Inside SAP’s Q3 2025: Strong Cloud Growth, AI Push, and Pricing Power Plays

SAP delivered a solid third quarter, underscored by continued momentum in its cloud business and accelerating AI traction. CEO Christian Klein opened the earnings call on an optimistic note, highlighting “a great Q3” marked by strong revenue growth, renewed traction in the U.S. public sector, and continued market share gains.

Financial Highlights

• Current Cloud Backlog: €18.84 (+27%)
• Total Revenue: €9.08 billion (+11%)
• Cloud & Software Revenue: €8.0 (+12%)
• Cloud revenue: €5.3B (+27%)
• Cloud ERP Suite: €4.6B (+31%)
• IFRS Earnings Per Share: €1.72 (+37%)

SAP’s cloud-first strategy continues to pay off, with cloud growth far outpacing total revenue, a clear signal that the company’s transition to cloud and AI-enabled services is making an impact.

As organizations look to strengthen their SAP strategies ahead of year-end, it’s critical to understand how the company’s Q3 results and messaging signal what’s next for customers and buyers alike. Here we outline the key takeaways from the earnings call and how they affect SAP customers’ go forward strategy.

AI at the Core of SAP’s Growth Playbook

SAP remains laser-focused on accelerating cloud adoption and embedding AI across its portfolio. The company’s strategic goal, first outlined at Sapphire, is to convert €1 of on-premise revenue into €5 of cloud revenue through RISE with SAP, amplifying the potential further by upselling and cross-selling opportunities. Reflecting on Q3 wins, Klein reiterated: “our strategy works, land and expand works, and the AI-infused integrated business suite is the way forward for customers as well as for SAP.”

In addition to touting new customer wins in Q3, Klein highlighted the following AI-driven initiatives:

• Joule AI Assistants – function-specific AI copilots co-developed with customers across industries to maximize the business value.
• Joule Everywhere – a new Perplexity-powered AI assistant launching in Q4, capable of working with SAP and non-SAP data to answer complex business questions.
• Research Recognition – a forthcoming publication on SAP’s foundation module for tabular data to debut at a leading AI research conference this year.

Klein shared his optimistic view on the pipeline, emphasizing that many customers are pulling 2026 deals forward into Q4 to adopt SAP Business AI sooner. He stated: “AI will be the key enabler for accelerating double-digit revenue growth through 2027.”

Momentum Meets Reality: The Revenue Gap and Regional Lag

Despite the upbeat narrative, SAP’s third-quarter revenue came in below expectations at €9.08 billion, missing analyst estimates of €10.61 billion. The shortfall, driven largely by a stalled sales pipeline in the first half of the year, triggered a modest stock dip after the release.

While SAP regained traction in the U.S. public sector, driven in part by a major framework contract with the U.S. Army, the Americas region continues to lag behind EMEA and APAC, particularly in cloud growth. Klein acknowledged early-year pipeline softness but expressed confidence that deferred demand is now materializing heading into year-end.

For customers, this signals potential regional variability in commercial flexibility and deal velocity, as SAP may prioritize markets showing stronger near-term conversion potential.

Holding the Line on Pricing Discipline

During the Q&A, Christian Klein was asked about what SAP is seeing in terms of elongated sales cycles. Klein talked about the fact that this is typically not an issue when there is deeper engagement at the C-level and customers have a compelling business case centered on transformation and AI as strategic drivers for effective execution.

From a commercial standpoint, success depends on executive alignment, a strong business case, and clear value articulation. Organizations that can connect transformation and AI objectives directly to measurable business outcomes will be best positioned to accelerate decisions and maintain leverage.

Investors also pressed SAP on how SAP’s price discipline is impacting their bookings through the quarter. Klein made it clear: SAP is not backing down and sticking to their price discipline strategy:

• “Customers are willing to pay a premium for highly sophisticated capabilities,” Klein said, emphasizing that SAP will not “give deals away” to hit sales quotas.
• Migration credits remain available to strengthen business cases, but they also serve SAP’s goal of protecting subscription pricing and maintaining cost discipline.

What SAP’s Earnings Mean for Customers

SAP is keeping true to its margin-driven strategy, doubling down on pricing discipline while tightening commercial flexibility. In recent deals, we’ve seen SAP intensify commercial optimization measures, including in-term price uplifts, reduced license-swap options, more frequent list-price increases, and short-term credits in place of deeper discounts.

The rebranding of RISE/GROW with SAP into SAP Cloud ERP Private/SAP Cloud ERP adds another layer of complexity, with reshuffled bundles and limited pricing transparency making tracking, quantifying, and TCO validating more difficult.

As SAP heads into its busiest quarter, customers should anticipate heightened commercial pressure. Procurement and IT leaders must be prepared, armed with robust TCO models, clearly-defined negotiation strategies, and executive-level alignment, to secure a favorable deal  before year-end.

SAP’s Q3 results reinforce a clear message: transformation and AI innovation will come at a premium. Customers who approach upcoming renewals and RISE evaluations with data-driven value cases and disciplined governance will be best positioned to turn SAP’s pricing strategy into their own negotiating advantage.

UpperEdge helps clients navigate SAP’s evolving commercial strategies with data-driven insights and proven negotiation frameworks. Connect with our SAP experts to turn these market shifts into opportunities for measurable value.