SAP Q3 2025 Non-IFRS Operating Profit Jumps 14%

SAP (SAP.DE) reported a strong third quarter for 2025, with non-IFRS operating profit increasing by 14% to €2.57 billion. This performance was driven by robust cloud revenue growth, demonstrating the company's continued momentum in its cloud transformation. The company's non-IFRS earnings per share (basic) rose by 29% to €1.59, falling short of the analyst estimate of 1.69.

Total revenue for the quarter reached €9.08 billion, marking a 7% increase year-over-year. This figure also fell below the analyst estimate of 9.77 billion. Despite an uncertain macroeconomic environment, the company maintained disciplined execution and a sharp focus on profitability and cash flow, underpinning its forward momentum.

Cloud Performance Drives Growth

Cloud revenue was a significant contributor to SAP's performance, growing by 22% to €5.29 billion, or 27% at constant currencies. Cloud ERP Suite revenue demonstrated even stronger growth, rising 26% to €4.59 billion, or 31% at constant currencies. The current cloud backlog also saw substantial growth, increasing by 23% to €18.84 billion, maintaining its second-quarter momentum.

The share of more predictable revenue for the quarter increased by 2 percentage points to 87%, highlighting the successful shift towards cloud-based subscriptions. This strong cloud adoption across SAP’s Business Suite, including Business Data Cloud and AI solutions, indicates market share gains and continued customer trust.

Management Optimistic on Outlook

SAP updated its 2025 financial outlook, now expecting cloud revenue towards the lower end of the outlook range of €21.6 – €21.9 billion at constant currencies, representing a 26% to 28% increase. Non-IFRS operating profit is anticipated to be towards the upper end of the outlook range of €10.3 – €10.6 billion at constant currencies, an increase of 26% to 30%. The company also projects free cash flow of €8.0 – €8.2 billion, an improvement from the previous outlook of approximately €8.0 billion.

Management expressed confidence in delivering on its commitments for the fourth quarter, driven by a strong pipeline and accelerated total revenue growth ambition for 2026. The company also announced strategic partnerships, including the acquisition of SmartRecruiters and collaborations with ADP and OpenAI, further solidifying its market position and innovation efforts.