SAP cloud revenue rises 26% as company targets top end of annual forecast
Key Facts
SAP's cloud revenue rose 26% year on year in the third quarter of 2026 to 6,668 million euros from 5,290 million euros, according to the company's earnings statement, beating analysts' expectations. Growth was 25% at constant currencies, while the company is targeting the top end of its annual cloud revenue forecast range. Total revenue reached 10,270 million euros, compared with 9,076 million euros in the same period a year earlier, an increase of 13%. Cloud revenue exceeded the median analyst estimate of 6,594 million euros, according to Visible Alpha estimates published on SAP's investor relations website. Total revenue also beat the median forecast of 10,119 million euros for the quarter.
SAP said in its statement that cloud revenue growth benefited from factors specific to the quarter, particularly "catch-up revenue spanning several quarters" from customers that had recovered from financial distress. Within the business, Cloud ERP Suite revenue reached 5,924 million euros, according to the earnings presentation. The suite's revenue grew 29% year on year on a reported basis. The increase was 28% at constant currencies, according to the company's statement. Regionally, cloud revenue in Europe, the Middle East and Africa grew 28% on both a reported and constant-currency basis. Christian Klein said customers were investing in technology that supports the company's strategy.
On profitability, IFRS operating profit rose to 2,930 million euros from 2,487 million euros a year earlier, according to the quarterly statement. Non-IFRS operating profit reached 3,030 million euros, compared with 2,566 million euros in the third quarter of 2025. Both measures increased 18% year on year. Non-IFRS operating profit exceeded the median analyst estimate of 2,942 million euros, according to Visible Alpha estimates. Basic earnings per share on the same basis rose to 1.89 euros from 1.59 euros in the comparable period, an increase of 19%. The non-IFRS cloud gross margin was 74.3%, according to the earnings presentation.
Cash flow from operating activities totaled 1,920 million euros in the third quarter, according to SAP's earnings presentation. Free cash flow rose to 1,718 million euros from 1,266 million euros in the same period a year earlier, an increase of 36%. In the second quarter of 2026, cloud revenue reached 6,281 million euros, according to the previous period's earnings statement. The business then posted reported year-on-year growth of 22%, while constant-currency growth was 24%. Annual cloud revenue growth therefore accelerated in the third quarter compared with the previous quarter, on both a reported and constant-currency basis.
Current cloud backlog reached 24,144 million euros in the third quarter, compared with 18,839 million euros in the same period a year earlier, according to the company's statement. The backlog grew 28% on a reported basis and 26% at constant currencies. It stood at 22,929 million euros in the second quarter, according to that period's earnings statement. While the backlog's value increased from the previous quarter, its year-on-year growth rate at constant currencies remained unchanged between the two periods. SAP defines this metric as contractually committed cloud revenue it expects to recognize over the next 12 months from the measurement date.
For fiscal 2026, SAP is targeting the top end of its cloud revenue forecast range of 25.8–26.2 billion euros at constant currencies, according to the earnings presentation. It is also targeting the top end of its combined cloud and software revenue range of between 36.3 and 36.8 billion euros on the same basis. The company maintained its non-IFRS operating profit forecast at 11.8–12.2 billion euros at constant currencies. It also maintained its annual free cash flow forecast at about 10 billion euros at actual exchange rates. It still expects a slight deceleration in year-on-year current cloud backlog growth at constant currencies by year-end. SAP will report fourth-quarter and full-year results on 28 January 2027 at 6:00 a.m. Central European Time, according to its investor relations calendar.