SAP (SAP.DE) published its fourth quarter results, which disappointed investors mainly due to weaker growth in its current cloud backlog, causing a sharp drop in its share price. Despite some positive elements, such as growth in cloud revenue and profitability, the market reacted negatively due to concerns about slowing growth and AI competition. Shares are currently trading nearly 14% lower than yesterday’s close and at their lowest levels since May 2024.
*Non-IFRS is a measure of profitability that adjusts for one-off costs (e.g., restructuring, write-offs), providing a clearer picture of current operations.
Key Q4 results
- Non-IFRS revenue: €9.68 billion (expected €9.74 billion)
- Non-IFRS cloud revenue (year-over-year growth in constant currencies): +26% (expected +25.8%)
- Current cloud backlog (year-over-year growth in constant currencies): +25% (expected +24.8%)
- Non-IFRS operating profit: €2.83 billion (expected €2.79 billion)
- EPS Non-IFRS: €1.62 (expected €1.52)
- Free cash flow: €1.03 billion (expected €988.1 million)
Key company data and historical overview. Valuation indicators. Source: XTB
Forecasts for 2026
- Non-IFRS cloud revenue: €25.8-26.2 billion (consensus €25.96 billion)
- Non-IFRS operating profit: €11.9-12.3 billion (consensus €12.02 billion)
- Free cash flow: approx. €10 billion (consensus €9.48 billion)
- The growth of the current cloud backlog is expected to slow down slightly from Q4 levels.
Market reaction
SAP shares fell as much as 11% during the day—the biggest intraday decline in more than five years—after a disappointing backlog.
Analysts’ opinions
- JPMorgan: Negative reaction to slowdown in backlog, but FCF above expectations.
- Goldman Sachs: Strong cloud revenue growth of +26%; expects moderate cuts to revenue forecasts.
The company’s shares fell below the 200-week EMA today for the first time since 2022. The RSI for the last 14 weeks is at levels not seen since 2002. Source: xStation
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