TLDR
- SAP stock plummeted 11% Thursday following Q4 cloud backlog growth of 25%, below the anticipated 26% increase
- The selloff marks the company’s steepest one-day drop since a 22% fall in October 2020
- SAP projected cloud backlog growth will “slightly decelerate” in 2026, disappointing Wall Street analysts
- Q4 cloud revenue rose 26% to 5.61 billion euros while overall revenue grew 9% to 9.68 billion euros
- The German software company announced a 10 billion euro stock buyback program launching February 2026
Thursday delivered bad news for SAP shareholders. The stock collapsed 11% after market open.
Cloud backlog numbers came in below expectations.
SAP’s current cloud backlog expanded 25% during the fourth quarter to 21.05 billion euros. That’s roughly $25.17 billion. Analysts had forecast 26% growth.
One percentage point made all the difference.
This represents SAP’s steepest decline since October 2020. That was when shares tanked 22% following weak Q3 results. The stock now trades more than 30% below where it stood 12 months ago.
CEO Christian Klein tried to spin the results positively. He claimed the Q4 cloud backlog creates a “strong foundation” for revenue growth through 2027.
The market disagreed sharply.
Cloud Outlook Amplifies Investor Worry
Future guidance made matters worse. SAP expects cloud revenue to grow 23% to 25% in 2026. The street had modeled 24% to 26% growth.
Then came the kicker. Management warned cloud backlog growth would “slightly decelerate” during 2026.
That statement rattled investors.
SAP explained the Q4 shortfall stemmed from timing issues. Large transformation deals pushed revenue into future periods. Termination clauses mandated by law also impacted results. These factors combined to reduce growth by about 1 percentage point.
UBS analysts labeled the cloud backlog performance a “disappointment” in their Thursday note to clients.
Citi analysts acknowledged SAP’s core business remains sound. However, they questioned whether results would satisfy investors given weak sentiment across the software sector. Concerns about excessive AI spending and potential market bubbles continue pressuring tech stocks.
Strong Regional Performance Despite Miss
The underlying quarterly numbers showed strength. Q4 total revenue hit 9.68 billion euros, up 9% from last year. Cloud business revenue jumped 26% to 5.61 billion euros.
Regional breakdowns revealed winners. Canada, Brazil, Germany, India, Italy, Spain, the UK and South Korea posted excellent cloud growth. Australia, Japan, Mexico, Saudi Arabia, Singapore and the U.S. also delivered positive results.
Full-year 2025 revenue totaled 36.80 billion euros. That marks 11% growth at constant currencies.
Fourth quarter net profit reached 1.89 billion euros versus 1.63 billion euros in the prior year. Operating profit climbed to 2.83 billion euros from 2.44 billion euros. The operating margin landed at 29.2%.
Buyback Program and 2026 Outlook
SAP attempted to soften the blow with a buyback announcement. The company will repurchase up to 10 billion euros of stock. The program starts in February 2026 and runs through December 2027.
Looking ahead to 2026, SAP forecasts non-IFRS operating profit between 11.9 billion and 12.3 billion euros. Free cash flow should reach approximately 10 billion euros. SAP continues moving away from traditional software licenses toward subscription-based cloud offerings.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
