SAP Stock Tumbles 11% on Weak Cloud Growth Forecast

TLDR

• SAP stock dropped 11% Thursday after reporting 25% cloud backlog growth in Q4, missing the expected 26% increase
• The decline marks SAP’s biggest daily fall since October 2020 when shares plunged 22%
• SAP guided for cloud backlog growth to “slightly decelerate” in 2026, disappointing investors
• The company reported Q4 revenue of 9.68 billion euros with cloud business sales growing 26% to 5.61 billion euros
• SAP announced a new share repurchase program worth up to 10 billion euros starting February 2026

SAP shares took a beating Thursday morning. The German software company dropped as much as 11% in early trading.

The reason? Cloud contract growth came in below expectations.

SAP’s current cloud backlog grew 25% in the fourth quarter to 21.05 billion euros. That’s about $25.17 billion. Investors wanted 26% growth.

SAP SE, SAP

The miss might seem small. But in the software world, every percentage point counts.

This marks SAP’s worst single-day decline since October 2020. Back then, the stock crashed 22% after disappointing third-quarter results. Shares are now trading more than 30% below their 12-month highs.

UBS analysts called the cloud backlog growth a “disappointment.” The company blamed large transformation deals for the shortfall. These deals had high cloud revenue scheduled for future years.

But investors didn’t buy it.

SAP also warned that cloud backlog growth would “slightly decelerate” in 2026. The company expects cloud revenue to grow between 23% and 25% this year. Wall Street wanted 24% to 26%.

That guidance gap spooked the market.

Cloud Business Shows Strength Despite Miss

The actual Q4 numbers weren’t terrible. Total revenue hit 9.68 billion euros, growing 9% year-over-year. Cloud business sales jumped 26% to 5.61 billion euros.

SAP’s cloud operations performed well across multiple regions. Canada, Brazil, Germany, India, Italy, Spain, the UK and South Korea all showed strong growth. Australia, Japan, Mexico, Saudi Arabia, Singapore and the U.S. also delivered solid results.

For the full year 2025, SAP reported total revenue of 36.80 billion euros. That’s an 11% increase at constant currencies.

Net profit came in at 1.89 billion euros for the quarter. That’s up from 1.63 billion euros a year earlier. Operating profit rose to 2.83 billion euros from 2.44 billion euros.

The operating margin reached 29.2%.

Buyback Program and Future Outlook

SAP tried to sweeten the deal for shareholders. The company announced a new share repurchase program worth up to 10 billion euros.

The buyback starts in February 2026 and runs through the end of 2027.

For 2026, SAP expects non-IFRS operating profit between 11.9 billion and 12.3 billion euros. Free cash flow should hit roughly 10 billion euros.

Citi analysts noted that SAP’s fundamentals remain solid. But they warned the results might not be enough given weak sector sentiment. Investors have been questioning whether massive AI spending makes sense. Some fear an AI bubble waiting to pop.

SAP continues shifting from software-license sales to subscription-based cloud services. Large deals with revenue scheduled for outer years shaved about 1 percentage point off Q4 cloud backlog growth.

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