% Total Cloud Backlog growth to a record €77bn. The significant Current Cloud Backlog growth in Q4 has laid a strong foundation for accelerating total revenue growth through 2027. SAP Business AI has become a main driver for growth as it was included in two thirds of our Q4 cloud order entry, combined with strong AI adoption across the ERP Suite,” Klein said.
SAP stated full‑year cloud revenue rose 23% to €21.02 billion, with the Cloud ERP Suite up 28% to €18.12 billion. Cloud and software revenue together reached €32.54 billion for the year, while services slipped 2% to €4.26 billion.
CFO Dominik Asam emphasised the financial momentum: “We closed 2025 on a high note, delivering strong operating profit and free cash flow ahead of our expectations. This performance reflects focused execution, financial discipline, and the continued trust our customers place in us as the North Star for their digital transformation. As evidenced by continued strong growth, well ahead of the market, in SaaS and PaaS, we are confident that our strategy and operational discipline will continue to drive long‑term value creation.”
SAP also announced a new two‑year share repurchase programme of up to €10 billion, signalling management confidence in cash generation. Independent reporting indicates free cash flow for 2025 almost doubled year on year to about €8.24 billion, with non‑IFRS operating profit and margins improving on the back of higher cloud gross profit.
Third‑party accounts vary on the exact scale of Q4 cloud revenues and some headline figures. Industry services reported cloud revenue for Q4 growing by mid‑ to high‑20s percentages, with specific Q4 cloud totals cited between roughly €4.7 billion and €5.6 billion depending on the outlet and treatment of items; analysts note these differences reflect currency effects and differing definitions used in external reporting. Despite the variance, consensus commentary points to meaningful momentum in predictable, subscription‑style revenue, which SAP says now accounts for around 86% of total sales.
Klein took the opportunity to stress SAP’s role in European technology and digital sovereignty, noting the company’s size in the region and the relevance of regulatory and skills questions as governments and businesses adopt artificial intelligence more broadly. SAP highlighted its EU AI Cloud offering, presented last November as a full‑stack sovereign cloud option allowing customers to choose deployment and data‑sovereignty levels across SAP‑run data centres, trusted European infrastructure or fully managed on‑site solutions.
AI is central to SAP’s growth narrative. The company claims SAP Business AI featured in two‑thirds of Q4 cloud order entries and points to customer examples where generative AI tools are being applied across operations. Klein cited retailers and healthcare providers using the firm’s AI capabilities to personalise customer experiences and automate clinical workflows, while SAP named a range of large customers that continued or began cloud migrations under its Rise with SAP and Grow with SAP programmes, from Adidas, H&M and Toyota to Lockheed Martin and Rolls‑Royce SMR.
Regional performance was strongest in Asia‑Pacific and Japan and in EMEA, with the Americas described as solid. SAP also highlighted deeper partnerships with data and AI players, including a collaboration with Snowflake enabling joint use of their data clouds, and alliances in France with Bleu, Capgemini and Mistral AI.
Looking ahead, SAP’s guidance for 2026 reflects cautious optimism. Management signalled ambitions for further cash generation , with a free cash flow target in the order of €10 billion cited by market commentators , and indicated that the growth profile will increasingly be driven by cloud and business‑oriented AI capabilities rather than legacy licence sales, which continue to decline as customers migrate workloads.
Market reaction to the results was mixed: investors focused on backlog and growth trajectories as much as on headline revenue growth, while analysts welcomed the stronger operating cash flow and the clear strategic emphasis on AI and sovereign cloud offerings as differentiators for enterprise customers.
Source: Noah Wire Services
