SAP Reports Q4 Revenue Growth as Cloud Business Accelerates

SAP SE shares fell the most in more than five years as the German software giant reported fourth-quarter results that, while solid, revealed some investor concerns about its cloud growth trajectory.

The company posted Q4 revenue of €9.68 billion, up 3% year-over-year, with adjusted operating profit surging 27% to €2.83 billion. For the full year, SAP generated €31.31 billion in revenue, marking a 5% increase from 2024.

However, the market reaction centered on SAP's cloud business performance. While the company forecasts cloud revenue to grow at least 23% year-over-year to €25.8 billion in 2026, current cloud backlog in the fourth quarter slipped, raising questions about near-term momentum.

"SAP's cloud backlog decline in Q4 is concerning given the company's ambitious growth targets," noted analysts at Bernstein. "The 23% cloud revenue growth forecast for 2026 will require significant acceleration in the coming quarters."

SAP's cloud business remains the primary growth engine, with cloud revenue reaching €7.5 billion in Q4, up 22% year-over-year. The company's strategic shift toward cloud-based enterprise software continues to show progress, though investors appear to be weighing the execution risks.

The stock decline reflects broader market skepticism about enterprise software valuations and growth expectations in an environment where companies are scrutinizing IT spending. SAP's performance will be closely watched as a bellwether for the broader enterprise software sector.

Despite the near-term concerns, SAP's strong operating profit growth and continued cloud transition suggest the company remains well-positioned for long-term success in the evolving enterprise software landscape.