Sap SE
Q3 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: −0.81%.
Did SAP Beat Earnings? Q3 2025 Results
SAP posted a mixed third quarter for fiscal 2025, with bottom-line results falling just short of expectations even as the company's cloud transformation accelerated meaningfully. The German enterprise software giant reported earnings per share of $1.59, missing the $1.64 consensus estimate by 3.05%, while revenue climbed 7.2% year over year to $9.08 billion. The headline EPS shortfall was partly attributed to a $98.00 million tax litigation charge and roughly $100.00 million in workforce transformation costs, both of which weighed on an otherwise operationally strong quarter. The standout driver was cloud momentum, with Cloud ERP Suite revenue growing 31% at constant currencies to $4.59 billion and the current cloud backlog reaching $18.84 billion, up 27%, signaling durable demand heading into year-end. SAP updated its 2025 outlook, now guiding cloud revenue toward the lower end of its $21.60 to $21.90 billion range, while raising free cash flow guidance to $8.00 to $8.20 billion; CEO Christian Klein expressed confidence in an accelerating total revenue growth trajectory into 2026, even as currency headwinds are expected to pressure Q4 cloud revenue growth by approximately 7 percentage points.
- Cloud ERP Suite revenue growth of 31% at constant currencies driven by accelerated adoption across the Business Suite
- Current cloud backlog of €18.84 billion up 27% at constant currencies signals sustained future growth
- Share of more predictable revenue increased to 87%
- Non-IFRS cloud gross margin improved 1.3 percentage points to 75.1%
- Particularly strong cloud performance in APJ and EMEA regions
- Outstanding performance in Brazil, France, Germany, India, Italy and South Korea
“SAP delivered a great Q3 with strong cloud revenue growth of 27%. We are gaining market share as our customers are adopting solutions across the entire Business Suite, including Business Data Cloud and AI at accelerated pace. For Q4 we are executing against a strong pipeline - which gives us confidence in our accelerating total revenue growth ambition for 2026.”
SAP CEO, on the earnings call
Forward Guidance & Outlook
SAP updated its 2025 outlook: cloud revenue expected toward the lower end of €21.6–21.9 billion at constant currencies (up 26%–28%); non-IFRS operating profit expected toward the upper end of €10.3–10.6 billion at constant currencies (up 26%–30%); free cash flow raised to €8.0–8.2 billion (previously approximately €8.0 billion). Cloud and software revenue guidance maintained at €33.1–33.6 billion at constant currencies (up 11%–13%). Non-IFRS effective tax rate expected at approximately 32%. Current cloud backlog growth at constant currencies expected to slightly decelerate in 2025. Significant currency headwinds expected in Q4 (approximately -7.0pp on cloud revenue growth, -6.5pp on non-IFRS operating profit growth). CEO expressed confidence in accelerating total revenue growth ambition for 2026 based on strong pipeline.
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Figures from SEC filings and company reports. Not investment advice.