Germany’s SAP hits $14.3 billion quarterly revenue milestone, lifts 2026 view

WALLDORF, Germany – In a significant milestone, Germany's SAP reported a €10 billion (S$14.3 billion) quarterly revenue achievement on October 21, marking its first time reaching the €10 billion mark. The tech giant also announced a 26% surge in its cloud backlog and raised its 2026 revenue outlook to the higher end of its range.

Cloud revenue grew by 26% to a total of €6.67 billion in the third quarter, while non-IFRS operating profit increased by 18% to €3.03 billion. SAP's cloud backlog, adjusted for currency fluctuations, expanded by 26% to €24.14 billion, outpacing UBS's forecast of a 24% to 25% growth. The company's operating profit outlook remained steady at €11.8 billion to €12.2 billion in constant currencies, a range that was previously narrowed in July due to recent acquisitions.

SAP's order book serves as a benchmark for global enterprise tech spending, as its software powers accounting and payroll systems for numerous major companies. In the recent quarter, AI emerged as the primary catalyst behind customers' shift to the cloud, according to SAP's CEO, Christian Klein, who shared insights with analysts.

Companies signed subscription contracts to access SAP's Joule assistant platform, which connects to over 70 AI models. Klein clarified that SAP does not favor any specific AI model. CFO Dominik Asam indicated that the fourth quarter would determine the overall trajectory of the year, highlighting a challenging economic climate marked by rising oil prices and increasing US interest rates that are "starting to develop teeth."

The company attributed its robust cloud revenue growth to customers returning from "financial distress." SAP's profit margin expanded to 29.5% from 28.3%, while free cash flow surged by 36% to €1.72 billion. SAP now anticipates that 2026 subscription revenue – the cost of accessing software customers rent remotely – will be at the upper range of its forecast, spanning €25.8 billion to €26.2 billion, reflecting a 23% to 25% increase.

When accounting for the declining classic license business, SAP projects revenue of €36.3 billion to €36.8 billion, representing a 12% to 13% growth at the upper end of its forecast range. CEO Klein hailed the quarter as "outstanding," pointing out that customers are investing in the technology supporting SAP's AI strategy. Notably, new cloud customers included AstraZeneca and Infineon.