SAP Hits Q4 Revenue Targets Amid Steady Cloud Demand
SAP has reported a strong performance in its fourth quarter, meeting market revenue expectations. This outcome reflects steady demand for its cloud software solutions despite broader economic uncertainties.
SAP’s Q4 Revenue Highlights
For the fourth quarter of the fiscal year, SAP’s total revenue amounted to 9.7 billion euros (approximately $11.6 billion). This figure aligns with market estimates. Importantly, cloud revenue for this quarter reached 5.6 billion euros, exceeding the consensus forecast of 5.5 billion euros.
Growth Prospects and Expectations
Looking ahead, SAP anticipates robust growth for its cloud services. The company projects an increase of 23% to 25% by 2026, estimating cloud revenue to fall between 25.8 billion euros and 26.2 billion euros. Additionally, cloud revenue for the full year climbed 26% at constant currencies, totaling 21 billion euros.
- The total cloud backlog surged by 30% to 77.3 billion euros.
- SAP’s CEO, Christian Klein, noted that SAP Business AI has significantly contributed to growth.
Financial Outlook
SAP’s expectations also include a combined revenue from cloud and software of approximately 36.3 billion euros to 36.8 billion euros. This reflects a growth rate of 12% to 13%. Operating profit is projected to rise by 14% to 18%, reaching 11.9 billion euros to 12.3 billion euros.
Regarding cash flow, the enterprise software maker expects free cash flow to be around 10 billion euros for the year. Furthermore, its effective tax rate is projected to improve to approximately 29%, down from 30.4%.
Future Growth and Strategic Initiatives
SAP is strategically focused on enhancing customer transitions to cloud-based solutions. Company officials predict that while cloud backlog growth may show slight deceleration in 2026, total revenue will likely accelerate through 2027. This increase anticipates continued customer migration to cloud services, supporting SAP’s growth trajectory.
In addition to these developments, SAP has announced a two-year share buyback program valued at up to 10 billion euros. This initiative is designed to bolster shareholder value amid positive performance trends in its cloud business.
Major clients acquired during the fourth quarter include notable names such as Dexco, Lockheed Martin, and Rolls-Royce.
Overall, SAP’s strong fourth-quarter results and ambitious growth forecasts underscore its commitment to advancing cloud solutions in the face of evolving market dynamics.
