Software provider SAP Q3 revenue rises on cloud business growth

By Reuters News


Overview

  • Germany enterprise software provider's preliminary Q3 revenue rose 13% yr/yr, cloud revenue up 26%

  • Adjusted EBIT for Q3 beat analyst expectations

  • Cloud revenue growth aided by multi-quarter catch-up from customers returning from financial distress


Outlook

  • SAP sees 2026 cloud revenue toward upper end of €25.8–26.2 bln at constant currencies

  • Company expects 2026 cloud and software revenue toward upper end of €36.3–36.8 bln at constant currencies

  • SAP continues to expect 2026 non-IFRS operating profit of €11.8–12.2 bln at constant currencies


Result Drivers

  • CLOUD MOMENTUM - Co said strong growth in cloud revenue and backlog was driven by customer adoption of its Autonomous Enterprise strategy and investments in cloud, data foundation, and business AI

  • COST MANAGEMENT - CFO said disciplined cost management paired with continued cloud momentum helped grow both revenue and operating profit

  • ACQUISITIONS IMPACT - Co said Q3 revenue included €49 mln from acquisitions of Reltio, Dremio, and Prior Labs, while operating profit was negatively impacted by €59 mln (IFRS) and €39 mln (non-IFRS) from these acquisitions


Company press release:


Key Details

Metric

Beat/Miss

Actual

Consensus Estimate

Q3 Adjusted EBIT

Beat

EUR 3.03 bln

EUR 2.96 bln (13 Analysts)

Q3 Adjusted EBIT Margin

29.50%

Q3 Adjusted Free Cash Flow

EUR 1.72 bln

Q3 Cloud Revenue

EUR 6.67 bln

Q3 EBIT

EUR 2.93 bln

Q3 EBIT Margin

28.50%


Analyst Coverage

  • The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 24 "strong buy" or "buy", 8 "hold" and 2 "sell" or "strong sell"

  • The average consensus recommendation for the software peer group is "buy"

  • Wall Street's median 12-month price target for SAP SE is €213.54, about 2.3% above its October 21 closing price of €208.65

  • The stock recently traded at 25 times the next 12-month earnings vs. a P/E of 17 three months ago


Reuters Recommended Reads

  • Oct 20 - Germany's Merz touts defence, AI and chip investment drive in pitch to investors

  • Oct 20 - AI data center projects boost US warehouse demand and rents, real estate company JLL says

  • Oct 21 - Germany's Jenoptik raises FY EBITDA margin outlook on strong semiconductor equipment demand


For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.


(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)

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