TLDR
- SAP stock plunged 11% Thursday morning after cloud backlog expanded 25% in Q4, falling short of the 26% Wall Street forecast
- The software giant warned cloud backlog growth will “slightly decelerate” during 2026, spooking investors
- This represents SAP’s steepest single-day loss since a 22% crash in October 2020
- Fourth quarter cloud revenue climbed 26% to 5.61 billion euros while total revenue increased 9% to 9.68 billion euros
- Company unveiled a 10 billion euro share buyback program running from February 2026 through end of 2027
Thursday brought pain for SAP investors. Shares of the German business software company fell 11% after the opening bell.
The culprit? Weaker than expected cloud numbers.
SAP’s current cloud backlog reached 21.05 billion euros in the fourth quarter. That represents 25% growth at constant currencies. Analysts had penciled in 26% growth.
One percentage point doesn’t sound like much. But markets react harshly to misses in the software sector.
This marks the worst trading day for SAP since October 2020. That month saw shares crater 22% after poor Q3 results. The stock now sits more than 30% below its 12-month peak.
CEO Christian Klein defended the results. He claimed the Q4 cloud backlog sets up “strong foundation” for accelerated revenue through 2027.
Wall Street wasn’t convinced.
Guidance Adds to Investor Concerns
The real problem came with forward guidance. SAP expects cloud revenue growth between 23% and 25% for 2026. The street wanted 24% to 26%.
More troubling was management’s warning. Cloud backlog growth will “slightly decelerate” this year.
That’s not what investors wanted to hear.
SAP blamed the cloud backlog miss on timing issues. Large transformation deals pushed revenue recognition into future years. These deals included termination clauses required by law. Combined, they shaved about 1 percentage point off growth.
UBS analysts labeled the cloud backlog performance a “disappointment” in a Thursday note.
Citi analysts said the results probably won’t satisfy investors given weak sector sentiment. They noted concerns about AI spending and potential bubble risks. But they maintained SAP’s underlying business remains healthy.
Revenue and Profit Beat Estimates
The actual quarterly performance showed strength. Total Q4 revenue hit 9.68 billion euros, up 9%. Cloud business revenue jumped 26% to 5.61 billion euros.
Regional performance varied. Canada, Brazil, Germany, India, Italy, Spain, the UK and South Korea led growth. Strong results also came from Australia, Japan, Mexico, Saudi Arabia, Singapore and the U.S.
Full year 2025 revenue reached 36.80 billion euros. That’s 11% growth at constant currencies.
Net profit for Q4 came in at 1.89 billion euros versus 1.63 billion euros last year. Operating profit grew to 2.83 billion euros from 2.44 billion euros. The operating margin hit 29.2%.
SAP announced a share buyback program worth up to 10 billion euros. The program launches in February and runs through December 2027. For 2026, the company projects non-IFRS operating profit between 11.9 billion and 12.3 billion euros with free cash flow around 10 billion euros.
