SAP lifts 2026 cloud revenue outlook

SAP raised its expectations for full-year 2026 cloud performance after a strong third quarter, saying it now anticipates cloud revenue and cloud and software revenue to reach the upper ends of existing guidance ranges. The company now expects 2026 cloud revenue towards the top of a €25.8 billion to €26.2 billion outlook at constant currencies, implying growth of 23% to 25%. Cloud and software revenue is likewise projected towards the upper end of a €36.3 billion to €36.8 billion range, with expected growth of 12% to 13% at constant currency. At the same time, SAP reaffirmed its adjusted operating profit guidance of €11.8 billion to €12.2 billion and continues to target free cash flow of approximately €10 billion for the year.

Management indicated that fourth-quarter cloud revenue growth is expected to moderate to about 23%, compared with 25% in the third quarter, citing tougher prior-year comparisons and a natural slowdown in backlog growth. Despite this expected deceleration, the company reaffirmed guidance for current cloud backlog, operating profit and free cash flow, and stated it expects to trend toward the upper end of its combined cloud and software revenue outlook.

The guidance shift follows what SAP described as another strong quarter across its main metrics. Total revenue in the three months to September increased 13% to €10.27 billion, marking the first time quarterly revenue has exceeded €10 billion. Cloud revenue rose 26% to €6.67 billion, supported by demand for cloud-based business software and tools. Revenue from the Cloud ERP Suite grew 29% to €5.92 billion, underscoring the central role of core enterprise applications in the company’s cloud mix.

Current cloud backlog, which reflects contracted cloud business not yet recognized as revenue, increased 26% to €24.1 billion, providing substantial visibility into future cloud revenue. Total revenue growth was 12% at constant currencies, with non-cloud activities making up a declining share of the overall mix. Management highlighted that the expansion in backlog and cloud revenue supports confidence in achieving the upper end of the 2026 cloud-related targets.

SAP’s profitability also improved alongside its top-line expansion. IFRS operating profit increased 18% to €2.93 billion, while adjusted operating profit likewise rose 18% to €3.03 billion. The adjusted operating margin advanced to 29.5%, up from 28.3% a year earlier, reflecting stronger operating leverage as cloud revenue scales. Non-IFRS operating profit was reported at €3.03 billion, also up 18% year on year.

Looking beyond 2026, SAP reiterated a €3 billion efficiency target over the next two years, driven by automation across engineering, cloud operations and corporate functions. The company stated that it believes it is well positioned to accelerate total revenue growth in 2027, supported by AI adoption, Business Data Cloud offerings and continued migration to its cloud platform. Management noted that the raised bar for 2026 cloud and software revenue will serve as the reference point for measuring this planned acceleration in 2027.