SAP SE

Q3 non-IFRS cloud revenue was about €6.7 billion, up 25% in constant currencies. Total revenue was €10.3 billion, up 12%, and operating profit increased 18% to more than €3 billion; Dominik Asam also said non-IFRS operating profit surpassed €3 billion. Current cloud backlog reached €24.1 billion, up 26%. Non-IFRS cloud gross margin was 74.3%, down 0.7 percentage points year over year; IFRS cloud gross margin was 73.9%. IFRS EPS rose 14% to €1.96, and non-IFRS EPS rose 19% to €1.89. Free cash flow was €1.7 billion. For guidance, management reaffirmed current cloud backlog, operating profit, and free cash flow guidance, and said it now expects to trend toward the upper end of the previously guided range for cloud and software revenue. Management said implied Q4 cloud revenue growth is around 23% and still expects total revenue growth to accelerate in 2027.

Christian Klein framed the quarter as evidence that SAP’s ‘autonomous enterprise’ strategy is being adopted, not just discussed. He emphasized that AI is accelerating RISE migrations, strengthening the business case for the suite, and driving demand for Business Data Cloud and Joule. He was upbeat on customer traction, saying the company is winning across sectors, while also noting the work is not finished and that SAP will keep improving agent accuracy and response times.

Dominik Asam highlighted strong backlog growth, cloud revenue of about €6.7 billion, total revenue of €10.3 billion, operating profit above €3 billion, free cash flow of €1.7 billion, and EPS of €1.96 IFRS and €1.89 non-IFRS. He said cloud revenue benefited from about 1 percentage point of one-off positive effects, including a revenue recognition catch-up from customers returning from financial distress. On margins, he noted non-IFRS cloud gross margin of 74.3%, down 0.7 points year over year, and said ongoing AI and cloud investments will continue in the near term, while longer term model routing and automation should support cloud gross margins. He also said there is a high accounts receivable balance to manage and that collections need to be tightened.

Analysts pressed on why SAP kept its slight deceleration language for current cloud backlog despite strong 26% growth; management said Q4 remains a very large bookings quarter and macro uncertainty, higher interest rates, and commodity pressure justify caution. Questions also focused on whether AI credits and a shift toward consumption pricing are affecting revenue recognition; Dominik Asam said credits are amortized over the contract life and that the bridge from backlog to revenue remains largely traditional in the near term. Management was also asked about AI model strategy, gross margin, and response times; Christian Klein said SAP is model-agnostic, increasingly uses open-weight models, and is working on accuracy and latency, while also expecting AI automation to support margins over time.