SAP Q4 FY2025 Earnings: Five Key Takeaways Heading Into 2026

SAP delivered solid overall financial results in FY2025, including strong operating profit and cloud revenue growth, and closed Q4 with notable sales momentum. But investors focused less on what went right and more on what didn’t: softer cloud backlog performance and a 2026 outlook that failed to reassure the market about long-term growth durability.

The market reaction was immediate and severe. SAP experienced its largest single-day stock drop in roughly five years, underscoring that “steady execution” is no longer enough when cloud performance is under a microscope.

For customers, this matters because heightened investor pressure often translates into heightened commercial urgency. As SAP works to restore confidence and prove sustained momentum in 2026, enterprise buyers may find a more favorable negotiation environment emerging.

Below are five key takeaways from SAP’s Q4 FY2025 earnings call that matter most for enterprise customers, sourcing leaders, and transformation programs heading into 2026.

1. Backlog Momentum and 2026 Guidance Raise New Commercial Pressure for SAP

One of the most closely watched metrics coming out of SAP’s Q4 release was current cloud backlog growth, which quickly became a focal point for market scrutiny. SAP reported 25% current cloud backlog growth, coming in below the 26% pace analysts were expecting.

While the difference may seem small, SAP executives acknowledged that cloud backlog growth came in softer than expected and attributed much of it to deal mix. This mix included a higher share of large transformation contracts that ramp more slowly and contribute less to near-term backlog.

SAP also noted an uptick in government and defense-sector contracts, many of which include termination-for-convenience clauses that prevent SAP from counting portions of these deals as fully committed cloud backlog.

The company also said more customers are questioning whether they want to rely entirely on large U.S. hyperscalers, pushing them to evaluate alternative hosting models that take longer to negotiate and deploy. Together, these dynamics are adding complexity and slowing how quickly demand converts into recognized backlog.

SAP’s cloud growth outlook for 2026 also came in softer than investors were hoping for. While many in the market had expected SAP to sustain cloud revenue growth closer to the ~30% level, the company instead guided to a slower 23%–25% range. SAP attempted to frame this as continued outperformance, noting that its cloud growth remains roughly 10 percentage points ahead of key peers, but the guidance still reinforced concerns that cloud momentum may be starting to cool.

UpperEdge perspective: SAP’s backlog performance is becoming harder to interpret, and investors viewed this as a meaningful concern rather than a temporary timing shift. This puts added pressure on SAP to convert pipeline into committed backlog, creating negotiation leverage for customers in 2026.

2. Mid-Market Expansion and Public Cloud Were Major Growth Engines in 2025

SAP highlighted an important strategic theme as it continues expanding beyond its traditional large-enterprise base into the mid-market and public cloud. Klein noted that SAP has added several thousand new mid-market customers over the last few years, making the mid-market the fastest-growing segment of its customer base.

Equally notable, SAP emphasized that public cloud grew five times faster than private cloud in 2025 and now represents nearly half of SAP’s cloud order entry. This reinforces the company’s push toward more standardized offerings, including GROW with SAP and its various Business Suite modules.

UpperEdge perspective: Behind the scenes, SAP has been telling customers that it wants to reduce the number of private cloud deals it sells over time. Public cloud is easier for SAP to scale and is significantly more profitable, so enterprises should expect continued pressure toward standardized public cloud models, even when private cloud may better align with their requirements. Customers should also anticipate that the RISE commercial model will continue evolving with an increasing emphasis on public cloud delivery.

3. SAP’s “Five Pillars of Growth” Show Where SAP Will Push Hardest Next

SAP’s five growth pillars are centered heavily around AI and Business Data Cloud, which management positioned as the foundation for SAP’s next phase of expansion. The company pointed to early traction in both areas, highlighting strong initial adoption of Business Data Cloud since its launch, totaling €2B in order entry in under one year, and noting that two-thirds of Q4 cloud deals included AI.

SAP outlined five strategic pillars it believes will drive future growth and competitive differentiation:

• Joule and AI-driven user experience modernization
  SAP is using Joule to reduce manual interaction with SAP systems and provide more automated recommendations and insights.
• Embedding AI agents into core workflows
  SAP is building AI “agents” that can handle tasks across workflows and communicate with each other to run business operations more intelligently.
• Industry-specific AI capabilities
  SAP is expanding its AI use cases to improve specialized industry-specific capabilities in retail, manufacturing, healthcare, and other sectors.
• Business Data Cloud (BDC) as the foundation for business AI
  SAP is positioning BDC as the key to overcoming data silos by unifying SAP and non-SAP data to enable effective AI outcomes.
• AI-enabled acceleration of ERP migrations and transformation services
  SAP plans to apply AI to automate parts of ERP migration work, including testing, configuration, and data conversion.

UpperEdge perspective: Customers should expect SAP to increasingly steer engagements around its own strategic priorities, even when they don’t align with customer requirements. However, selectively aligning with these priorities where it makes sense can create meaningful negotiation leverage.

4. Klein Addressed the Biggest Question in SaaS: Will AI Replace ERP?

One of the biggest questions hanging over SAP and the broader SaaS market is whether AI will eventually make traditional enterprise applications like SAP less relevant. Klein emphasized that even though large language models are strong at processing unstructured content like emails and support tickets, meaningful enterprise value ultimately comes from structured operational data such as financials, payments, inventory, pipeline, and core business processes. 

SAP is betting, and actively pushing the narrative to the market, that its advantage comes from combining AI capabilities with the business data already embedded in its applications, supported by its AI foundation and Business Data Cloud.

UpperEdge perspective: Many customers are still defining what AI should look like across their enterprise, and key strategic decisions remain around whether to rely on ERP-native AI like SAP, external platforms, or a hybrid approach.

The AI landscape is moving quickly, and players like Anthropic, OpenAI, Google, and Microsoft could reshape where enterprise value ultimately sits. As this evolves, customers should expect SAP to embed AI deeper into its platform and continue evolving its commercial model in ways that drive greater lock-in and monetization.

5. Cloud ERP Negotiations Are Dragging Out, Largely Due to SAP’s Own Commercial Disruption

SAP acknowledged that Cloud ERP negotiations are taking longer, not because demand is weakening, but because transactions are becoming harder to structure and execute in the current environment.

However, SAP did not fully address how much of this friction is being driven internally. In 2025 alone, the company introduced new Cloud ERP packaging, rolled out Business Data Cloud and additional Business Suite modules, and expanded AI capabilities, all while many customers (and even SAP’s own sales teams) are still working to understand the commercial and operational implications.

UpperEdge perspective: While SAP blames external factors, a key underlying driver of SAP’s prolonged negotiation cycles is the internal complexity they continue to introduce through their ongoing commercial evolution and shifting sales priorities. As a result, customers are often forced to navigate SAP’s new offerings and deal structures without sufficient clarity, leading to delays and uncertainty on their strategic transformation decisions.

North America Reset: New Leadership Amid Lagging Regional Growth

One additional development worth noting for U.S. and Canadian customers is SAP’s appointment of David Robinson as President of North America. The timing is important, as North America cloud and sales growth once again lagged behind EMEA and APJ.

This leadership change follows a period in 2025 in which regional leadership under Jan Gilg was not always visible in customer engagements. Instead, executives from Walldorf were often more directly involved in key North American accounts.

Robinson brings more than 22 years of SAP experience, most recently serving as Managing Director of U.S. Public Services and Chief Revenue Officer for Cloud ERP.

UpperEdge perspective: North American customers should expect sharper regional focus, increased sales intensity, and a greater willingness from SAP to offer aggressive commercial terms in 2026, as the region is once again under pressure to show meaningful progress. Customers that are still on the fence about their RISE deal timing should evaluate whether this near-term window of leverage is right for them, as SAP will undoubtedly need to provide flexibility and incentives to accelerate deal conversion.

Closing Thought: SAP’s Urgency Creates a Buyer-Friendly Window in 2026

Despite SAP’s progress with RISE, embedded AI, and Business Data Cloud, this earnings outcome suggests a more customer-friendly window in the near term, as SAP faces increasing pressure to reaccelerate growth across key regions and industries.

For enterprise customers, SAP complexity is not going away, but the urgency to lock in committed backlog and restore market confidence may open a meaningful negotiation window in 2026.

Regardless of where you are in your SAP journey, UpperEdge is here to help you navigate strategy, commercial positioning and transformation outcomes.

Make smarter SAP decisions in 2026, commercially and strategically. See how UpperEdge’s SAP Advisory Practice can help.