SAP Q4 2025 SAP SE Earnings Call - Press Conference | AllMind AI Earnings | AllMind AI
Q4 2025 SAP SE Earnings Call - Press Conference
2025 earnings conference call.
Throughout today's recorded presentation, all participants will be in a listen-only mode.
The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by 1 on your touchtone telephone.
I would now like to turn the conference over to Alexandra, stiger Global head of investor relations. Please go ahead.
Good morning, everyone and welcome. Thank you for joining us with me today are CEO Christian crime and CFO Dominic Assam on this fall. We will discuss saps fourth quarter, and full year results for 2025, you can find the deck supplementing this call, as well as our quarterly statement on our website relations website.
During this call, we will make forward-looking statements which are predictions projections or other statements about future events. These statements are based on current expectations and assumptions that are risk that are subject to risk and uncertainty that could cause actual results and outcome to different materiality additional information regarding this resident. Uncertainties may be found in our filings with the SEC including but not limited to the risk factor section of our annual report on form 20f for 2024, unless otherwise stated all numbers on this call are non-ifrs and growth rates. And percentage Point changes are non-ifrs year and year on constant currencies the non-ifrs financial measures. We provide should not be considered as a substitute for or Superior.
Speaker #1: SAP SE Q2, big points first. 2025. You have seen the numbers. Let me share also some more background on these numbers, and then, of course, also the outlook for 2026 and the years to come.
To the measures of financial performance prepared in accordance with ifs. And with that, I would like to turn the call over to Christian. Thank you, Alexandra. And a warm, welcome to everyone joining this call.
Speaker #1: And, of course, there I will also double down on the topic of AI. Now, talking about 2025, I mean, first, when you look at the set of numbers, I would say I'm very happy with how SAP, again, wants to deliver a very successful year.
In countless conversations with Business Leaders in Q4. And at the world economic Forum, it became clear.
Speaker #1: You can look at cloud and software. We achieved our outlook, and please also remember, in the half-year one, we had a rough start. There were some geopolitical tensions.
Speaker #1: We especially in the public sector, we actually had, you know, our challenges to actually do deals. And still, we achieved our outlook for the year.
We overachieved and beat our outlook for operating profit and cash flow. It's not only about cost discipline—it's also the way we transform SAP, how we make the internal processes more efficient, and how we are now applying AI in all parts of the company.
Customers are facing geopolitical uncertainty, macroeconomic volatility. And they would like to leverage AI to make their companies more resilient and more productive driving growth as well as cost efficiencies at the same time, it is very encouraging that more and more customers and partners are turning to SCP to gain real business value from AI. Why? Because they realize that they don't gain value by developing. A number of custom AI agents or by applying commodity large language models on top of transactional, business applications.
Speaker #1: I will come later to that when it comes to 2026. Also, in 2025, in Q4, we actually had our best bookings result of the year.
Speaker #1: So I know there are still some discussions out there on CCB. I will touch base on that in a moment. But actually, Q4 was our best quarter with regard to bookings.
The formula for gaining real value from AI as an Enterprise is becoming clearer. It's important to reimagine first, how AI will change existing business modules, and Mission critical business processes and to boost process Automation and efficiency. AI agents must be embedded in business processes and trained with context, Which business data that is not available to large language, module providers,
Speaker #1: We had lower churn than expected, and also the discounts we have given actually were pretty stable. So actually, Q4. Now, again, net-net in a very good we started our transformation five years back, and we were sitting here.
This is a unique combination. Only sap can deliver.
Speaker #1: I was sitting here, made a pretty bold commitment about the 2025 ambition we have as a company. There were many doubts out there, but we delivered.
Because our business Suite provides us with access to the world's largest volume of business data and we directly Infuse our Atlantic AI layer in the most Mission critical business processes of a company.
Speaker #1: The company delivered. I'm super thankful to our 100,000 colleagues worldwide, to the customers, for the trust. Because with RISE and GROW, we made a big bet, not only on lifting and shifting our customers to the cloud, but really helping them to transform.
Momentum of sap business. AI is also clearly visible visible. In our Q4 numbers more than 2/3 of our Q4 Cloud order, entry includes business AI increasing by more than 20% points, compared with Q3
Speaker #1: And what came out of that is one of the biggest success stories, and definitely the biggest transformation in SAP’s history. Now, when you deep dive a bit on GROW—I mean, SAP is known for running large enterprises in the world.
Looking at a 50 largest deals in Q4, 90% of them included AI or sap business data cloud.
We also saw the number of customers using our AI co-pilot tool growing 9fold over the course of the year.
Now, let's
Speaker #1: And yes, we are very proud about that. But what we also managed over the last years is that actually several thousand net new customers joined from the mid-market.
have a look at our financial performance.
Speaker #1: Then the mid-market is actually by far now the fastest growing market within our customer base. We are expanding our ecosystem because a lot of that will be also covered by our partners.
Q4 was the best booking Squad of 2025 ahead of our expectations. This resulted in a total Cloud, backlog of 77 billion euros up 30%
Speaker #1: And in 2025, and that is also shows the success of our cloud transformation, actually, our public cloud business was growing five times faster than our private cloud business.
This also clearly shows the underlying momentum of our business as well as our potential in the future.
In addition, we achieved our 2025 Financial outlook for cloud Revenue, as well as cloud and software Revenue.
Speaker #1: And also, look at the resilience—what actually SAP, in the meantime, gained. We have a large recurring revenue share. We actually tripled our cloud revenue over the last year.
A great performance considering the macroeconomic challenges. We faced in half year 1.
Speaker #1: So definitely, I would say a huge success story. But we are living in a fast-moving industry. I would say this is probably the fastest moving industry in the world.
The ongoing transformation of scp's operating module combined with applying AI across the company allowed us to even be our operating profit and free cash flow Outlook in 2025.
Speaker #1: And so we can't rest. Now, what we also did, when you look at this half-moon, is actually we put a lot of clarity into our product strategy.
Speaker #1: I mean, we said, hey, all lines of businesses have to come together on one platform. The BDP is now, in the meantime, the platform for integration and extensibility.
but what we promised and even outperformed this ambition, but more importantly,
Speaker #1: We put a BDM, a business transformation portfolio, together again, helping our customers to do the process transformation, to be world-class in enterprise architecture. And also just help them to transform on the business side.
The great technological achievements of our Cloud transformation are now giving sep the why to win with business AI.
Speaker #1: We launched a lot of new innovations. Around sustainability, the business network, and all these businesses contributing to the overall growth of SAP. Very important, obviously, is also what we did in the last years around AI and the business data cloud.
It is the time to thank our customers partners and more than 100,000 colleagues worldwide for the trust in our strategy, and for making the transformation happen, for sure. The biggest in sap system.
Speaker #1: The business data cloud now produced in the meantime over $2 billion of order entry since its launch in January. Shows the success, but even more important, shows the strategic relevance.
To Q4 number where I expect some questions, our current cloud backlog.
In Q4 it. Grew 25%. Back in, Q3 we expected to reach, 26%.
Speaker #1: Because when we talk about AI, we talk a lot about data quality. And for the customers, super important to have this semantic layer of bringing SAP and non-SAP data together.
Before I explained the deviation. Let me outline that in Q4. New bookings came in clearly ahead of plan and we saw a strong customer retention low. Turn and stable discount rates.
Speaker #1: And that is also then resulting in the huge success of BDC within the first 12 months. But of course, we are not stopping here.
This resulted in a 30% increase to 777 billion total Cloud, backlog and impressive quotes on an already large base.
Speaker #1: I mean, you have seen our total cloud backlog increase by 30% to 77 billion. I mean, what a number. That also shows why we are so confident on our guidance to accelerate total revenue growth in the years to come.
The strong Q4 performance 2 factors led to the deviation.
First.
Speaker #1: I mean, with this backlog and the contract duration is around about four years, so you can see there is already a lot in the books, which will help us to say with confidence that SAP will be a growth company.
Christian Klein: Two rather big points. First, 2025, you have seen the numbers. Let me share also some more background on these numbers. And then of course also the outlook for 2026 and the years to come. And of course there I will also double down on the topic of AI. Now talking about 2025, I mean first when you look at the set of numbers I would say I very happy with how SAP again once delivered a very successful year. You can look at cloud and software. We achieved our outlook, and please also remember the H1 we had a rough start. There were some geopolitical tensions, especially in the public sector. We actually had our challenges to actually do deals, and still we achieved our outlook for the year. We overachieved and beat our outlook for operating profit and cash flow.
Christian Klein: Two rather big points. First, 2025, you have seen the numbers. Let me share also some more background on these numbers. And then of course also the outlook for 2026 and the years to come. And of course there I will also double down on the topic of AI. Now talking about 2025, I mean first when you look at the set of numbers I would say I very happy with how SAP again once delivered a very successful year. You can look at cloud and software. We achieved our outlook, and please also remember the H1 we had a rough start. There were some geopolitical tensions, especially in the public sector. We actually had our challenges to actually do deals, and still we achieved our outlook for the year. We overachieved and beat our outlook for operating profit and cash flow.
Speaker #1: The cloud business, when you compare this revenue growth numbers here of 26% in 2025, these are on an average 10 percentage points faster. Then our peers, then our competitors, just shows how also SAP is gaining market share.
We closed a higher share of significantly large deals in Q4, compared to our forecast, in October, which is great for the total Globe, backlog, but large customers often, don't move their mission critical Erp in the first year, these deals always have more back-end loaded worms. And as a consequence, a limited impact on current cloud backlog. In the first 12 months, the good news. The average contract duration remains stable. So we expect higher Revenue contributions from these deals over the next few years.
Speaker #1: So net-net also operating profit, free cash flow, Dominik will talk about that. So no need for me to dig deeper. But also there we beat our outlook, and that speaks for itself.
Second, we close the higher share of government deals in Q4. That, included a termination for convenience by law. Such such deals are not reflected in the CCB.
Speaker #1: Q4, on in we closed a lot of business, best bookings quarter. Now, I can tell you, share with you a story about all of them.
Speaker #1: I want to pick two. And I picked those two just to show the relevance of SAP AI in the world going forward. H&M, we all know them.
So while we even overperformed on bookings and are very satisfied with the outcome of Q4 the combination of both effects, resulted in a 1 percentage points difference to what we expected in October. And consequently, a slight shift of cloud revenue from 2026 to 2027 and Beyond.
Christian Klein: Not only about cost discipline, it's also the way how we transform SAP, how we make the internal processes more efficient, how we also now applying AI in all parts of the company. I will come later to that when it comes to 2026. Also in 2025 in Q4 we actually had our best bookings result of the year. So I know there's still some discussions out there on CCB. I will touch base on that in a moment. But actually Q4 was our best quarter with regard to bookings. We had lower churn than expected, and also the discounts we have given actually were pretty stable. So actually net net in a very good Q4. Now again we started our transformation five years back, and we were sitting here, I was sitting here, made a pretty bold commitment about the 2025 ambition we have as a company.
Not only about cost discipline, it's also the way how we transform SAP, how we make the internal processes more efficient, how we also now applying AI in all parts of the company. I will come later to that when it comes to 2026. Also in 2025 in Q4 we actually had our best bookings result of the year. So I know there's still some discussions out there on CCB. I will touch base on that in a moment. But actually Q4 was our best quarter with regard to bookings. We had lower churn than expected, and also the discounts we have given actually were pretty stable. So actually net net in a very good Q4. Now again we started our transformation five years back, and we were sitting here, I was sitting here, made a pretty bold commitment about the 2025 ambition we have as a company.
Speaker #1: Great retailer. And they came to us and said, hey, our business will change a lot as a retailer. And then we prototyped together over the complete year, and we closed the deal in Q4.
Now the great bookings performance included, some impressive wins in Q4, added us, L'Oreal, and hmm, group are embarking on the wise with sap Journey delloyd, Pirelli, RTX, Nokia, JBL and the US Navy chose wise 2. Well, Toyota and Daimler are even expanding their ongoing wise Journey, lock
Speaker #1: They wanted to see okay, we are happy with your commerce platform, but in the future, our consumers expect a more personalized shopping experience. So we custom coded for them a prototype on how shopping experience will change.
Speaker #1: We brought this back into the standard. And they said, wow, this is exactly what we need to really address our consumer needs, the online.
Speaker #1: consumer trends wide in the store, Second, we talked about certain things about returns claims management. People ordering stuff, sending it back. How can we make this more efficient?
Speaker #1: How can we improve the consumer experience? Can we actually propose to the consumer a different good? If they are not happy with one thing, what if a certain good is not available in one store?
Christian Klein: There were many doubts out there, but we delivered, the company delivered. I'm super thankful to our 100,000 colleagues worldwide, to the customers for the trust because with RISE and GROW we made a big bet not only on lifting and shifting our customers to the cloud, but really helping them to transform. And what came out of that is one of the biggest success stories and definitely the biggest transformation in SAP's history. Now when you deep dive a bit on GROW, I mean SAP, I know is known for running large enterprises in the world and yes we are very proud about that. But what we also managed over the last years is that actually several thousand net new customers joined from the mid-market, then the mid-market is actually by far now the fastest growing market within our customer base.
There were many doubts out there, but we delivered, the company delivered. I'm super thankful to our 100,000 colleagues worldwide, to the customers for the trust because with RISE and GROW we made a big bet not only on lifting and shifting our customers to the cloud, but really helping them to transform. And what came out of that is one of the biggest success stories and definitely the biggest transformation in SAP's history. Now when you deep dive a bit on GROW, I mean SAP, I know is known for running large enterprises in the world and yes we are very proud about that. But what we also managed over the last years is that actually several thousand net new customers joined from the mid-market, then the mid-market is actually by far now the fastest growing market within our customer base.
Martin went live on wise with 1 of their business areas. A third of that in our multi-year partnership, it will continue in 2026 with our human Capital Management Solutions as they keep transforming their Workforce. Across all sectors, companies, selected sep quo to transform their business KPMG Snowflake and Mueller. A large German retailer. Just to name a few on business, AI new, customers included names, such as Tech, Mahindra, Mondelez Kirin, and Sun chemical.
Speaker #1: Can an AI agent help to find a right store to deliver next day or even in the same evening? So and we showed them this was the SAP transactional application in the old world.
In healthcare selected sap business, AI to sustainably sustainably, improve patient care. We also saw the Bosch group select sap business are in Q4 to help boost Innovation across all 4 of its business sectors.
Speaker #1: And this is what you get with AI in the new world. And it was tremendous what they have found out on to really personalize the consumer experience to make the supply chain more dynamic, more agile with regard to also delivering the stuff faster to the consumers than finally, of course, they saw all the agents working together also into the back office into finance.
This momentum is translating into business, AI adoption.
Our customers are are already achieving impressive outcomes. Just 1 example, at Siemens Consultants can reinvest 25% of their weekly working time into higher value activities. Thanks to tool for Consultants.
Speaker #1: And that is what made this deal happen. It was not only the cloud move and get rid of the legacy; it was really the AI embedded in the different parts of our apps, which made this happen.
Christian Klein: We are expanding our ecosystem because a lot of that will be also covered by our partners and in 2025, and that is also shows the success of our cloud transformation. Actually, our public cloud business was growing five times faster than our private cloud business. And also look at the resilience what actually SAP in the meantime gained. We have a large recurring revenue share. We actually tripled our cloud revenue over the last year. So definitely I would say a huge success story. But we are living in a fast moving industry. I would say this is probably the fastest moving industry in the world, and so we can't rest now. What we also did when you look at this H1 is actually we put a lot of clarity into our product strategy.
We are expanding our ecosystem because a lot of that will be also covered by our partners and in 2025, and that is also shows the success of our cloud transformation. Actually, our public cloud business was growing five times faster than our private cloud business. And also look at the resilience what actually SAP in the meantime gained. We have a large recurring revenue share. We actually tripled our cloud revenue over the last year. So definitely I would say a huge success story. But we are living in a fast moving industry. I would say this is probably the fastest moving industry in the world, and so we can't rest now. What we also did when you look at this H1 is actually we put a lot of clarity into our product strategy.
These impressive wins aren't just a list of logos. They are the result of our Focus strategy execution throughout the year.
Speaker #1: Fresenius, we did a press release already, super happy about that. We got a lot of feedback, especially in Germany, hey, you were great in patient management, but why do you not deliver the next generation?
Looking back at 2025, we made huge progress. Let me name a few highlights.
Speaker #1: Together with Fresenius and Avellios, we are now coding on our platform a new patient management solution. And we started to do that. Avellios is our main partner here.
Speaker #1: And it will revolutionize how much more efficient we can make the doctors and the nurses, to spend more time with the people in the hospital, make them more efficient, making more efficient decisions.
First, our Cloud transformation is in full swing. Customers representing 40% of our support Revenue base, have now initiated a move to Cloud Erp using the wise and grow with sap offerings. And to go to market site, we established a partner first approach for the mid market and our focus on public. Cloud pays off with other entry growing, more than 5 times faster than private cloud in 2025. Now, almost half of our order entry,
Speaker #1: And adjust also make the whole operations in a hospital way more efficient than it is today. And again, AI agents taking a lot of manual work over what the nurses and the doctors had to do in the past.
Christian Klein: I mean, we said, hey, all lines of businesses have to come together on one platform. The BTP is now in the meantime the platform for integration and extensibility. We put a BTM, a business transformation portfolio, together again helping our customers to do the process transformation to be world class in enterprise architecture and also just help them to transform on the business side. We launched a lot of new innovations around sustainability, the business network, and all these businesses contributing to the overall growth of SAP. Very important obviously is also what we did in the last years around AI and the business data cloud. The business data cloud now produced in the meantime over EUR 2 billion of order entry since its launch in January shows the success but even more important shows the strategic relevance.
I mean, we said, hey, all lines of businesses have to come together on one platform. The BTP is now in the meantime the platform for integration and extensibility. We put a BTM, a business transformation portfolio, together again helping our customers to do the process transformation to be world class in enterprise architecture and also just help them to transform on the business side. We launched a lot of new innovations around sustainability, the business network, and all these businesses contributing to the overall growth of SAP. Very important obviously is also what we did in the last years around AI and the business data cloud. The business data cloud now produced in the meantime over EUR 2 billion of order entry since its launch in January shows the success but even more important shows the strategic relevance.
Speaker #1: And we showed this to many other healthcare customers, and they said, wow, this is it. We definitely want to join SAP in delivering next-generation patient management.
Situation. And with the hmrc in the UK,
Finally, our Innovations in sap, business data, cloud and business AI are seeing strong traction.
Speaker #1: Now, talking about the future of AI, talking about the future of SAP, and I know there is a general concern out there in the market about, oh, how will software sustain in the world of AI?
Speaker #1: Can not everyone code software? I would say, clearly, no. Because what we are already seeing with many customers is, of course, they are building certain custom agents for cash flow collection, et cetera, with those LLM providers.
Sap business data Cloud, secured around 2 billion euros in total contract value in less than a year since its launch. And as I mentioned earlier, more than 2/3 of our Q4 Cloud order, entry included, AI
Now, let's turn to our clothes ambition for the year, 2026 and Beyond.
Speaker #1: But what you always see as a roadblock—and this is now what customers see more and more, and that's also why it explains why we sold two-thirds of our deals with AI—they first of all see, oh, an LLM can read, when I build a cash flow agent, can read a support ticket.
Over the last years we have built a solid foundation for future growth, thanks to the successful execution of our transformation.
Christian Klein: Because when we talk about AI, we talk a lot about data quality, and for the customers, super important to have this semantic layer of bringing SAP and non-SAP data together. And that is also then resulting in the huge success of BDC within the first 12 months. But of course we are not stopping here. I mean you have seen our total cloud backlog increase by 30% to EUR 77 billion.
Because when we talk about AI, we talk a lot about data quality, and for the customers, super important to have this semantic layer of bringing SAP and non-SAP data together. And that is also then resulting in the huge success of BDC within the first 12 months. But of course we are not stopping here. I mean you have seen our total cloud backlog increase by 30% to EUR 77 billion.
Speaker #1: Yeah, it could be that, because of a support issue with the customer, the customer is not paying. You can read mails, okay. But what about the P&L data?
Building on this momentum. We are confident that we will further, expand our market share for all Cloud revenue and accelerate total revenue growth through 2027.
Speaker #1: What about certain sales negotiations, deals in the pipeline? What about certain payment informations, which are also necessary for the agent to understand why is this customer not paying?
Dominik Asam: Doll.
Doll.
Christian Klein: I mean, what a number. That also shows why we are so confident on our guidance to accelerate total revenue growth in the years to come. I mean, with this backlog and the contract duration is around about 4 years. So you can see there is already a lot in the books which will help us to say with confidence that SAP will be a growth company. The cloud business, when you compare this revenue growth numbers here of 26% in 2025. These are on an average 10 percentage points faster than our peers than our competitors. Just shows how also SAP is gaining market share. So net net also operating profit free cash flow. Dominik will talk about that. So no need for me to dig deeper. But also there we beat our outlook and that speaks for itself.
I mean, what a number. That also shows why we are so confident on our guidance to accelerate total revenue growth in the years to come. I mean, with this backlog and the contract duration is around about 4 years. So you can see there is already a lot in the books which will help us to say with confidence that SAP will be a growth company. The cloud business, when you compare this revenue growth numbers here of 26% in 2025. These are on an average 10 percentage points faster than our peers than our competitors. Just shows how also SAP is gaining market share. So net net also operating profit free cash flow. Dominik will talk about that. So no need for me to dig deeper. But also there we beat our outlook and that speaks for itself.
Speaker #1: So, it always goes together—the LLMs are super good in the unstructured data, but you need business data. And which company has petabytes of data which we are using to fine-tune our AI foundation?
Confidence is based on several key growth drivers. First coming back to our total Cloud, backlog of 77 billion euros this group by 30% it outperformed our client Cloud. Backlog growth by 5 percentage points in short. We have a significant amount of our future Cloud Revenue in the books,
Speaker #1: This is SAP. And we are using the world's best LLMs for the different use cases, bringing this together, and have a so-called knowledge graph to correlate the unstructured data with the structured data.
And given the whams of the large deals over the next 4 years, we are increasingly building a strong foundation for total revenue acceleration through 2027.
Speaker #1: And, of course, BDC helps to bring the semantical data together for the structured data in a company. And that is the winning formula. And then the second piece is, when you want to change a retailer like H&M, you cannot just go there and say, DIT, embed.
Second, we will continue converting our install base to the cloud with a multiplier of 2 to 3x.
Considering our support Revenue base of 10.5 billion euros. This represents a multi-billion Euro Cloud Revenue opportunity for us.
so,
Speaker #1: You have to fundamentally rethink. Like we do in SAP, how will I run a certain industry going forward? How will cash collection work? How will recruiting work?
Dominik Asam: In Q4.
In Q4.
The vast majority of our Cloud customers are expanding, their sap footprint across the sap business Suite. They now clearly see the value of best of Suite over best of breed.
Christian Klein: We closed a lot of business. Best bookings quarter. Now, I can tell you, share with you a story about all of them. I want to pick two and I picked those two just to show the relevance of SAP AI in the world going forward. H&M, we all know them, great retailer. And they came to us and said, hey, our business will change a lot as a retailer. And then we prototyped together over the complete year. And we closed the deal in Q4. They wanted to see, okay, we are happy with your commerce platform, but in the future, our consumers expect a more personalized shopping experience. So we custom coded for them a prototype on how shopping experience will change. We brought this back into the standard and they said, wow, this is exactly what we need to really address our consumer needs.
We closed a lot of business. Best bookings quarter. Now, I can tell you, share with you a story about all of them. I want to pick two and I picked those two just to show the relevance of SAP AI in the world going forward. H&M, we all know them, great retailer. And they came to us and said, hey, our business will change a lot as a retailer. And then we prototyped together over the complete year. And we closed the deal in Q4. They wanted to see, okay, we are happy with your commerce platform, but in the future, our consumers expect a more personalized shopping experience. So we custom coded for them a prototype on how shopping experience will change. We brought this back into the standard and they said, wow, this is exactly what we need to really address our consumer needs.
Speaker #1: How will workforce management work? So our product managers are just sitting there, using the which information, knowledge what we have about industries and business processes, to really redefine how these agents have to work.
Especially in the age of AI so they Leverage The Best of 3. The port not only to 1 their business processes and to end
but they also seek the harmonized data platform that provides the foundation for high value business AI,
Speaker #1: An inventory agent is a matter of fact. You can do an inventory, but if the inventory agent has no clue what is happening on the demand side, the inventory agent is not so intelligent, I can tell you.
As a result in Q4 alone, almost 2/3 of our deals, exceeding 1 million euros involved 4 or more lines of businesses.
Speaker #1: And then, of course, there are a lot of things that—no, what kind of information can I actually feed into an agent? There are certain security authorization requirements, which all sit in our beloved apps.
A remarkable increase of 25 percentage points.
But we see this, not only in increased up and Crossing numbers but also in Market checkings overall.
Speaker #1: Now, super important for us is business data, business process, security and trust, and, of course, completely rethinking how we run those companies—our customers—going forward.
We performed the cloud Market by 10 percentage points in 2025.
Forth. It is not just the world's largest Enterprises that rely on sap.
With our business Suite in the public Cloud saps. Mid-market business is growing too.
Christian Klein: The consumer trends right in the store and online. Second, we talked about certain things, about returns, claims, management, people ordering stuff, sending it back. How can we make this more efficient? How we can improve the consumer experience? Can we actually propose to the consumer a different good if they are not happy with the one thing? What if a certain good is not available in one store? Can an AI agent help to find the right store to deliver next day or even in the same evening? And we showed them, this was the SAP transactional application in the old world, and this is what you get with AI in the new world.
The consumer trends right in the store and online. Second, we talked about certain things, about returns, claims, management, people ordering stuff, sending it back. How can we make this more efficient? How we can improve the consumer experience? Can we actually propose to the consumer a different good if they are not happy with the one thing? What if a certain good is not available in one store? Can an AI agent help to find the right store to deliver next day or even in the same evening? And we showed them, this was the SAP transactional application in the old world, and this is what you get with AI in the new world.
Speaker #1: And so when I think about the future of this AI, of AI and SAP, I'm super happy that I have our ERP. I'm super happy that I have our apps.
We expand in the midmarket and we are winning new customers through our partner first strategy and the significant expansion of our reseller ecosystem.
Speaker #1: Because without those apps, I wouldn't have the data, and without the data, I wouldn't have an AI. So I know there is a lot of talk about, oh, what can the LLMs take over?
This channel is already growing more than 1 and a half times faster than our Direct business.
Speaker #1: The LLMs can take over coding of software, for sure. I mean, because this is unstructured information—code—they understand the patterns, how our developers coded in the past.
And we will substantially increase the contribution from our ecosystem.
Speaker #1: But everything related to business data is actually something that SAP can offer, which is pretty unique to us. So when you think about how SAP will grow its business going forward—and I find it pretty remarkable that, with an already heavily growing business, we said we're going to further accelerate our total revenue.
Finally, let's conclude with the clothes driver that has the highest potential and is of course the greatest strategic relevance by far.
Christian Klein: It was tremendous what they have found out on to really personalize the consumer experience, to make the supply chain more dynamic, more agile with regard to also delivering the stuff faster to the consumers. Then finally, of course, they saw all the agents, you know, working together also into the back office, into finance. And that is what, what made this deal happen. It was not only the cloud move and get rid of the legacy, it was really the AI embedded in parts of our apps which made this happen. Fresenius, we did a press release already, super happy about that. We got a lot of feedback, especially in Germany. Hey, you were great in patient management, but why do you not deliver the next generation? Together with Fresenius and Avelios, we are now coding on our platform a new patient management solution.
It was tremendous what they have found out on to really personalize the consumer experience, to make the supply chain more dynamic, more agile with regard to also delivering the stuff faster to the consumers. Then finally, of course, they saw all the agents, you know, working together also into the back office, into finance. And that is what, what made this deal happen. It was not only the cloud move and get rid of the legacy, it was really the AI embedded in parts of our apps which made this happen. Fresenius, we did a press release already, super happy about that. We got a lot of feedback, especially in Germany. Hey, you were great in patient management, but why do you not deliver the next generation? Together with Fresenius and Avelios, we are now coding on our platform a new patient management solution.
Our business Ai and business data cloud.
The traction from 2025 is just the beginning.
Many customers have seen that, an llm alone is not enough.
Speaker #1: We have five pillars where we have a clear 'why to win.' We cannot win everywhere, but we have five pillars which are very important for our customers.
They need modules business data and context to build high value. AI use cases and derive, business value.
Speaker #1: When you think about SAP and UX in the past, this was not a big success story. I mean, we know that Google cannot take over today every skill of an end user, but we are getting there.
So let me explain to you how we drive growth with. S saps unique combination of apps data and AI.
First 2.
We are Reinventing the user experience and the way people work across all our apps with our co-pilot tool.
Speaker #1: And we will not only take over manual work, we will take over analytical regress. We will train Joule also with correlations to understand not only how to do analytical reporting, but also give smart recommendations—how to source the best for this good I’m looking for, how to actually do inventory planning the best, looking into what is happening on the demand side, what is happening on the market side.
Unlike other digital, co-workers tool doesn't just access the world's leading llms.
It also has.
Access to business data.
Christian Klein: We started to do that. Avelios is our main partner here, and it will revolutionize how much more efficient we can make the doctors and the nurses to spend more time with the people in the hospital, making them more efficient, making more efficient decisions, and just also make the whole operations in a hospital way more efficient than it is today. And again, AI agents taking a lot of manual work over what the nurses and the doctors had to do in the past. And we showed this to many other healthcare customers, and they said, wow, this is it. We definitely want to join SAP in delivering the next generation patient management, now talking about the future of AI, talking about the future of SAP.
We started to do that. Avelios is our main partner here, and it will revolutionize how much more efficient we can make the doctors and the nurses to spend more time with the people in the hospital, making them more efficient, making more efficient decisions, and just also make the whole operations in a hospital way more efficient than it is today. And again, AI agents taking a lot of manual work over what the nurses and the doctors had to do in the past. And we showed this to many other healthcare customers, and they said, wow, this is it. We definitely want to join SAP in delivering the next generation patient management, now talking about the future of AI, talking about the future of SAP.
No matter the task.
Tool is setting new standards for user experience Simplicity productivity and we'll just redefine the future of work.
Speaker #1: So Joule will not only be connected to an LLM like GPT, Joule will be connected to our AI foundation to get the two worlds together.
Second embedded and extensible, AI agents. We are embedding AI agents across the main business processes of every company.
Speaker #1: And what it will do is, when you think about how often did I sit in front of my desktop or mobile typing in to data into SAP's, this will completely change.
Speaker #1: The design, the user experience, the simplicity, and at the end, the productivity of every end user will change. Second, I mean, this is logic.
Speaker #1: We are running business processes today. Transactions, workflows, complex. We are now embedding not further features into these apps. We are embedding agents. So the agents will take over the features.
Christian Klein: And I know there is a general concern out there in the market about oh, how will software sustain in the world of AI? Cannot everyone code software? I would say clearly no, because what we are already seeing with many customers is of course they're doing certain building certain custom agents for cash flow collection, et cetera with those LLM providers. But what you always see as a roadblock and this is now what customers see more and more. And that's why it also explains why we sold 2/3 of our deals with AI. They first of all see, oh, an LLM can read when I build a cash flow agent, can read a support ticket. Could be that because of a support of an issue of the customer, customer is not paying. You can read mails. Okay, but what about the P and L data?
And I know there is a general concern out there in the market about oh, how will software sustain in the world of AI? Cannot everyone code software? I would say clearly no, because what we are already seeing with many customers is of course they're doing certain building certain custom agents for cash flow collection, et cetera with those LLM providers. But what you always see as a roadblock and this is now what customers see more and more. And that's why it also explains why we sold 2/3 of our deals with AI. They first of all see, oh, an LLM can read when I build a cash flow agent, can read a support ticket. Could be that because of a support of an issue of the customer, customer is not paying. You can read mails. Okay, but what about the P and L data?
Speaker #1: And the agent will talk to each other. So we are actually infusing, across the most mission-critical business processes in the world, our agents. And we will train them.
To extend where differentiation is needed. We provide a powerful agent Builder with capabilities that are unique to sap such as the access to a semantical, BDC data product, and the ability to Benchmark and Infuse agents directly into the business process layer within our apps.
Speaker #1: Again, to also contextualize some information, because no agent can work in isolation. Otherwise, you are not running businesses. Very important in that space—in the second space, AI assistant—not every AI assistant will look the same.
Our Pro code offering serves, the needs of our developers while our business users can use the agent builder in a local mode to easily build deploy, and manage AI agents.
Speaker #1: For example, the cash flow example. So extensibility is key. So you're getting access in our agent builder to, first of all, understand the process better, and then you can also enhance those agents based on individual needs of a treasurer, of a person in supply chain training, and so on.
So we have always differentiated ourselves for our deep industry, and business processes, knowledge and code. It high value industry, specific applications. Now we are reimagining these strategic industry capabilities with AI
Speaker #1: And we have both. We have the toolset for the developers, and we have the low-code toolset for the business users. Third, industry-specific capabilities—already today, super important.
Christian Klein: What about, you know, certain, you know, sales negotiations, deals in the pipeline? What about certain payment information which is also necessary for the agent to understand why is this customer not paying? So it always goes together. The LLMs are super good in the unstructured data, but you need the business data. And which company has petabytes of data which we are using to fine-tune our AI Foundation. This is SAP, and we are using the world's best LLMs for the different use cases. Bring this together, have a so-called Knowledge Graph to correlate the unstructured data with the structured data. And of course BDC helps to bring the semantic data together for the structured data in a company, and that is the winning formula.
What about, you know, certain, you know, sales negotiations, deals in the pipeline? What about certain payment information which is also necessary for the agent to understand why is this customer not paying? So it always goes together. The LLMs are super good in the unstructured data, but you need the business data. And which company has petabytes of data which we are using to fine-tune our AI Foundation. This is SAP, and we are using the world's best LLMs for the different use cases. Bring this together, have a so-called Knowledge Graph to correlate the unstructured data with the structured data. And of course BDC helps to bring the semantic data together for the structured data in a company, and that is the winning formula.
Speaker #1: I mentioned Fresenius. We had another large deal in Q4 where we could show the customer, 'Oh, you're doing last-mile delivery with SAP. Now we're going to show you how your trucks arrive faster at your stores with AI in the future.'
Together, with some industry-leading customers, we are already redefining Mission critical parts of an industry value Chain by developing the Next Generation, AI Solutions like 3 defining, patient care in healthcare, delivering higher predictability and supply chain resilience in manufacturing and to 1 smarter trade promotions and personalized, the shopping experience in retail.
Some of these industry are use cases, where already crucial to the success of our q4th.
Force.
Speaker #1: How you can improve load optimization of your trucks with AI. So these things are super, super important. Because here is the value of a customer.
BDC address is 1 of the biggest workloads for all blocks for AI adoption that. Our customers face today data, silos.
Speaker #1: This is how customers can differentiate in their industry. These are the main, main capabilities—for example, trade promotion for a retailer, personalized shopping experience, supply chain resiliency in manufacturing, asset management for the navies of the world.
BDC brings together sap and non-sap data. Providing our customers. With the harmonized data, they need to enable the agentic AI vision.
Christian Klein: And then the second piece is when you want to change a retailer like H&M, you cannot just go there and say to it, embed a certain agent in my operations. You have to fundamentally rethink like we do in SAP. How will I run a certain industry going forward? How will cash collection work? How will recruiting work? How will workforce management work? So our product managers are just sitting there using the rich information knowledge, what we have about industries and business processes to really redefine how these agents have to work. You know, an inventory agent as a matter of fact can do an inventory. But if the inventory agent has no clue what is happening on the demand side, the inventory agent is not so intelligent, I can tell you.
And then the second piece is when you want to change a retailer like H&M, you cannot just go there and say to it, embed a certain agent in my operations. You have to fundamentally rethink like we do in SAP. How will I run a certain industry going forward? How will cash collection work? How will recruiting work? How will workforce management work? So our product managers are just sitting there using the rich information knowledge, what we have about industries and business processes to really redefine how these agents have to work. You know, an inventory agent as a matter of fact can do an inventory. But if the inventory agent has no clue what is happening on the demand side, the inventory agent is not so intelligent, I can tell you.
Speaker #1: These are the things which SAP knows about how we ran it in the past. And now, we will reimagine those capabilities with AI. Fourth, business data cloud.
In 2026, we will have a heavily accelerate, the development of data products to enrich the semantic layer for all of our customers.
And fifth.
Accelerated Erp migration.
Speaker #1: I mean, again, the biggest roadblocker for business AI today is data, data harmonization, data silos. This is actually what constrains our customers the most.
Speaker #1: And this is what you have seen in numbers, PDC is a big success. Because SAP said, hey, we are not a closed shop anymore, and really bringing our data together with non-SAP data, BDC, and it's only in BDC, we are going to allow you to harmonize SAP data with whatever other business data you have in your company sitting in non-SAP apps.
Or in customers spend 10x more on their Erp, migration compared to what they spend on their Erp software with our integrated AI, powered migration tool chain. In the wise Journey, we are shrinking this ratio by cutting the migration cost and making it faster and easier for customers to realize value from their transformation.
Netn, net.
In all of the focus areas sep has a clear wide to win.
Speaker #1: And then fifth, obviously, this is what is close to our heart for many SAP customers and Christian. I just do the wise journey, but guess what?
Christian Klein: And then, of course, there are a lot of things that—what kind of information can I actually feed into an agent? There are certain security authorization requirements which all sits in our beloved apps. Now, super important for us is business data, business process, security, and trust. And, of course, completely rethink how we want those companies, our customers going forward. And so now when I think about the future of AI and SAP, I'm super happy that I have our ERP. I'm super happy that I have our apps because without those apps I wouldn't have the data and without the data I wouldn't have an AI. So I know there is a lot of talk about oh, what can the LLMs take over? The LLMs can take over coding of software for sure.
And then, of course, there are a lot of things that—what kind of information can I actually feed into an agent? There are certain security authorization requirements which all sits in our beloved apps. Now, super important for us is business data, business process, security, and trust. And, of course, completely rethink how we want those companies, our customers going forward. And so now when I think about the future of AI and SAP, I'm super happy that I have our ERP. I'm super happy that I have our apps because without those apps I wouldn't have the data and without the data I wouldn't have an AI. So I know there is a lot of talk about oh, what can the LLMs take over? The LLMs can take over coding of software for sure.
Together. They'll secure sep's position as the leading AI company.
Speaker #1: We are paying $1 to SAP—I mean, not exactly $1—but we are paying then $10 more to DSI. I said, that is not good.
finally, to be credible in the eye Market, we are role model, the use of business AI
And kicked off an extensive AI transformation program internally.
Speaker #1: So what we are doing is, I mean, why can AI not take over certain parts of the ERP migration? Think about data migration. Think about configuration of the system.
Speaker #1: Think about test automation. So these things are super important. We are doing this together with our partners because they understand as well, hey, in the world of AI, it's not only about putting a consultant to work.
Speaker #1: This work can be done way easier, way faster, and way more efficiently. And obviously, when we talk about ERP migrations, I think about SAP, and this is definitely a big focus area for us.
We are using AI across all functions to unlock significant long-term operating profit potential in R&D. We see huge efficiency gains as the world of a developer shifting from traditional code writing toward designing, guiding and validating AI generated Solutions. In sales business AI will help us to better quote twice, identify opportunities in HR business AI will help, us better plan and transform our Workforce.
Speaker #1: Then, coming to our—I mean, to be credible in AI, we need to use Joule. We need to use our own AI. And yes, does everything already work to perfection?
Christian Klein: I mean, because this is unstructured information code, they understand the patterns, how our developers code in the past. But everything related to business data is actually something what SAP can offer and which is pretty unique to us. So when you think about how will SAP grow its business going forward, and I find it pretty remarkable that we, on an already heavily growing business, we said we're going to further accelerate our total revenue. 5 pillars where we have a clear why to win. We cannot win everywhere, but we have 5 pillars which are very important for our customers. When you think about SAP and UX in the past, this was not a big success story. I mean, we know that Joule cannot take over today every skill of an end user. But we are getting there.
I mean, because this is unstructured information code, they understand the patterns, how our developers code in the past. But everything related to business data is actually something what SAP can offer and which is pretty unique to us. So when you think about how will SAP grow its business going forward, and I find it pretty remarkable that we, on an already heavily growing business, we said we're going to further accelerate our total revenue. 5 pillars where we have a clear why to win. We cannot win everywhere, but we have 5 pillars which are very important for our customers. When you think about SAP and UX in the past, this was not a big success story. I mean, we know that Joule cannot take over today every skill of an end user. But we are getting there.
Every sap leader across every function is infusing AI into their business and drive the reskilling of our Workforce.
because,
Speaker #1: No. But even more important is that we are a role model underpinning our great cash flow results and profit results with the use of AI.
AI isn't just about technology. It first needs to be enabled by our people.
All together.
Speaker #1: And you can ask all of our people—we are pushing this really heavily. So we mean it. So in R&D, code generation tools, Joule for developer, APA—we have thousands of developers who already see, oh, now I have much more time on developing those agents and making the agent orchestration work, and less about my time producing code.
Our goal is to achieve a 1 weight of around 2 billion euros in reel cost efficiencies by the end of 2028, thanks to the internal usage of AI.
This equates to efficiency gains of 15 to 20% of a trustable cost, which also helps us to reinvest into our AI road map.
So,
Speaker #1: In sales, already in Q4, we did a lot with AI on quoting, on pricing, on packaging, helped me to find the best deal for my customer, helped me now to find in the pipeline the best opportunities for me to close out the year in HR, recruiting.
To sum it all up, we closed 2025 with strong momentum. Our strategy is validated by our customers.
Christian Klein: We will not only take over manual work, we will take over analytical regress. We will train Joule, we will also with correlations to understand not only do analytical reporting but also give smart recommendations how to source the best for this good. What I'm looking for, how to actually do inventory planning the best looking into what is happening on the demand side, what is happening on the market side. So Joule will not only be connected to an LLM like GPT, Joule will be connected to our AI Foundation to get the two worlds together. And what it will does is when you think about how often did I sit in front of my desktop or mobile typing into data into SAP. This will completely change the design, the user experience, the simplicity, and at the end the productivity of every end user will change.
We will not only take over manual work, we will take over analytical regress. We will train Joule, we will also with correlations to understand not only do analytical reporting but also give smart recommendations how to source the best for this good. What I'm looking for, how to actually do inventory planning the best looking into what is happening on the demand side, what is happening on the market side. So Joule will not only be connected to an LLM like GPT, Joule will be connected to our AI Foundation to get the two worlds together. And what it will does is when you think about how often did I sit in front of my desktop or mobile typing into data into SAP. This will completely change the design, the user experience, the simplicity, and at the end the productivity of every end user will change.
Speaker #1: We made the acquisition with SmartRecruiters. But also on skills, a lot will be handled and will work smarter with infused AI into our SuccessFactors solutions and then, of course, into our own HR operations.
And we we have all the ingredients to win in the age of AI. The groundwork is done and 2026 will be the year, AI delivers and the price scale return on investment. And with that, I'll hand over to Dominic
Thank you very much, Christian and thank you all for joining us this morning.
Speaker #1: So in tech, innovations, come at a very fast pace. The most important thing is, next to having the right strategy is our people. So AI is, first of all, not only a technology who can run a company smarter, it's also about the skills of the people.
I'd also like to wish you all a happy and healthy year.
2026.
Saps. Strong close to the year, reflects steady execution, against our operatories.
Speaker #1: So reskilling is a big topic within SAP, and we will double down on that. Because AI will affect every job, and we need to prepare our people for that.
As we navigated a rapidly shifting microeconomic backdrop at the beginning of the year, we remain focused on operational, disciplined, and driving value. For our customers in times of unprecedented, technological change,
Speaker #1: That doesn't mean that we need less people. I want to say this very clearly, but we need different skills and honestly, there will be a change of the mix of the job profiles going forward.
Christian Klein: Second, I mean this is logic. We are running business processes today, transactions, workflows, complex. We are now embedding not further features into these apps. We are embedding agents. So the agents will take over the features and the agent will talk to each other. So we are actually infusing across the most mission critical business process in the world, our agents. And we will train them again to also contextualize certain information. Because no agent can work in isolation, otherwise you are not running businesses very important in that space. In the second space, AI assistant, not every AI assistant will look the same. For example, the cash flow example. So extensibility is key. So you're getting access in our agent builder to first of all understand the process better.
Second, I mean this is logic. We are running business processes today, transactions, workflows, complex. We are now embedding not further features into these apps. We are embedding agents. So the agents will take over the features and the agent will talk to each other. So we are actually infusing across the most mission critical business process in the world, our agents. And we will train them again to also contextualize certain information. Because no agent can work in isolation, otherwise you are not running businesses very important in that space. In the second space, AI assistant, not every AI assistant will look the same. For example, the cash flow example. So extensibility is key. So you're getting access in our agent builder to first of all understand the process better.
Speaker #1: But as long as we post such great top-line results, we are not thinking about how we can reskill our existing employee base to make them fit for the next chapter of our transformation. We are rather thinking about restructuring.
Ability to drive Topline growth while consistently exceeding our profitability and free cash flow expectations, reflects the consistent execution against the Outlook, we provided at the beginning of the year. While challenges persisted, we took deliberate steps to reinforce our foundation and align the business for durable sustainable performance.
Speaker #1: Now, when we then look forward, and in a second I will hand over to Dominik. Let me just share some geopolitical observations. I mean, SAP is, I guess, by far the biggest tech company in Europe.
As a result, we closed the year in a position of strength. And the progress we've made has set the stage for continued advancement towards our financial and strategic priorities in the years ahead.
Rise and grow with sap, both remain, core pillars of our transformation strategy.
Speaker #1: But what will be very important for the future of SAP and for Europe is clearly, first of all, talent. So we really need to make sure that we are changing our education system and, really, our universities give us access to the best talents.
Serving as a go-to solution for large-scale Enterprises and high growth. Mid-size companies undergoing complex end-to-end modernization efforts.
Christian Klein: And then you can also enhance those agents based on individual needs of a treasurer of a person in supply chain training and so on. We have both. We have the tool set for the developers and we have the low code toolset for the business users. Third, industry specific capabilities already today super important. I mentioned Fresenius. We had another large deal in Q4 where we could show the customer oh you're doing last mile delivery with SAP now we're going to show you how your trucks arrive faster at your stores with AI in the future, how you can improve load optimization of your trucks with AI. So these things are super, super important because here is the value of a customer. This is how customers can differentiate in their industry. These are the main, main capabilities.
And then you can also enhance those agents based on individual needs of a treasurer of a person in supply chain training and so on. We have both. We have the tool set for the developers and we have the low code toolset for the business users. Third, industry specific capabilities already today super important. I mentioned Fresenius. We had another large deal in Q4 where we could show the customer oh you're doing last mile delivery with SAP now we're going to show you how your trucks arrive faster at your stores with AI in the future, how you can improve load optimization of your trucks with AI. So these things are super, super important because here is the value of a customer. This is how customers can differentiate in their industry. These are the main, main capabilities.
and as highlighted by Christian Ai and the business data Cloud are beginning to show real commercial impact
emerging as a meaningful contributor to customer decision and deal activity.
Speaker #1: That's actually working quite well. But when you think into every job the next generation has to do, it will change. And that's super important, and I've been talking about this for quite a while.
This combined momentum continues to materialize in large Cloud. Transactions with deal volumes, greater than 5 million euros. Contributing a record 71% to our total Cloud order entry in the fourth quarter.
Speaker #1: Especially here in Germany, I see a lot of movement now, the willingness to digitize Germany. But when I think about our home market and compare this to the US—oh my God, the regulation.
These results, validate our role as a partner of choice, trusted by world-class organizations navigating high stakes transformation at speed and scale.
Speaker #1: I mean, layers upon layers. And that is, of course, something when we are closing deals in Q4, in the US—oh, it's FedRAMP. You have clear regulation.
Now, let me provide more details around our financial highlights.
Current Club. Backlog reached 21 million euros up 25%.
Speaker #1: We are not even talking with customers about regulation. They are clear. And here you on the state level, you have regulation. Everyone reads a little bit different.
Christian Klein: For example, trade promotion for a retailer, personalized shopping experience, supply chain resiliency in manufacturing, asset management for the navies of the world. These are the things which SAP knows how we want it in the past, and now we will reimagine those capabilities with AI for Business Data Cloud. I mean, again, the biggest roadblocker for business AI is today data data harmonization, data silos. This is actually what constrains our customers the most. And, and this is what you have seen in numbers. BDC is a big success because SAP said hey we are not a closed shop anymore in really bringing our data together with non-SAP data. BDC, and it's not only in BDC we are going to allow you to harmonize SAP data with whatever other business data you have in your company sitting in non-SAP apps.
For example, trade promotion for a retailer, personalized shopping experience, supply chain resiliency in manufacturing, asset management for the navies of the world. These are the things which SAP knows how we want it in the past, and now we will reimagine those capabilities with AI for Business Data Cloud. I mean, again, the biggest roadblocker for business AI is today data data harmonization, data silos. This is actually what constrains our customers the most. And, and this is what you have seen in numbers. BDC is a big success because SAP said hey we are not a closed shop anymore in really bringing our data together with non-SAP data. BDC, and it's not only in BDC we are going to allow you to harmonize SAP data with whatever other business data you have in your company sitting in non-SAP apps.
Speaker #1: The Datenschutzgrundverordnung. Then, on the federal level, you find other people who have other ideas on regulations and sovereignty. And then you come to the European layer.
This is a more pronounced slowdown than what we had anticipated and more than the slight deceleration we guided to at the beginning of last year.
Speaker #1: And now that is not good for SAP, but think about all of our startups where you find the same startup like an N8N in China and the US.
Thank you and Christians remarks. This outcome reflects that deal mix weighted towards larger Transformations. Many of which include longer ramp periods or flexible, structuring reducing their near-term, CCB contribution.
Speaker #1: And so, this digital union to come together and harmonize—that is of such essential importance, because it's not only about funding and access to capital.
also further mounting geopolitical tensions, have led to many customers putting, even more emphasis on exploring Sovereign, SAS options,
Speaker #1: It's really about speed, and speed is especially super important for all of the great startups we are having. So with that, I said enough.
While sap is extremely, well, positioned in the segment. And we have a significant pipeline of opportunities, due to the trust, Germany and sap continue to enjoy on a global scale. It takes longer to negotiate. These more complex transactions,
Speaker #1: I'm super confident about our outlook for 2026. Strategy is the right one. And we will also you're going to see SAP clearly as a winner in AI.
Christian Klein: And then fifth, obviously this is what is close to our heart for many SAP customers, the RISE with SAP journey. But guess what, we are paying $1 to SAP. I mean not exactly $1 but we are paying then $10 more to the SI. I said that is not good. So what we are doing is, I mean why can AI not take over certain parts of the ERP migration? Think about data migration, think about configuration of the system, think about test automation. These things are super important. We are doing this together with our partners because they understand as well. Hey, in the world of AI it's not only about putting a consultant to work. This work can be done way easier, way faster, and way more efficient.
And then fifth, obviously this is what is close to our heart for many SAP customers, the RISE with SAP journey. But guess what, we are paying $1 to SAP. I mean not exactly $1 but we are paying then $10 more to the SI. I said that is not good. So what we are doing is, I mean why can AI not take over certain parts of the ERP migration? Think about data migration, think about configuration of the system, think about test automation. These things are super important. We are doing this together with our partners because they understand as well. Hey, in the world of AI it's not only about putting a consultant to work. This work can be done way easier, way faster, and way more efficient.
And also longer to deploy and ramp as compared with plain vanilla offerings of us infrastructure, the service vendors.
Speaker #1: And with that, Dominik, over to
Speaker #1: you. Thank you,
Speaker #2: Christian. And thank you all for joining us this morning. I'd also like to wish you all a happy and healthy year 2026. SAP's strong close to the year reflects steady execution against our priorities as we navigated a rapidly shifting macroeconomic backdrop at the beginning of the year we remained focused throughout the year on operational discipline and driving value for our customers in times of unprecedented technological change.
This is particularly true for any state-owned and related entities as well as defense. But starts to also affect commercial customers in certain particularly sensitive geographies and industries.
Total Cloud backlog for the year. Grew 30% to record 77 billion against significantly exceeding. Our Council of backlog and Cloud Revenue growth.
Cloud Revenue, actually grew 26% year on year in 2025.
Again, primarily driven by the strong performance of cloud year, P Suite.
Claudia P Suite had another notable year reinforcing its position as a key engine of growth,
Christian Klein: And obviously when we talk about ERP migrations I think about SAP and this is definitely a big focus area for us. Then coming to our, I mean to be credible in AI we need to use tool we need to use our own AI. And yes, does everything already work to perfection? No. But even more important is that we are a role model underpinning our great cash flow results and profit results with the use of AI. And you can ask all of our people, we are pushing this really heavily so we mean it. So in R and D code generation tools for developer ABAP, we have thousands of developers who already see oh now I have much more time on developing those agents and making the agent orchestration work and less about my time producing code in sales.
And obviously when we talk about ERP migrations I think about SAP and this is definitely a big focus area for us. Then coming to our, I mean to be credible in AI we need to use tool we need to use our own AI. And yes, does everything already work to perfection? No. But even more important is that we are a role model underpinning our great cash flow results and profit results with the use of AI. And you can ask all of our people, we are pushing this really heavily so we mean it. So in R and D code generation tools for developer ABAP, we have thousands of developers who already see oh now I have much more time on developing those agents and making the agent orchestration work and less about my time producing code in sales.
Speaker #2: Our ability to drive top-line growth while consistently exceeding our profitability and cash flow consistent execution against the expectations reflects the outlook we provided at the beginning of the year.
with an increase of 32% in 2025, and I want to make the remarks as a constant currency number in you, as a US dollar that number would be 2 percentage points higher if you want to compare to competition,
Speaker #2: While challenges persisted, we took deliberate steps to reinforce our foundation and align the business for durable, sustainable performance. As a result, we closed the year in a position of strength, and the progress we've made has set the stage for continued advancement towards our financial and strategic priorities in the years ahead.
This performance is especially meaningful given the expansion of its Revenue base. Over time, highlighting its ability to scale and a sustainable growth rate and our accounting for 86% of total Cloud revenue for the year.
Software licenses Revenue, decreased by 27%.
Finally, total revenue for the full year approached 37 billion euros up 11%.
Speaker #2: Rise and grow with SAP both remain core pillars of our transformation strategy, serving as go-to solutions for large-scale enterprises and high-growth mid-sized companies undergoing complex end-to-end transformations and modernization efforts.
Now, let's take a brief. Look at our regional performance.
Christian Klein: Already in Q4, we did a lot with AI on quoting, on pricing, on packaging, helped me to find the best deal for my customer, helped me now to find in the pipeline the best opportunities for me to close out the year. In HR recruiting, we made the acquisition with SmartRecruiters, but also on skills, a lot will be handled, and we will work smarter with infused AI into our SuccessFactors solutions and then of course into our own HR operations. So in tech, innovations come at a very fast pace. The most important thing is, next to having the right strategy, our people. So AI is first of all not only a technology who can run a company smarter, it's also about the skills of the people.
Already in Q4, we did a lot with AI on quoting, on pricing, on packaging, helped me to find the best deal for my customer, helped me now to find in the pipeline the best opportunities for me to close out the year. In HR recruiting, we made the acquisition with SmartRecruiters, but also on skills, a lot will be handled, and we will work smarter with infused AI into our SuccessFactors solutions and then of course into our own HR operations. So in tech, innovations come at a very fast pace. The most important thing is, next to having the right strategy, our people. So AI is first of all not only a technology who can run a company smarter, it's also about the skills of the people.
For the full year, Brazil, France, Germany, India, Italy, South Korea, and Spain. All had outstanding performances in Cloud Revenue, but China, Japan, Saudi Arabia and the United Kingdom, as well as the US were particularly strong.
Speaker #2: And as Christian just highlighted, AI and the business data cloud are beginning to show real commercial impact, emerging as a meaningful contributor to customer decisions and deal activity.
Now, down the income statement.
Speaker #2: The combined momentum continues to materialize in large cloud transactions, with deal volumes greater than $5 million contributing a record 71% to our cloud order entry in the fourth quarter.
Our non ifs Cloud Ross margin for the full year continued its upward trend from last year and expanded by 1.6 percentage points to 75% driving Cloud. Prosperity up by 29% in the fourth quarter.
Is operating profit, increased 27% to 2.6 billion.
Speaker #2: These results validate our role as a partner of choice trusted by world-class organizations navigating high-stakes transformations and speed at scale. Now let me provide more details around the financial highlights.
Non Irish operating profit was up 21%.
Both IRS and non-irish operating profit growth were negatively impacted by approximately 100 million euros related to a 2025 Workforce transformation.
Speaker #2: The current cloud backlog reached €21 billion, up 25%. Quite frankly, this is a more pronounced slowdown than we had anticipated, and more than the slight deceleration we guided at the beginning of last year.
Christian Klein: So reskilling is a big topic within SAP, and we will double down on that because AI will affect every job and we need to prepare our people for that. That doesn't mean that we need less people. I want to say this very clearly, but we need different skills, and honestly there will be a change of the mix of the job profiles going forward. But as long as we post such great top line results, we are not thinking about restructuring; we are rather thinking about how we can reskill our existing employee base to make them fit for the next chapter of our transformation. Now when we then look forward and in a second I will hand over to Dominik. Let me just share some geopolitical observations. I mean SAP is I guess by far the biggest tech company in Europe.
So reskilling is a big topic within SAP, and we will double down on that because AI will affect every job and we need to prepare our people for that. That doesn't mean that we need less people. I want to say this very clearly, but we need different skills, and honestly there will be a change of the mix of the job profiles going forward. But as long as we post such great top line results, we are not thinking about restructuring; we are rather thinking about how we can reskill our existing employee base to make them fit for the next chapter of our transformation. Now when we then look forward and in a second I will hand over to Dominik. Let me just share some geopolitical observations. I mean SAP is I guess by far the biggest tech company in Europe.
In addition I first operating profit growth was negatively impacted by 200 million US dollar related to Terra dotta litigation expenses.
Non-irish operating profit to 10.4 billion euros.
Speaker #2: Echoing Christian's remark, the outcome reflects a deal mix weighted towards larger transformations many of which include longer RAM periods, more flexible structuring, reducing the near-term CCB contribution.
The IRS effective tax rate for the full year was 28.5%.
The non IRS tax rate was 30.4%, which is below the outlook for approximately 32%.
Speaker #2: Also, further mounting geopolitical tensions have led to many customers putting even more emphasis on exploring sovereign software as a service solution options. While SAP's extremely well-positioned in the segment and we have a significant pipeline of opportunities due to the trust Germany and SAP continue to enjoy on a global scale, it takes longer to negotiate these more complex transactions and also longer to deploy and ramp as compared to plain vanilla offerings done by US infrastructure service vendors.
Mainly resulting from an increasing ability to offset foreign withholding taxes in Germany.
looking forward we expect the midterm, non-irs effective tax rate to be in a range of 28 to 30%, which is likely lower than half lower, which is in the lower, half of the previously, communicated range of 28 to 32,
Christian Klein: But what will be very important for the future of SAP and for Europe is clearly first of all talent. So we really need to make sure that we are changing our education system and really our universities give us access to the best talents. That's actually working quite well. But when you think into every job the next generation has to do, it will change and then super important. And I'm talking about this since quite a while, especially here in Germany. I see a lot of movement now, the willingness to digitize Germany. But when I think about our home market and compare this to the US, oh my God, the regulation. I mean layers of layers. And that is of course something when we are closing deals in Q4 in the US. Oh, it's FedRAMP. You have clear regulation.
But what will be very important for the future of SAP and for Europe is clearly first of all talent. So we really need to make sure that we are changing our education system and really our universities give us access to the best talents. That's actually working quite well. But when you think into every job the next generation has to do, it will change and then super important. And I'm talking about this since quite a while, especially here in Germany. I see a lot of movement now, the willingness to digitize Germany. But when I think about our home market and compare this to the US, oh my God, the regulation. I mean layers of layers. And that is of course something when we are closing deals in Q4 in the US. Oh, it's FedRAMP. You have clear regulation.
3 cash flow for the full year was around it down. 8.2 billion euros. I at the very high end of our revised Outlook range of 8 billion to 8.2 billion.
Speaker #2: This is particularly true for any state-owned and related entities, as well as defense, but it is also starting to affect commercial customers and certain particularly sensitive geographies and industries.
This increase was mainly attributable to higher profitability, and to lower payments for restructuring and share based compensation.
Speaker #2: Total cloud backlog for the year grew 30% to a record €77 billion. Again, significantly exceeding our current cloud backlog and cloud revenue growth.
This results, reflects our continued emphasis on disciplined cash management and operating efficiency building on the progress, we've made in strengthening quality and consistency of our cash flow over time.
We are very proud of the progress we've made this year and the business momentum that contributed to our Strong, net cash position.
Speaker #2: Cloud revenue actually grew 26% year-on-year in 2025, again primarily driven by the strong performance of the cloud ERP suite. The cloud ERP suite had another notable year, reinforcing its position as a key engine of growth with an increase of 32% in 2025.
As a result sap has decided to further step up, its capital returns with a new 2-year share repurchase program of up to 10 billion euros.
Scheduled to start in February.
Christian Klein: We are not even talking with customers about regulation. They are clear. Here on the state level you have regulation. Everyone reads a little bit different. The Datenschutz-Grundverordnung. Then on the federal level you find other people who have other ideas on regulations, on sovereignty, and then you come to the European layer, and then you have layer and layer and layer. Now that is not good for SAP. But think about all of our startups, where you find the same startup like an NN in China and the US, and so this digital union to come together and harmonize, that is of such an essential importance because it's not only about funding and access to capital, it's really about speed. The speed is especially super important for all of the great startups we are having. So with that I said enough.
We are not even talking with customers about regulation. They are clear. Here on the state level you have regulation. Everyone reads a little bit different. The Datenschutz-Grundverordnung. Then on the federal level you find other people who have other ideas on regulations, on sovereignty, and then you come to the European layer, and then you have layer and layer and layer. Now that is not good for SAP. But think about all of our startups, where you find the same startup like an NN in China and the US, and so this digital union to come together and harmonize, that is of such an essential importance because it's not only about funding and access to capital, it's really about speed. The speed is especially super important for all of the great startups we are having. So with that I said enough.
This decision, reflects our confidence in the sustainable, strengths of the business, and our continued commitment to returning, Capital to shareholders in a disciplined, and balanced way.
Speaker #2: By the way, if you want to make that comparable to our US competitor at a couple of percentage points, if you make this constant currency number a US dollar number, then it would have been 34%.
Speaker #2: This performance is especially meaningful given the expansion of its revenue base over time, highlighting its ability to scale at a sustainable growth rate, and now accounting for 86% of total cloud revenue for the year.
Finally non-irs basic earnings per share in fiscal year 2025 increased by 36% to 650.15 cents. Now, let's move on to our Outlook.
Speaker #2: Software licenses revenue decreased by 27%. Finally, total revenue for the full year approached 37 billion, up 11%. Now, down the income statement, our non-IFS cloud gross margin for the full year continued its upward trend from last year, and expanded by another 1.6 percentage points to 75%, driving cloud gross profit up by 29%.
As you've probably seen in the quarterly statement published earlier today, we have provided this year's Outlook by now. We expect CCB growth to moderately to, to to moderate slightly over the course of 2026.
While some deceleration is anticipated, it is expected to be meaningfully less than what we saw in 2025 in terms of deceleration.
Christian Klein: I'm super confident about our outlook for 2026. Strategy is the right one and we will also. You're going to see SAP clearly as a winner in AI. And with that, Dominik, over to you.
I'm super confident about our outlook for 2026. Strategy is the right one and we will also. You're going to see SAP clearly as a winner in AI. And with that, Dominik, over to you.
Speaker #2: In the fourth quarter, IFS operating profit increased 27% to 2.6 billion euros, non-IFS operating profit was up 21%. Both IFS and non-IFS operating profit were growing negative impacted by approximately 100 million euros, related to a 2025 workforce transformation.
At the same time, we see a path for total revenue growth to accelerate supported by the foundation we've built and the continuous strength of our business and our operating profit Outlook reflects the stained operating discipline driving. Our expense to revenue growth ratio towards the lower end of our long-term. Operating leverage objectives of 80 to 90%,
Dominik Asam: Thank you, Christian, and thank you all for joining us this morning. I'd also like to wish you all a happy and healthy year. 2023, SAP's strong close to the year reflects steady execution against our priorities as we navigated a rapidly shifting macroeconomic backdrop at the beginning of the year. We remain focused throughout the year on operational discipline and driving value for our customers in times of unprecedented technological change. Our ability to drive top line growth while consistently exceeding our profitability and cash flow expectations reflects the consistent execution against the outlook we provided at the beginning of the year. While challenges persisted, we took deliberate steps to reinforce our foundation and align the business for durable, sustainable performance.
Dominik Asam: Thank you, Christian, and thank you all for joining us this morning. I'd also like to wish you all a happy and healthy year. 2023, SAP's strong close to the year reflects steady execution against our priorities as we navigated a rapidly shifting macroeconomic backdrop at the beginning of the year. We remain focused throughout the year on operational discipline and driving value for our customers in times of unprecedented technological change. Our ability to drive top line growth while consistently exceeding our profitability and cash flow expectations reflects the consistent execution against the outlook we provided at the beginning of the year. While challenges persisted, we took deliberate steps to reinforce our foundation and align the business for durable, sustainable performance.
Giving us the opportunity to continue to drive non-s operating profit growth significantly above Revenue growth.
In addition, in 2026, we expect to generate a record, free cash flow of approximately 10 billion euros supported by continued efficiency, improvements and operational rigor.
Speaker #2: In addition, IFS operating profit growth was negatively impacted by 200 million US dollars, related to Teradata litigation expenses. For the full year, IFS operating profit increased to 9.8 billion euros, and non-IFS operating profit to 10.4 billion euros.
Overall, our guidance reflects a balanced view of the opportunity ahead grounded in disciplined execution.
And an ongoing commitment to long-term value creation.
Speaker #2: The IFS effective tax rate for the full year was 28.5%. The non-IFS tax rate was 30.4%, which is below the outlook of approximately 32%, mainly resulting from an increased ability to offset foreign withholding taxes in Germany.
With 2025 now behind us we move into 2026 focused on consistency, Clarity, and execution. The groundwork we have laid across both transformation incentives in initiatives and Commercial performance puts us in a strong position to deliver against the guidance we outlined today.
While geopolitical and trade tensions have taken a certain toll on our Topline performance in 2025.
Speaker #2: Looking forward, we expect the midterm non-IFS effective tax rate to be in a range of 28 to 30%, which is the lower half of the previously communicated range of 28 to 32%.
Dominik Asam: As a result, we closed the year in a position of strength, and the progress we've made has set the stage for continued advancement towards our financial and strategic priorities in the years ahead. RISE with SAP and GROW with SAP both remain core pillars of our transformation strategy, serving as go-to solutions for large-scale enterprises and high-growth mid-sized companies undergoing complex end-to-end transformations and modernization efforts. As Christian just highlighted, AI and the Business Data Cloud are beginning to show real commercial impact, emerging as meaningful contributors to customer decisions and deal activity. The combined momentum continues to materialize in large cloud transactions with deal volumes greater than EUR 5 million, contributing a record 71% to our cloud order entry in the fourth quarter.
As a result, we closed the year in a position of strength, and the progress we've made has set the stage for continued advancement towards our financial and strategic priorities in the years ahead. RISE with SAP and GROW with SAP both remain core pillars of our transformation strategy, serving as go-to solutions for large-scale enterprises and high-growth mid-sized companies undergoing complex end-to-end transformations and modernization efforts. As Christian just highlighted, AI and the Business Data Cloud are beginning to show real commercial impact, emerging as meaningful contributors to customer decisions and deal activity. The combined momentum continues to materialize in large cloud transactions with deal volumes greater than EUR 5 million, contributing a record 71% to our cloud order entry in the fourth quarter.
the growing need for sovereignty and resilience also offers unique opportunities for those vendors that can offer Technologies and tools to reduce dependencies from dominant offerings,
Speaker #2: Free cash flow for the full year was rounded down 8.2 billion. I.e., at the very high end of our revised outlook range, of 8 billion, 8 to 8.2 billion, sorry.
as the largest non us software SARS and pass vendor. There's no company better position than sap to satisfy this rapidly growing demands.
Speaker #2: The increase was mainly attributable to higher profitability and to lower payments for restructuring and share-based compensation. This result reflects our continued emphasis on disciplined cash management and operating efficiency, building on the progress we've made in strengthening the quality and consistency of our cash flow over time.
I was ready to design a stick, which is not locked into any particular. Vendor is particular valuable in that respect and our decision to keep developing our powerful sap converge Cloud infrastructure.
The Sovereign infrastructure.
Thereby preserving capability to run infrastructure service, efficiently in our own data centers.
Provides us with another now, even more valuable option to deploy ourselves and pass offerings.
Speaker #2: We are very proud of the progress we've made this year, and the business momentum that contributed to our strong net cash position. As a result, SAP has decided to further step up its capital returns with a new two-year share repurchase program of up to 10 billion euros, scheduled to start in February.
Despite an unpredictable Market on geopolitical environment, our strategy remains clear and our execution is already driving meaningful progress across the business.
Dominik Asam: These results validate our role as a partner of choice trusted by world-class organizations navigating high-stakes transformations and speed at scale. Now let me provide more details around the financial highlights. The Current Cloud Backlog reached EUR 21 billion, up 25%. Quite frankly, this is a more pronounced slowdown than we had anticipated and more than the slight deceleration we guided at the beginning of last year. Echoing Christian's remark, the outcome reflects a deal mix weighted towards larger transformations, many of which include longer ramp periods for flexible structuring, reducing the near-term CCB contribution.
These results validate our role as a partner of choice trusted by world-class organizations navigating high-stakes transformations and speed at scale. Now let me provide more details around the financial highlights. The Current Cloud Backlog reached EUR 21 billion, up 25%. Quite frankly, this is a more pronounced slowdown than we had anticipated and more than the slight deceleration we guided at the beginning of last year. Echoing Christian's remark, the outcome reflects a deal mix weighted towards larger transformations, many of which include longer ramp periods for flexible structuring, reducing the near-term CCB contribution.
Speaker #2: This decision reflects our confidence in sustainable strength of the business and our continued commitment to returning capital to shareholders in a disciplined and balanced way.
Customers are choosing us as their Northstar to lead Mission critical change and we remain committed to helping them move faster. Scales smarter become more Sovereign, more resilient and more modernized with confidence.
Thank you and we will now be happy to take your questions.
Speaker #2: Finally, non-IFRS basic earnings per share in fiscal year 2025 increased by 36% to €6.15. Now, onto the outlook. As you've likely all seen in the quarterly statement published earlier today, we have provided this year's outlook. We expect CCB growth to moderate slightly over the course of 2026, while some deceleration is anticipated.
Thank you Dominic and with that we'll now take your question. I would like to kindly remind you to only ask 1 question. When prompted operator please open the line.
Anyone who wishes to ask a question may press star followed by 1 on their touchtone telephone.
Speaker #2: It is expected to be meaningfully less than what we saw in 2025. At the same time, we see a path for total revenue growth to accelerate supported by the foundation we've built, and the continued strength of our business.
If you are using speaker equipment today, please lift the handset before making your selections.
Dominik Asam: Also, further mounting geopolitical tensions have led to many customers putting even more emphasis on exploring sovereignty software as a service solution options. While SAP is extremely well positioned in the segment and we have a significant pipeline of opportunities due to the trust Germany and SAP continue to enjoy on a global scale, it takes longer to negotiate these more complex transactions and also longer to deploy and ramp as compared to plain vanilla offerings done by US infrastructure service vendors. This is particularly true for any state-owned and related entities as well as defense, but starts to also affect commercial customers in certain particularly sensitive geographies and industries. Total cloud backlog for the year grew 30% to a record EUR 77 billion, again significantly exceeding our Current Cloud Backlog and cloud revenue growth.
Also, further mounting geopolitical tensions have led to many customers putting even more emphasis on exploring sovereignty software as a service solution options. While SAP is extremely well positioned in the segment and we have a significant pipeline of opportunities due to the trust Germany and SAP continue to enjoy on a global scale, it takes longer to negotiate these more complex transactions and also longer to deploy and ramp as compared to plain vanilla offerings done by US infrastructure service vendors. This is particularly true for any state-owned and related entities as well as defense, but starts to also affect commercial customers in certain particularly sensitive geographies and industries. Total cloud backlog for the year grew 30% to a record EUR 77 billion, again significantly exceeding our Current Cloud Backlog and cloud revenue growth.
Again, anyone who has a question may press star followed by 1 at this time, 1 moment for the first question, please.
We'll take our first question from Adam wood with Morgan Stanley.
Speaker #2: And our operating profit outlook reflects sustained operating discipline, driving expense to revenue growth ratio towards the lower end of our long-term operating leverage, objectives of 80 to 90%, lower end being good, giving us the opportunity to continue to drive non-IFS operating profit growth significantly above revenue growth.
Speaker #2: In addition, in 2026, we expect to generate record free cash flow of approximately €10 billion, supported by continued efficiency improvements and operational rigor.
Speaker #2: Overall, our guidance reflects a balanced view of the opportunity ahead, grounded in disciplined execution and an ongoing commitment to long-term value creation. With 2025 now behind us, we move into 2026 focused on consistency, clarity, and execution.
Hey, good morning, fishing morning Dominick. Thanks very much for taking the question. Um, maybe if we go to, I guess the the main focus for investors on on the CCB at the end of the year. Um, you know, you you spoke obviously at the end of the year of 25% being disappointed being disappointing, which is unfortunately, where we ended up. Could you, maybe talk us a little bit through the end of the fourth quarter closed, um, you know, was it entirely that you had these large deals with with later ramps and deals with, um, cancellation Clauses in them or or did you also see some slippage? And maybe that was also the case, could you help us with what the pipeline looks like going into q1? You know, obviously, there was
Dominik Asam: Cloud revenue actually grew 26% year-on-year in 2025, again primarily driven by the strong performance of Cloud ERP Suite. Cloud ERP Suite had another notable year, reinforcing its position as a key engine of growth with an increase of 32% in 2025. By the way, if you want to make that comparable to our US competitor at a couple of percentage points, if you make this constant currency number US dollar number, then it would have been 34%. This performance is especially meaningful given the expansion of its revenue base over time, highlighting its ability to scale at a sustainable growth rate. Now accounting for 86% of total cloud revenue for the year, software licenses revenue decreased by 27%. Finally, total revenue for the full year approached EUR 37 billion, up 11%. Now down the income statement.
Cloud revenue actually grew 26% year-on-year in 2025, again primarily driven by the strong performance of Cloud ERP Suite. Cloud ERP Suite had another notable year, reinforcing its position as a key engine of growth with an increase of 32% in 2025. By the way, if you want to make that comparable to our US competitor at a couple of percentage points, if you make this constant currency number US dollar number, then it would have been 34%. This performance is especially meaningful given the expansion of its revenue base over time, highlighting its ability to scale at a sustainable growth rate. Now accounting for 86% of total cloud revenue for the year, software licenses revenue decreased by 27%. Finally, total revenue for the full year approached EUR 37 billion, up 11%. Now down the income statement.
Speaker #2: The groundwork we've laid across both transformation initiatives and commercial performance puts us in a strong position to deliver against the guidance we outlined today.
Speaker #2: While geopolitical and trade tensions have taken a certain toll on our top-line performance in 2025, the growing need for sovereignty and resilience also offers unique opportunities for those vendors that could offer technologies and tools to reduce dependencies from dominant offerings.
Slippage out of a very big Q4, that could be in a very good pipeline for the first quarter. And then I appreciate you going to give these numbers, you know, to, to the big figure and not to the decimal point. But unfortunately, I think for everybody, you know, that the kind of rounding up and rounding down would help. Could you give us any insight into whether 25% and then 26% adjusted for those effects is being rounded down or rounded up. Um and then maybe just finally you talked about slight deceleration.
I guess everybody's going to say well slight deceleration last year was 4 Points. I guess we could say 3 points. Organic, is that the same type of range that people should be thinking about because I think that's, you know, an issue where people would would go to thank you.
Speaker #2: As the largest non-US software, SaaS and PaaS vendor, there is no company better positioned than SAP to satisfy this rapidly growing demand. Our strategy to design a stack which is not locked into any particular infrastructure as a service vendor is a particular asset in that respect.
Speaker #2: And our decision to keep developing our powerful SAP Sovereign Cloud infrastructure, SCI, thereby preserving capability—growing infrastructure as a service efficiently in our own data centers—brought us with another, now even more valuable, option to deploy our SaaS and PaaS offerings.
Dominik Asam: Our non-IFRS cloud gross margin for the full year continued its upward trend from last year and expanded by another 1.6 percentage points to 75%, driving cloud gross profit up by 29% in the fourth quarter. IFRS operating profit increased 27% to EUR 2.6 billion. Non-IFRS operating profit was up 21%. Both IFRS and non-IFRS operating profit were growing, negatively impacted by approximately EUR 100 million related to a 2025 workforce transformation. In addition, IFRS operating profit growth was negatively impacted by $200 million related to Teradata litigation expenses. For the full year, IFRS operating profit increased to EUR 9.8 billion and non-IFRS operating profit to EUR 10.4 billion. The IFRS effective tax rate for the full year was 28.5%.
Our non-IFRS cloud gross margin for the full year continued its upward trend from last year and expanded by another 1.6 percentage points to 75%, driving cloud gross profit up by 29% in the fourth quarter. IFRS operating profit increased 27% to EUR 2.6 billion. Non-IFRS operating profit was up 21%. Both IFRS and non-IFRS operating profit were growing, negatively impacted by approximately EUR 100 million related to a 2025 workforce transformation. In addition, IFRS operating profit growth was negatively impacted by $200 million related to Teradata litigation expenses. For the full year, IFRS operating profit increased to EUR 9.8 billion and non-IFRS operating profit to EUR 10.4 billion. The IFRS effective tax rate for the full year was 28.5%.
Speaker #2: Despite an unpredictable macro and geopolitical environment, our strategy remains clear, and our execution is already driving meaningful progress across the business. Customers are choosing us as their North Star to lead mission-critical change, and we remain committed to helping them move faster, scale smarter, become more resilient, and modernize with confidence.
Yeah, thanks a lot, Adam. So look, let me start with the the CCB of 25%, as yes. We said in October, 26%, would be the target. I mean, first, let me reiterate again, compared to October. We even had over achieved our booking plan and also the churn came out lower than expected. And we also very importantly, uh, had stable discount rates. Now, why did we end up at a 25%? What we have seen is that during the course of Q4, actually did the, the, the deal mix has changed. We closed larger deals. And I mean, it's, it's, it's quite standard in in for a larger customer often times in the first year, they are shifting, you know, some smaller solutions to the cloud because the larger eaps that needs time. First to figure out how they would love to 1 their business processes. We talk about clean Core but of course there are also a lot of technical things to be figured out before you we
Speaker #2: Thank you. Thank you very much, Christian. Thank you, Dominik. We have 30 minutes left, and we are going to move to the Q&A session now.
Speaker #2: Could you please, at the beginning, limit your input to one question only? I have a couple of questions here in the tour already, but I want to kick it off here in the room, of course.
Speaker #3: Okay.
Speaker #3: Good morning, Heidi. I have a question related to the topic mentioned last. You mentioned the better environment in the US as to regulation. And you mentioned your opportunity here given the demand as to more sovereign and solutions offering.
Dominik Asam: The non-IFRS tax rate was 30.4%, which is below the outlook of approximately 32%, mainly resulting from an increased ability to offset foreign withholding taxes in Germany. Looking forward, we expect the mid-term non-IFRS effective tax rate to be in a range of 28% to 30%, which is the lower half of the previously communicated range of 28% to 32%. Free cash flow for the full year was a rounded down EUR 8.2 billion. That is at the very high end of our revised outlook range of EUR 8 billion to 8.2 billion. Sorry, the increase was mainly attributable to higher profitability and to lower payments for restructuring and share-based compensation. This result reflects our continued emphasis on disciplined cash management and operating efficiency. Building on the progress we've made in strengthening the quality and consistency of our cash flow over time.
The non-IFRS tax rate was 30.4%, which is below the outlook of approximately 32%, mainly resulting from an increased ability to offset foreign withholding taxes in Germany. Looking forward, we expect the mid-term non-IFRS effective tax rate to be in a range of 28% to 30%, which is the lower half of the previously communicated range of 28% to 32%. Free cash flow for the full year was a rounded down EUR 8.2 billion. That is at the very high end of our revised outlook range of EUR 8 billion to 8.2 billion. Sorry, the increase was mainly attributable to higher profitability and to lower payments for restructuring and share-based compensation. This result reflects our continued emphasis on disciplined cash management and operating efficiency. Building on the progress we've made in strengthening the quality and consistency of our cash flow over time.
Speaker #3: But are you and resilient infrastructure facing hurdles there in the US, like kind of against the backdrop of growing tensions between the two countries, and maybe there are some hurdles your competitors are facing here?
Really lift and shift your most Mission critical system to the cloud. So that was clearly. I would say the largest factor and the the second 1 is actually that we have seen that. Actually we perform much better in the public sector and and in some deals, you know, you have a termination um for convenience by law. So per se we are not including this in the CCP and that was the only mix effect. I would say we had compared to October again. Bookings performance was ahead of plan now for for some of the larger deals where that lies, I mean in every quarter you have slippages. But I would say the execution, the sales execution was was was actually was really good. I mean some of these larger Mega deals, what I was mentioning is actually that some of them closed, some of them not so clearly also for 2026 we see actually a better pipeline coverage, you know, than when we compare the pipeline now compared to where we are at in 2025 also of
Speaker #3: So they might backfire? Are there any indications for that?
Speaker #4: No, actually, the US public sector was one of the best-performing businesses in Q4. And that has completely changed. And those customers are actually less concerned about whether the software is coded in Europe or somewhere else.
Speaker #4: They have clear regularity framework, obviously, and it has high standards for where we mission-critical parts of the US government, for example. And still, standards for other businesses in regulated industries.
Dominik Asam: We are very proud of the progress we've made this year and the business momentum that contributed to our strong net cash position. As a result, SAP has decided to further step up its capital returns with a new two-year share repurchase program of up to EUR 2.10 billion scheduled to start in February. This decision reflects our confidence in sustainable strengths of the business and our continued commitment to returning capital to shareholders in a disciplined and balanced way. Finally, non-IFRS basic earnings per share in fiscal year 2025 increased by 36% to EUR 6.15. Now on to the outlook. As you've likely all seen in the quarterly statement published earlier today, we have provided this year's outlook. We expect CCB growth to moderate slightly over the course of 2026. While some deceleration is anticipated, it is expected to be meaningfully less than what we saw in 2025.
We are very proud of the progress we've made this year and the business momentum that contributed to our strong net cash position. As a result, SAP has decided to further step up its capital returns with a new two-year share repurchase program of up to EUR 2.10 billion scheduled to start in February. This decision reflects our confidence in sustainable strengths of the business and our continued commitment to returning capital to shareholders in a disciplined and balanced way. Finally, non-IFRS basic earnings per share in fiscal year 2025 increased by 36% to EUR 6.15. Now on to the outlook. As you've likely all seen in the quarterly statement published earlier today, we have provided this year's outlook. We expect CCB growth to moderate slightly over the course of 2026. While some deceleration is anticipated, it is expected to be meaningfully less than what we saw in 2025.
Course, 1 thing to consider what dominic also mentioned is software. Andy, I mean, in some, uh, countries of the world in some Industries, obviously also deal Cycles took a little bit longer. I mean, with the geopolitical tensions customers, have more questions around sovereignty. And actually, that also then reflects in longer negotiation Cycles. Now, for 2026, what means marginal decline or slight decline over the year, definitely not a 4 percentage decline that is
Speaker #4: And so there is not a debate about are you from Europe, are you from the US. It's really about adhering to those standards. And that, of course, when you imagine now applying AI to this parts of the world and to their companies, it's very important because now you can really focus on the business value.
Speaker #4: You can focus on the technological questions. Here, you can find, in Europe, customers from the same country asking you for very, very different regulatory standards, because again, there really are this many layers of regulation.
Not what we are seeking for. It will be not such a decline like what you have seen in 2025. Also again given the strong pipeline what we have now at the beginning of the year. Also mentioning I mentioned the 90% of deals which included AI. I mean, we see an even better trend for 2026 so you clearly see with BDC and AI customers are now not only doing wise to just reimaging their business model and try to a clean Core. We see now in more and more deals that also, of course, Ai and bdcs kicking in as another close driver. Also, helping of course, the multiples of these deals
We'll take our next question, from Charlie, Brennan with Jeffries.
Speaker #4: And that is something where, when we really want to leverage the power of Europe—and I'm all in favor of Europe—we need Europe more than ever.
Speaker #4: But then at a certain point, someone has to give up power and say, "Okay, in order to come to one Europe, we can't regulate everywhere." And I guess that is the biggest difference.
Dominik Asam: At the same time, we see a path for total revenue growth to accelerate, supported by the foundation we've built and the continued strength of our business. Our operating profit outlook reflects sustained operating discipline, driving expense-to-revenue growth ratio towards the lower end of our long-term operating leverage objectives of 80% to 90%, lower end being good, giving us the opportunity to continue to drive non-IFRS operating profit growth significantly above revenue growth. In addition, in 2026, we expect to generate record free cash flow of approximately EUR 10 billion, supported by continued efficiency improvements and operational rigor. Overall, our guidance reflects a balanced view of the opportunity ahead, grounded in disciplined execution and an ongoing commitment to long-term value creation. With now 2025 behind us, we move into 2026 focused on consistency, clarity, and execution.
At the same time, we see a path for total revenue growth to accelerate, supported by the foundation we've built and the continued strength of our business. Our operating profit outlook reflects sustained operating discipline, driving expense-to-revenue growth ratio towards the lower end of our long-term operating leverage objectives of 80% to 90%, lower end being good, giving us the opportunity to continue to drive non-IFRS operating profit growth significantly above revenue growth. In addition, in 2026, we expect to generate record free cash flow of approximately EUR 10 billion, supported by continued efficiency improvements and operational rigor. Overall, our guidance reflects a balanced view of the opportunity ahead, grounded in disciplined execution and an ongoing commitment to long-term value creation. With now 2025 behind us, we move into 2026 focused on consistency, clarity, and execution.
Speaker #4: Also, what we have seen, by the way, in Q4—it was very visible also in all the deal closing activities we
Speaker #4: had. Thank
Speaker #2: You. Let me build on that one. We have one question from Reuters here in the tools, to the same topic. Are your solutions intended to diversify, or are they intended to replace offerings from non-European providers in the long—
Speaker #2: term? I don't
Speaker #4: see it. I mean, I feel sometimes in Germany we are discussing forever since years now what does sovereignty mean. And then we are getting very theoretic in, "Okay, does it need to be a European provider, a US provider?" At the end, every little piece of hardware will come at some point of time, either from the US or China.
Uh, great. Good morning. Um, thanks for taking my question. I'll do 2 if I can uh, firstly, everyone's preoccupied with with AI at the moment. Uh, I think you referred to a 2 billion saving at, uh, at sap over the next couple of years. Can you talk to how that's going to flow through the business? Uh, are you going to extract that through, uh, natural churn, and the organization or or do we have to think more about a, um, another restructuring program? Uh, and then as you rewire the business towards a sort of AI age, uh, how much of your R&D today? Uh, do you think is based on uh, AI driven tools and how much of your output today is focused on AI as opposed to some of the core products. Thank you.
Speaker #4: Whether you like it or don't like it, at the end, it's really about the competitiveness. SAP needs to be more competitive. Our AI needs to be stronger than the ones from our competitors.
Dominik Asam: The groundwork we've laid across both transformation initiatives and commercial performance puts us in a strong position to deliver against the guidance we outlined today. While geopolitical and trade tensions have taken a certain toll on our top-line performance in 2025, the growing need for sovereignty and resilience also offers unique opportunities for those vendors that could offer technologies and tools to reduce dependencies from dominant offerings. As the largest non-US software SaaS and PaaS vendor, there is no company better positioned than SAP to satisfy this rapidly growing demand. Our strategy to design a stack which is not locked into any particular infrastructure or service vendor is a particular asset in that respect.
The groundwork we've laid across both transformation initiatives and commercial performance puts us in a strong position to deliver against the guidance we outlined today. While geopolitical and trade tensions have taken a certain toll on our top-line performance in 2025, the growing need for sovereignty and resilience also offers unique opportunities for those vendors that could offer technologies and tools to reduce dependencies from dominant offerings. As the largest non-US software SaaS and PaaS vendor, there is no company better positioned than SAP to satisfy this rapidly growing demand. Our strategy to design a stack which is not locked into any particular infrastructure or service vendor is a particular asset in that respect.
Speaker #4: And then the customers, no matter where in the world, will buy that. Obviously, they will also tell us what the sovereignty standards are. I mean, in India, we are also now going to build a new sovereignty standard with some local partners.
Yeah. Uh talking about our internal transformation, obviously it's fast. Super important to also be credible to our customers. And indeed, I mean all our Business Leaders already working with actually our product management teams on implementing. Certainly, our use cases for for the 2 billion uh that will be reached obviously by you know first we will have a heavily growing business and with that we will just under proportionally quote our cost and headcount base and you will see the efficiencies obviously in R&D, I mean,
Speaker #4: We do the same in France. We do, I mean, that is becoming different. But it's still also, for SAP, absolutely manageable because when you think about what did we do in the past, there was less regularity requirements on data and cloud because cloud was 30 years ago, was not there.
Speaker #4: But we have always localized our software for over 100 countries in the world, and that's now becoming more, especially with cloud and AI. But we have done that in the past.
Dominik Asam: And our decision to keep developing our powerful SAP Sovereign Cloud Infrastructure, SCI, thereby preserving capability to run infrastructure as service efficiently in our own data centers provide us with another now even more valuable option to deploy our SaaS and PaaS offerings. Despite an unpredictable macro and geopolitical environment, our strategy remains clear, and our execution is already driving meaningful progress across the business. Customers are choosing us as their North Star to lead mission critical change, and we remain committed to helping them move faster, scale smarter, become more resilient, and modernize with confidence.
And our decision to keep developing our powerful SAP Sovereign Cloud Infrastructure, SCI, thereby preserving capability to run infrastructure as service efficiently in our own data centers provide us with another now even more valuable option to deploy our SaaS and PaaS offerings. Despite an unpredictable macro and geopolitical environment, our strategy remains clear, and our execution is already driving meaningful progress across the business. Customers are choosing us as their North Star to lead mission critical change, and we remain committed to helping them move faster, scale smarter, become more resilient, and modernize with confidence.
Speaker #4: And now, we are doing the same thing, obviously, with other requirements coming towards SAP on the cloud and the AI side.
Speaker #5: Right. Hackman? Okay. You’ve mentioned a couple of times how the geopolitical tensions impact the business. So, how do you expect these tensions to impact the business going forward?
This is where the llm modules alone Can Do Magic on on, especially on the code generation side. But in all other areas, obviously, our own AI Foundation is kicking in where, you know, heavily. Also, you need business data to build those smart agents who can take over a lot of the work, what people are are doing today. So today, as of today, there is no restructuring plan. Restructuring Bland obviously, can you rule this out forever? No, but today I can tell you we going to achieve that by just scaling our business way more than in the past with AI. Now, on the R&D side, I mean first, what we did is I mean, we have great talents in the organization but obviously these talents are often times buried in development backlog. So already last year, we lifted and shifted a lot of our AI talents, uh, into, you know, the work to build the foundation to train, our foundational module to build those AI agents. So a lift and shift has already happened. And so for, for example, the the things which are of course
Speaker #5: I mean, I know there is an outlook, but what impact do you see in this outlook? Do you plan for a scenario in which the tensions might even escalate?
Speaker #5: And maybe a very special question I've heard that the next SAP leadership meeting is supposed to take place in Washington, DC. So is there a reason why you have chosen this location and do you consider changing it against the political
Alexandra Steiger: Thank you, thank you very much, Christian. Thank you, Dominik. We have 30 minutes left, and we are going to move to the Q&A session now. Could you please, at the beginning, limit your inputs to one question only? I have a couple of questions here in the queue already, but I want to kick it off here in the room.
[Analyst 1]: Thank you, thank you very much, Christian. Thank you, Dominik. We have 30 minutes left, and we are going to move to the Q&A session now. Could you please, at the beginning, limit your inputs to one question only? I have a couple of questions here in the queue already, but I want to kick it off here in the room.
Speaker #5: backdrop? Yeah.
Now, becoming less and less is code generation. So we already automated a certifi 35% of the code and then obviously, that will increase. Now also again significantly this year. So actually the the profile of a soft software developer is already changing quite significantly with a within sap, also again, investing, and it's not a size of quantity, quantity of people. It's really about getting the best people, the best data scientists, the best AI developer,
Speaker #4: I can take the leadership summit question because it came to my table. I didn't think about the geopolitical tensions when we were making these decisions.
Christian Klein: Of course.
Of course.
Alexandra Steiger: Heidi. Okay. Good morning. I have a question related to the topic mentioned last, better environment in the US as to regulation, and you mentioned your opportunities here given the demand as to more sovereign and resilient infrastructure and solutions offering. But are you facing hurdles there in the US, like kind of, you know, against the backdrop of growing tensions between the two countries? And maybe there are some hurdles that competitors are facing here, so they might backfire, you know. Are there any indications for that?
Heidi.
help us on board to actually you know build what I just like lined out with the 5 post drivers within AI
[Analyst 2]: Okay. Good morning. I have a question related to the topic mentioned last, better environment in the US as to regulation, and you mentioned your opportunities here given the demand as to more sovereign and resilient infrastructure and solutions offering. But are you facing hurdles there in the US, like kind of, you know, against the backdrop of growing tensions between the two countries? And maybe there are some hurdles that competitors are facing here, so they might backfire, you know. Are there any indications for that?
Speaker #4: But obviously, we should probably. I don't know. Look, the leadership summit, it took place in beautiful road over the last three years. And we are a global company.
Speaker #4: And we love to spend our time here. But I also have to support our customers worldwide. And so we made a simple decision. But a long time ago, that's just to make sure that everyone lives in peace.
Speaker #4: So we do it once in the US. If you're coming back to Europe and then we go to ABJ. That is the only thing.
Speaker #4: And sorry to say, we are still a company who has to support global customers. So we cannot make these decisions dependent on what is just happening in the world.
Speaker #4: I mean, obviously, if there would be a war and other crisis, of course, but at the end, we are a global company. And we have people everywhere in the world.
Christian Klein: No, actually the US public sector was one of the best performing businesses in Q4, and that has completely changed. You know, those customers are actually less concerned around is the software coded in Europe or somewhere else. They have clear regulatory framework, obviously, and it has high standards for very mission critical parts of the US government, for example, and still standards for other businesses in regulated industries. So there is not a debate about are you from Europe, are you from the US. It's really about adhering to those standards. That, of course, when you imagine now applying AI to these parts of the world and to their companies, it's very important because now you can really focus on the business value; you can focus on the technological questions.
Christian Klein: No, actually the US public sector was one of the best performing businesses in Q4, and that has completely changed. You know, those customers are actually less concerned around is the software coded in Europe or somewhere else. They have clear regulatory framework, obviously, and it has high standards for very mission critical parts of the US government, for example, and still standards for other businesses in regulated industries. So there is not a debate about are you from Europe, are you from the US. It's really about adhering to those standards. That, of course, when you imagine now applying AI to these parts of the world and to their companies, it's very important because now you can really focus on the business value; you can focus on the technological questions.
Speaker #4: And they want to feel part of SAP. And if I would say to my 30,000 people in the US, 'Oh, sorry, I don't come anymore,' I mean, what kind of signal would we send?
Maybe maybe on the R&D side, let's not forget that. Um, I think 1 of the challenges we we use to face very heavily is the the enormous rigorous prioritization of what. We actually developing because they have such a scarcity, um, of topics we can go after versus them, um, in terms of opportunities, there are so, um, that's not forget that there is ample of wood to chop, so to speak on R&D to do things that previously we couldn't do using the modern, um, Technologies. And this is also why in terms of financial model, we stick to our 82, 90% operating leverage? Yes. Um we are going to be at the lower end of that in 2026, but the last thing we want to have is putting some mortgages on the top line. We really want to push the Top Line, very hard by aggressively investing. And um so we want to use these tools to really push the envelope and and secure um, Innovation and Topline and to the head of the pack.
The next question is from the line of Frederick Bulan with Bank of America.
Speaker #4: I mean, sorry, but this is how we do it, and I feel we are doing it in the right way.
Speaker #4: Dominik? Maybe on
Speaker #6: the outlook, first of all, I want to emphasize that 2025 was not necessarily an easy year to put it mildly in terms of trade issues, geopolitical tensions.
Christiane Dominic. Um, if I can uh uh, follow up on the AI side. Uh, we've seen growing concerns about risks, some from AI back in the Enterprise SAS.
Speaker #6: And I find it quite remarkable that on cloud revenues, despite all these adversities, I would call it, we have been able to be really within spitting distance to the midpoint of our cloud revenue guidance.
Uh, you made it strong uh, pitch around the the kind of software.
Speaker #6: That shows you how predictable the number is by now by virtue of the high share of more predictable revenues. So for the way we now scale the guidance for next year, we have basically assumed the 2025 environment to be the new normal.
Uh, data and agent. Uh ecosystem it would be good to share in terms of AI traction. Uh what percentage of existing Cloud customers currently using your AI offering. Um, I mean you know it's a good to have the kind of 90% of um
Christian Klein: Here you can find in Europe customers from the same country asking you for very, very different regulatory standards. Because again, there is really this many layers of regulation. And that is something where when we really want to leverage the power of Europe, and I'm all in favor for Europe, we need Europe more than ever. But then at a certain point someone has to give up power and say, okay, in order to come to one Europe, we can't regulate everywhere. And I guess that is the biggest difference. Also, what we have seen, by the way, in Q4, it was very visible also in all the deal closing activities we had.
Here you can find in Europe customers from the same country asking you for very, very different regulatory standards. Because again, there is really this many layers of regulation. And that is something where when we really want to leverage the power of Europe, and I'm all in favor for Europe, we need Europe more than ever. But then at a certain point someone has to give up power and say, okay, in order to come to one Europe, we can't regulate everywhere. And I guess that is the biggest difference. Also, what we have seen, by the way, in Q4, it was very visible also in all the deal closing activities we had.
Speaker #6: So, I think 2025 shows that we have a resilience, even if some unexpected events hit us. But, of course, we're not embarking on any meltdown catastrophe scenarios here in that guidance.
Speaker #6: But I'd say a good base to build on because that's all hope that it's not getting worse than what we have seen in 2025.
Speaker #6: But I'd say a good base to build on because that's all hope that it's not getting worse than what we have seen in 2025.
Speaker #2: Okay. Let me continue with questions from the tool because we have a lot of questions with regards to our share price. Dropped today by 10% for a short time this morning.
You've seen earlier adoption. And from a risk standpoint, I mean a huge amount of concern in the, in the industry, about new tools out there. Um, you made a pitch about the relevance of your own models versus commoditized LMS. But would be, you know, do you see any of your customers starting to use in a different tools to respond to needs, uh, that they were previous previously addressed by sap either in Korea, P or cross? Uh, HTM, Etc. Thank you very much.
Speaker #2: What is the market not understanding about the
Speaker #2: company? So I'm
Alexandra Steiger: Thank you. Let me build on that one. We have one question from Reuters here in the queue to the same topic. Are your solutions intended to diversify or are they intended to replace offerings from non-European providers in the long term?
[Analyst 1]: Thank you. Let me build on that one. We have one question from Reuters here in the queue to the same topic. Are your solutions intended to diversify or are they intended to replace offerings from non-European providers in the long term?
Speaker #4: doing this job now since six years. I have seen a lot of ups and downs. And I when we were meeting here, a year ago, and the share price looked really great.
Speaker #4: I mean, we had a great one for two years. It's not a reason for me to lean back and say, "Hey, this is now this is it." And so we need to make our strategy, and we need to drive our execution independent of what the capital market is right now telling us.
Christian Klein: I don't see it. I mean, I feel sometimes in Germany we are discussing forever, since years now, what does sovereignty mean. And then we are getting very theoretical in, okay, does it need to be a European provider, US provider? At the end, every little piece of hardware will come at some point of time, either from the US or China, if you like it or don't like it. At the end, it's really about the competitiveness. SAP needs to be more competitive. Our AI needs to be stronger than the ones from our competitors. And then the customers, no matter where in the world, will buy that. Obviously they will also tell us what the sovereignty standards are. I mean, in India we are also now going to build, you know, a new sovereignty standard with some local partners. We do the same in France. We do.
Christian Klein: I don't see it. I mean, I feel sometimes in Germany we are discussing forever, since years now, what does sovereignty mean. And then we are getting very theoretical in, okay, does it need to be a European provider, US provider? At the end, every little piece of hardware will come at some point of time, either from the US or China, if you like it or don't like it. At the end, it's really about the competitiveness. SAP needs to be more competitive. Our AI needs to be stronger than the ones from our competitors. And then the customers, no matter where in the world, will buy that. Obviously they will also tell us what the sovereignty standards are. I mean, in India we are also now going to build, you know, a new sovereignty standard with some local partners. We do the same in France. We do.
Speaker #4: And obviously, it's not only SAP when you have followed the market in the last six months. I mean, there are all our competitors in the SaaS space.
Speaker #4: I mean, Alexandra head of IR tells me we are in the penalty box. We are in this penalty box because there are questions around, "Okay, what is the future of software in times where everyone maybe can generate and code apps?" I mean, I already alluded to that.
I can, I can start the Dominican. Please also comment. I mean, first on, uh, number of customer customer adoption, as I already said, uh, customer adoption of tool increased by 9 fold, which is really significant. Uh, you know, starting when I compare this, you know, back to uh, 20, 25 January and then secondly, what we are seeing is, of course, now that we are developing skills, more users are jumping on it, customers are 1 Thing number of users. And what we see is actually in the cloud base, a healthy penetration of of our AI round about 60% of our customers are already. Using our AI actively 20% are on the way to it, but also please not forget and I know what the market is. Um, you know, fearing right now to give you 1 practical example, or let 2
What in in the business World in order to deliver high value AI? I mean, let's take code generation, yes, of course. Um, the llms can understand code can find the patterns, understand how people used to code and actually are super powerful in that there is no business data involved.
Let's use the German customer.
Speaker #4: When you look back into all of the technological innovations over the last 10 to 20 years, it always starts with, I mean, these phones here became so powerful because they were better chips, better hardware.
Christian Klein: I mean that is becoming different, but it's still also for SAP, absolutely manageable. Because when you think about what did we do in the past there was less regulatory requirements on data and cloud because you know, cloud was 30 years ago was not there. But we always localized our software for over 100 countries in the world. And that's now becoming more especially with cloud and AI. But we have done that in the past and now we are doing the same thing obviously with other requirements coming towards SAP on the cloud and the AI side.
I mean that is becoming different, but it's still also for SAP, absolutely manageable. Because when you think about what did we do in the past there was less regulatory requirements on data and cloud because you know, cloud was 30 years ago was not there. But we always localized our software for over 100 countries in the world. And that's now becoming more especially with cloud and AI. But we have done that in the past and now we are doing the same thing obviously with other requirements coming towards SAP on the cloud and the AI side.
Actually started with an llm to build a cash flow agent.
Speaker #4: And the same is with the LLMs. It always starts with the chips with the hardware. But I'm 100% sure in order to create value on the business side, you need to move up the stack.
No value. Because why the llm could, of course weed certain emails, support tickets and try to figure out why is this customer? Not paying, but what was completely missing is all the
Speaker #4: And it always happened like that. And what I explained before is that these agents need to understand business data. They need to understand business processes in order to deliver value for our customers.
Speaker #4: This is very true. And so, while there is, of course, a lot of money now going into the chip and semiconductor space—which I totally get—I'm 100% sure that we are uniquely positioned to win the race on business AI.
Dominik Asam: Right. Okay. You've mentioned a couple of times how.
[Analyst 3]: Right. Okay. You've mentioned a couple of times how.
Christian Klein: The geopolitical tensions impact the business. So how do you expect these tensions?
The geopolitical tensions impact the business. So how do you expect these tensions?
Speaker #4: And we're going to prove that. And so that's why such a share price today is not nice. But at the end, it's super important that we understand our strategy, that we hear from our customers, that the strategy is the right one, and that we know our laser focus on the execution of that.
Dominik Asam: To impact the business going forward?
To impact the business going forward?
Christian Klein: I mean, I know there is an.
I mean, I know there is an.
Dominik Asam: Outlook, but what impact do you see in this outlook? Do you plan for a scenario in.
Outlook, but what impact do you see in this outlook? Do you plan for a scenario in.
Christian Klein: With the tensions might even escalate?
With the tensions might even escalate?
Speaker #4: And then I'm going to, and then we will also see again, different times.
Dominik Asam: Maybe a very special question. I've heard that the next SAP leadership meeting is supposed to take place in.
Maybe a very special question. I've heard that the next SAP leadership meeting is supposed to take place in.
the business data. Yeah, the the inventory data, the financial bank statements, the other data on the customer side is there's still a deal ongoing maybe that's blocking, you know, actually the payment of this customer. So actually, what we did is we used this llm, we brought it together with our AI foundation and our knowledge graph. And actually what it did the customer did they removed actually over 200, addictive modules now which they build on their own using our AI foundation. And that example, you can actually replicate to every AI agent in the business World. Second we want a large deal with H&M. Uh, we actually build a prototype for them. I mean, and that's what they are. Now going to implement on AI, we showed them the personalized shopping experience in Commerce. Obviously also using an llm but we combine it again with our AI Foundation to better. Understand what did the consumer Buy.
Speaker #6: And maybe to add some numbers around it, I mean, it's almost like a philosophical war around where the value is created. Is it on the infrastructure layer?
Christian Klein: Washington, D.C., so is there a reason?
Washington, D.C., so is there a reason?
Dominik Asam: Why you have chosen this location and do you consider changing it against the political backdrop?
Why you have chosen this location and do you consider changing it against the political backdrop?
Speaker #6: Which is currently the flavor of the month, where everybody is investing. By the way, that's actually good for SAP because we are agnostic. And the more money flowing into that, the more competitive that infrastructure will be.
Christian Klein: I can take the Leadership Summit question because it came to my table. I didn't think about the geopolitical tensions when we are making these decisions, but obviously we should probably, I don't know, look, the Leadership Summit, it took place in beautiful Rhode Island over the last 3 years and we are a global company and we love to spend our time here, but I also have to support our customers worldwide. And so we made a simple decision, but a long time ago. Let's just make sure that everyone lives in peace. So we do it once in the US, we are coming back to Europe, and then we go to Asia. That is the only thing. And sorry to say, we are still a company who has to support global customers. So we cannot make these decisions dependent on what is just happening in the world.
Christian Klein: I can take the Leadership Summit question because it came to my table. I didn't think about the geopolitical tensions when we are making these decisions, but obviously we should probably, I don't know, look, the Leadership Summit, it took place in beautiful Rhode Island over the last 3 years and we are a global company and we love to spend our time here, but I also have to support our customers worldwide. And so we made a simple decision, but a long time ago. Let's just make sure that everyone lives in peace. So we do it once in the US, we are coming back to Europe, and then we go to Asia. That is the only thing. And sorry to say, we are still a company who has to support global customers. So we cannot make these decisions dependent on what is just happening in the world.
Speaker #6: To run our PaaS and SaaS services on top. We are actually de-emphasizing that business. Maybe that will stabilize at some point in time because of the sovereign debate we just had before.
Speaker #6: On the other side, if I look at the SaaS and the PaaS layer, which we continue to believe, for the reasons Christian mentioned, will be a key layer, we are actually doing great.
Speaker #6: Especially in comparison to competitors you have seen results of some competitors like Dynamics and ServiceNow over the night. There's others to follow. And if you then adjust to an apples-to-apples dollar comparison, we are actually far ahead of the pack in terms of growth rates.
Speaker #6: So, just to give you some data, on SaaS PaaS in 2025, we had 30% growth in US dollar terms. So that's what you need to compare our competitors to.
In the past, to understand better patterns about what he clicked on the web page, Etc. Then, you know, we went into returns claims management also that we had this industry capability. Always in our portfolio. Now, we are actually reimagining this industry, uh, capability with AI. Making it smarter making it more efficient, uh, when it comes to returns claims management. So, and that is a very good example. We closed 1 of these Mega deals, I'm personally was involved in. We didn't win it. Actually, again only because, hey, Cloud clean Core, that was the thing, what we did a year ago now, we are winning it because last mile delivery, again, these these customer try to reinvent large mile delivery with an llm. Again, they were missing business data. We brought it together. We showed them what we can build together with our AI foundation and they were totally convinced. So, to make this very clear, we are winning deals because of AI, we are not losing deals because of AI and definitely. You know, these deals are actually now.
Christian Klein: I mean, obviously if there would be a war and otherwise, of course. But in the end, we are a global company, and we have people everywhere in the world, and they want to feel part of SAP. And if I would say to my 30,000 people in the US, oh, sorry, I don't come anymore, I mean, what kind of signal would we send? I mean, sorry, but this is how we do it, and I feel we are doing it in the right way. Dominik, maybe on the outlook.
I mean, obviously if there would be a war and otherwise, of course. But in the end, we are a global company, and we have people everywhere in the world, and they want to feel part of SAP. And if I would say to my 30,000 people in the US, oh, sorry, I don't come anymore, I mean, what kind of signal would we send? I mean, sorry, but this is how we do it, and I feel we are doing it in the right way. Dominik,
Leveraging AI to increase the win rate in Q4.
Speaker #6: And I'd say there are some, hovering around 20%. There are some hovering around 10%. Some in the mid-teens. But nobody is anywhere close there.
Maybe to give a little bit of a financial color around that kind of winning deals.
Speaker #6: So we have a strong degree of confidence right now that kind of SaaS PaaS layer is not super appreciated by capital markets. But I think the jury is still out what ultimately will happen.
Speaker #6: And by the way, we had a similar bifurcation, I’d say, in the last big tech bubble in 2000, where telecoms and fiber optics were going through the roof.
Dominik Asam: maybe on the outlook.
Dominik Asam: First of all, I want to emphasize that 2025 was not necessarily an easy year, to put it mildly, in terms of trade issues, geopolitical tensions. I find it quite remarkable that on cloud revenues, despite all these adversities, I would call it, we have been able to be really within spitting distance to the midpoint of our cloud revenue guidance. That shows you how predictable the number is by now by virtue of the high share of more predictable revenues. So for the way we now scale the guidance for next year, we have basically assumed the 2025 environment to be the new normal. So I think 2025 shows that we have a resilience even if some unexpected events hit us. But of course we're not embarking any meltdown catastrophe scenarios here in that guidance. But it's, I'd say, a good base to build on.
First of all, I want to emphasize that 2025 was not necessarily an easy year, to put it mildly, in terms of trade issues, geopolitical tensions. I find it quite remarkable that on cloud revenues, despite all these adversities, I would call it, we have been able to be really within spitting distance to the midpoint of our cloud revenue guidance. That shows you how predictable the number is by now by virtue of the high share of more predictable revenues. So for the way we now scale the guidance for next year, we have basically assumed the 2025 environment to be the new normal. So I think 2025 shows that we have a resilience even if some unexpected events hit us. But of course we're not embarking any meltdown catastrophe scenarios here in that guidance. But it's, I'd say, a good base to build on.
I'm always a little bit nervous about how people compare our numbers. Um, to the industry, we have a constant currency disclosure, um, but don't forget we had a massive devaluation of the US dollar, I think. Um, over the years, it was about 13% appreciation of the euro
Speaker #6: Infrastructure again, because that's kind of 'a rising tide lifts all boats.' And I wonder how much dark fiber today is still in the ground, which has never been lit since then.
Speaker #6: And on the other hand, by the way, this dark fiber, you can GPUs you buy will not hold for 20 still light today whereas the years.
Speaker #6: So the jury is
Speaker #6: still out on that topic, I guess. Thank
Speaker #2: You. Before I move to my M&A question here from the tool, any questions in the room? Herr
Um, so our our constant currency performance in South pass and, and there's also different strategy. I mean, we are not investing massively in infrastructure. Actually, you have seen our infrastructure business decline. Frankly that decline might slow as The Sovereign Solutions, become more prevalent, but, um, still it will, um, we will largely, um, leverage third-party infrastructure. And this is free of investment appetite right now, in this, um, frothy business. So we are not very concerned about lack of opportunities, to leverage that infrastructure. Now what we focus on is fast and Fast.
Speaker #2: Puck? Can you hear me?
Speaker #3: Yes, I have a question about the tariffs. How are the US tariffs affecting your business, both directly and indirectly via delayed spending or decisions by your customers?
Speaker #3: customers? I mean, there are
Speaker #4: no tariffs on software or software services, which is good. So there is no direct impact. And we hope it stays like that because we have again customers everywhere in the world.
Dominik Asam: Because let's all hope that it's not getting worse than what we have seen in 2020.
Because let's all hope that it's not getting worse than what we have seen in 2020.
Terrible US dollar numbers, that's above 30%. Now you have seen some of our competitors Dynamics and service. Now report numbers in Q4 which are hovering around the 20s, I think, 19 20% you've seen, um, our largest competitors, some of them not even reaching 10%.
Alexandra Steiger: Okay, let me continue with questions from the two because we have a lot of questions with regards to our share price dropped today by 10% for a short time this morning. What is the market not understanding about the company?
[Analyst 1]: Okay, let me continue with questions from the two because we have a lot of questions with regards to our share price dropped today by 10% for a short time this morning. What is the market not understanding about the company?
And um, so so I'd say that is the evidence that we are actually winning in AI as opposed to losing.
Speaker #4: And tariffs, digital tariffs would immediately fire back no matter where you are in the world. And then on the indirect impact, again, yeah, we saw in half year one, 2025, that was not great on the public sector.
We'll take our next question, from Ben Castillo with BNP paraba.
Hi, good morning, thanks for coming.
Christian Klein: So I'm doing this job now since six years. I have seen a lot of ups and downs. And when we were meeting here a year ago and the share price looked really great, I mean, we had a great run for two years. It's not a reason for me to lean back and say, hey, this is now, this is it. And so we need to make our strategy and we need to drive our execution independent of what the capital market is right now telling us. And obviously it's not only SAP when you have followed the market in the last six months. I mean, they are all our competitors in the SaaS space. I mean, Alexandra, our head of IR tells me we are in the penalty box.
Christian Klein: So I'm doing this job now since six years. I have seen a lot of ups and downs. And when we were meeting here a year ago and the share price looked really great, I mean, we had a great run for two years. It's not a reason for me to lean back and say, hey, this is now, this is it. And so we need to make our strategy and we need to drive our execution independent of what the capital market is right now telling us. And obviously it's not only SAP when you have followed the market in the last six months. I mean, they are all our competitors in the SaaS space. I mean, Alexandra, our head of IR tells me we are in the penalty box.
Speaker #4: A lot of new requirements came up. We needed new certifications, but we overcame that. And Q4 was actually really good in the US public sector.
Speaker #4: And yeah, so no, today there is no actual direct or indirect impact. Let's hope it stays like that. You never know. Let's see what's happening tomorrow morning.
Speaker #2: So, back to my tool. The company plans to start a share buyback program. Is there really no other idea to invest for the future?
This is not the positives in here, lots of large deals in the mix either, solving Cloud opportunity, you know, the high volume of AI and the backlog record TCB. So that all sounds optically, you know, very encouraging and we were to pair that against, you know, we ultimately still have, you know, CCV, growth of some 25% uh, in Q4 and still indicating the cloud revenues decelerate this year to come. I guess. Could you help us just think about, you know, the changing landscape here. That growing mix of large deals in in the pipeline that are converting the longer deal ramps.
Speaker #2: revenues? I
Speaker #4: mean, yeah, I knew that question will come. And look, it's a fair question. But look, I mean, first of all, these share buybacks, what we are also doing with these shares, we have employees.
How should we think about that, maybe mid-term trajectory of, of, total Cloud Revenue growth, you know, into 27 and perhaps Beyond, just help us with, you know, how you think about that, that pace of of cloud Revenue growth, either, deceleration or scope for stabilization. Thank you.
Speaker #4: And they actually we are also paying them via our shares. So we have actually employee stock programs and that resonates really well. And so I mean, there is a mean to it.
Christian Klein: We are in this penalty box because there are questions around, okay, what is the future of software in times where everyone maybe can generate and code apps? I mean, I already alluded to that. When you look back into all of the technological innovations over the last 10 to 20 years, it always starts with, I mean, these phones here became so powerful because there were better chips, better hardware. And the same is with the LLMs. It always starts with the chips, with the hardware. But I'm 100% sure in order to create value on the business side, you need to move up the stack. And it always happened like that. And what I explained before, that these agents need to understand business data, they need to understand business processes in order to deliver the value for our customers. This is very true.
We are in this penalty box because there are questions around, okay, what is the future of software in times where everyone maybe can generate and code apps? I mean, I already alluded to that. When you look back into all of the technological innovations over the last 10 to 20 years, it always starts with, I mean, these phones here became so powerful because there were better chips, better hardware. And the same is with the LLMs. It always starts with the chips, with the hardware. But I'm 100% sure in order to create value on the business side, you need to move up the stack. And it always happened like that. And what I explained before, that these agents need to understand business data, they need to understand business processes in order to deliver the value for our customers. This is very true.
Speaker #4: Piece, obviously, I mean, we didn't buy back shares. The second, it's not just about financially doing larger M&A over the last years. We didn't need to.
Speaker #4: I mean, still here, look at these quotes. We are posting the accelerated total revenue will come organically. Many tech companies can say this. And so, but going forward, obviously, would I now rule out M&A?
Speaker #4: No, we will at some point do M&A, but then more for technological reasons, especially in the data and AI space. Whenever we see there is a technology out there which can help to accelerate our AI and the data platform, we have enough financial flexibility to do that.
Speaker #4: So SAP is now, after that share buyback, not short of money. We have the flexibility to react. And we will react, but not from a financial standpoint.
Christian Klein: And so while there is of course a lot of money now going into the chip and semiconductor space, which I totally get, I 100% sure that we are uniquely positioned to win the race on business AI and we gonna prove that. So that's why such a share price today is not nice. But at the end it's super important that we understand our strategy, that we hear from our customers that the strategy is the right one, and that we now are laser focused on the execution of that. And then we will also see again different types, maybe to add some numbers around it.
And so while there is of course a lot of money now going into the chip and semiconductor space, which I totally get, I 100% sure that we are uniquely positioned to win the race on business AI and we gonna prove that. So that's why such a share price today is not nice. But at the end it's super important that we understand our strategy, that we hear from our customers that the strategy is the right one, and that we now are laser focused on the execution of that. And then we will also see again different types, maybe to add some numbers around it.
Yeah, I mean, good question and for sure, um, when I'm looking back to October, there's definitely I mean, honestly also 11th's learn that Q4. And we didn't see this in the forecast. But obviously, when you are, then going into a Q4, it's not unnatural actually that you have large deals, but you see it in the order entry. I mean, we are this time really closed. Many more large deals. And again, what should you do? I mean, we saw this, then in the during the course of actually in December the customers then said, okay deal done. And now we are doing the phasing and and and the phasing actually I mean should we now incentivize our people to keep the first 12 months up, that would be the wrong thing to do because again it's against the nature of how these Transformations work and also I don't want to Discount the renewal base, you know at the end what matters for the company on the mid? And the long term is the renew.
Speaker #4: We will react if we find the right technology and the right company we believe in.
Speaker #6: May I add on the financial aspects of that question? First, I want to highlight that SAP today has an extremely strong credit profile. So we have very good ratings, much better than some of our competitors.
Speaker #6: And I dare say we have managed to base that rating more and more on recurring cash generation. Think about the $10 billion guidance we have put out, the 8.2 that we delivered in '25.
Dominik Asam: I mean, it's almost like a philosophical war around where the value is created. Is it on the infrastructure layer, which is currently the flavor of the month where everybody is investing? By the way, that's actually good for SAP because we are agnostic, and the more money flowing into that, the more competitive that infrastructure will be to run our SAP and SaaS services on top. We are actually de-emphasizing that business. Maybe that will stabilize at some point in time because of the sovereign debate we just had before. On the other side, if I look at the SaaS and the SaaS layer, which we continue to believe, for the reasons Christian mentioned, will be a key layer, we are doing actually great, especially in comparison to competitors. You have seen results of some competitors like Dynamics and ServiceNow overnight.
Dominik Asam: I mean, it's almost like a philosophical war around where the value is created. Is it on the infrastructure layer, which is currently the flavor of the month where everybody is investing? By the way, that's actually good for SAP because we are agnostic, and the more money flowing into that, the more competitive that infrastructure will be to run our SAP and SaaS services on top. We are actually de-emphasizing that business. Maybe that will stabilize at some point in time because of the sovereign debate we just had before. On the other side, if I look at the SaaS and the SaaS layer, which we continue to believe, for the reasons Christian mentioned, will be a key layer, we are doing actually great, especially in comparison to competitors. You have seen results of some competitors like Dynamics and ServiceNow overnight.
Base, because that is what the swing, the cloud revenue. And the, and the profits actually on the long term. And so, when you look into 2026, I mean, q1 Q2 Q3. Actually, we, you know, we are not having this larger share, you know, of large deals. And that's why we actually see we will see a similar pattern and about Q4. I mean, definitely, when you look into our support Revenue base, there are still some larger customers and we need to make sure that especially
Speaker #6: So, we don't need to hoard an excess cash pile to sustain that extremely strong creditworthiness. So that's the philosophy. And frankly, we always benchmark investments like M&A against investing in our own shares.
When it comes to the facing uh of a deal etc, that we have that, right? And uh but again I would see there is definitely you can expect a similar pattern to what we have seen in in 2025. I mean given what? What is left in the install base? Yeah.
Speaker #6: I always say, why should we do an M&A if investing in our own shares would give us more value? So this is why we think it's part of the mix.
Speaker #6: And I think it also is evidence to the success we have in really coming up on the free cash generation massively.
Speaker #2: Thank you.
Speaker #2: Barbara? You said you won't need less.
Speaker #1: people. Does this apply to Germany as well?
Dominik Asam: There are others to follow, and if you then adjust to an apples-to-apples dollar comparison, we are actually far ahead of the pack in terms of growth rates. So just to give you some data on SaaS/PaaS in 2025, we had 30% growth in US dollar terms. So that's what you need to compare our competitors to. And I'd say there are some hovering around 20%, there are some hovering around 10%, some in the mid teens, but nobody is anywhere close there. So we have a strong degree of confidence right now. That kind of fast path layer is not super appreciated by capital markets, but I think the jury is still out what ultimately will happen.
There are others to follow, and if you then adjust to an apples-to-apples dollar comparison, we are actually far ahead of the pack in terms of growth rates. So just to give you some data on SaaS/PaaS in 2025, we had 30% growth in US dollar terms. So that's what you need to compare our competitors to. And I'd say there are some hovering around 20%, there are some hovering around 10%, some in the mid teens, but nobody is anywhere close there. So we have a strong degree of confidence right now. That kind of fast path layer is not super appreciated by capital markets, but I think the jury is still out what ultimately will happen.
Speaker #6: That applies especially to Germany, because there are people here in this part of the world who are super well protected. And we are also super happy with these people.
Maybe on the cloud Revenue in terms of what we see going forward. First of all, we guided Cloud revenues now for 26, and maybe just looking back at 25. And I venture to say that the the accuracy of forecasts on cloud revenues is actually by now, extremely high. This is also due to the extremely high share of recurring, um, more predictable revenues. And yes, because of all the macros being at the Tariff disputes or the kind of sovereign debate, we just mentioned, we were a kind of
Speaker #6: We are also investing in Munich, in Berlin. And there are major hubs now in the meantime, Munich more supply chain AI, Berlin, it's a lot about data.
Mini 75 million away from the width point of the guidance at the end of 25. Um, against such a massive micro backdrop, I feel a half percentage points variance to the midpoints on growth is almost like forward accounting. So um, so rest assured that. Um, our Revenue guides also for 26 um is is of a similar kind of confidence level.
Speaker #6: And so yes, just still, I mean, I mentioned some of the headwinds we are having here. We can only always share with our government: just look at what's happening in China and the US.
Dominik Asam: And by the way, we had a similar bifurcation, I'd say, in the last big tech bubble in 2000, where telecoms and fiber optics were going through the roof, infrastructure again because that's kind of rising tide lifts all boats, and I wonder how much dark fiber today is still in the ground, which has never been lit since then. And on the other hand, by the way, this dark fiber you can still light today, whereas the GPUs you buy will not hold for 20 years. So jury's still out on that topic, I guess.
And by the way, we had a similar bifurcation, I'd say, in the last big tech bubble in 2000, where telecoms and fiber optics were going through the roof, infrastructure again because that's kind of rising tide lifts all boats, and I wonder how much dark fiber today is still in the ground, which has never been lit since then. And on the other hand, by the way, this dark fiber you can still light today, whereas the GPUs you buy will not hold for 20 years. So jury's still out on that topic, I guess.
Speaker #6: And we can always agree or disagree with certain things and if it adheres to our values. I will stay out of that. But what happens on the economical side is, they are moving super fast.
Um, CCB forecast is always a little bit more difficult, because as as we just learned the, the granularity of what's exactly coming in the crystal ball is a little bit difficult, but I also want to highlight, um, how how we think about um, the bridge from CCB growth and Cloud revenues. And if you again, do the math for for last year to, to calibrate your model, so to speak, um, it it will be obvious once we publish our results, you will
Speaker #6: And when it comes to hiring new people, you have an onboard in two weeks—matters. If you have to reskill your workforce, there's no one you need to ask on, can I apply now, this code generation tools to my workforce?
Alexandra Steiger: Thank you. Before I move to my M&A question here from the tool. Any questions in the room?
[Analyst 1]: Thank you. Before I move to my M&A question here from the tool. Any questions in the room?
Dominik Asam: Habook, can you hear me? Yes, I have a question about the tariffs.
Habook,
Speaker #6: There are way less regulations. And all of that is a result when we are asking ourselves, why is there not another SAP here in Europe?
[Analyst 4]: can you hear me? Yes, I have a question about the tariffs.
Christian Klein: How are the US tariffs affecting your business both directly and indirectly via delayed?
How are the US tariffs affecting your business both directly and indirectly via delayed?
Speaker #6: I mean, here you probably can find some of the reasons. Not everything is related to that. You need also great entrepreneurs. You need CEOs who need to make the right decisions.
Dominik Asam: Spending decisions by your customers?
Spending decisions by your customers?
Christian Klein: I mean there are no tariffs on.
Christian Klein: I mean there are no tariffs on.
Dominik Asam: Software or software services, which is good.
Software or software services, which is good.
Speaker #6: But of course, also the regulatory environment is very, very important, especially for a tech company, because this industry moves much faster than any other industry in the world.
Christian Klein: So there is no direct impact. We hope it stays like that because we have again customers everywhere in the world, and digital terrorists would immediately fire back no matter where are you in the world. Then on the indirect impact, again we saw in H1 2025 that was not great on the public sector. A lot of new requirements came up. We needed new certifications, but we overcome that, and Q4 was actually really good in the US public sector, and yeah, so no, today there is no actually direct or indirect impact. Let's hope it stays like that. You never know. Let's see what's happening tomorrow morning.
So there is no direct impact. We hope it stays like that because we have again customers everywhere in the world, and digital terrorists would immediately fire back no matter where are you in the world. Then on the indirect impact, again we saw in H1 2025 that was not great on the public sector. A lot of new requirements came up. We needed new certifications, but we overcome that, and Q4 was actually really good in the US public sector, and yeah, so no, today there is no actually direct or indirect impact. Let's hope it stays like that. You never know. Let's see what's happening tomorrow morning.
Speaker #2: So we'll talk about AI in a second here on the tool. Any other oops, any other questions in the room? Herr Jungert?
Speaker #3: Yes, hi. And thank you for having my question. How important are deals with the military for your company? Thank you.
It used to be close to 1 and a half percentage point last year, and it will be diluted to less than a percentage point. So, um, I think the nice thing is about also, when you look at the fill rate, I mean, what percent of the cloud revenues adjusted for currency? Yeah, there's always a problem. The CCB is a point value, which was an extremely high dollar change. The, um, other values are constant currency, if you're really deep pollute that you see the coverage with CCB for next year is actually quite good. Um, so um, that also should give you some confidence about 26 and now going beyond that, um I already mentioned what slide kind of reasonably means. Um you can then work from there and assume further um dilution of the transactional part, so this is how I would think about it. So it's actually stabilizing in some ways.
Speaker #4: I mean, they are as important as every other deal we are closing. I mean, we are running a lot of military defense companies all over the world.
With Goldman Sachs.
Speaker #4: I mean, we are super proud. We have a project going on with the Japanese Navy. We're doing a lot with Australia, and so on.
Alexandra Steiger: So back to Alan Matula. The company plans to start a share buyback program. Is there really no other idea to invest for future revenues?
[Analyst 1]: So back to Alan Matula. The company plans to start a share buyback program. Is there really no other idea to invest for future revenues?
Speaker #4: So there are part of our customer base as every other customer. And of course, with AI, what we are doing oftentimes there, it's not about war.
Christian Klein: I mean, yeah, I knew that question will come, and look, it's a fair question, but look, I mean, first of all, these share buybacks, what we are also doing with these shares, we have employees, and actually we are also paying them with our shares. So we have actually employee stock programs, and that resonates really well. And so, I mean, there is a means to it. It's not just about financially buying back shares. The second piece, obviously. I mean, we didn't do larger M&A over the last years. We didn't need to. I mean, still, here, look at these Qs we're posting. The accelerated total revenue will come organically. Many tech companies can say this, and so, but going forward, obviously. Would I now rule out M&A?
Christian Klein: I mean, yeah, I knew that question will come, and look, it's a fair question, but look, I mean, first of all, these share buybacks, what we are also doing with these shares, we have employees, and actually we are also paying them with our shares. So we have actually employee stock programs, and that resonates really well. And so, I mean, there is a means to it. It's not just about financially buying back shares. The second piece, obviously. I mean, we didn't do larger M&A over the last years. We didn't need to. I mean, still, here, look at these Qs we're posting. The accelerated total revenue will come organically. Many tech companies can say this, and so, but going forward, obviously. Would I now rule out M&A?
Speaker #4: It's about things, how we can make them more flexible. How can we help with AI on asset management, on the maintenance of their fleets, et cetera?
Speaker #4: So that is actually what SAP is doing. It's pretty similar to what we are also doing for other industries. So, yeah, they are part of our customer base, yes.
Great. Thank you morning, Christian morning. Dominic. Um, my question was really on the TCP, uh, you talked a lot about sort of delays in in recognizing some of this business into the CCB. Um, we saw quite a steep decel in the sort of CCB growth versus a year ago, almost sort of 9 to 10 points. Um, you know, is there any? I know there's kind of the law of large numbers here but is there anything you can sort of comment on? That's kind of going on here. Um, because you obviously talked about record number of larger deals. So just want to better understand that Dynamic and as a follow-up. Um, could you update it?
Speaker #4: And I mean, maybe just from the size of the industry, the public sector is ranked number five when you and we are dealing with 22 industries roundabout.
Perhaps on BDC, and the momentum, you're saying, you've signed up a flurry of, uh, many partners. How is that sort of pipeline? Uh, shifting. Um, and and what's really do you expect, uh, in terms of contribution in, uh, 2026, thank you.
Speaker #4: And it's ranked number five from a revenue perspective, yeah.
Speaker #2: So two questions from the tool. AI first or current cloud backlog first? Let's start with current
Speaker #2: Cloud backlog. Yeah. I mean, the
Christian Klein: No, we will at some point do M and A, but then more for technological reasons, especially in the data and AI space. Whenever we gonna see there is a technology out there which can help to accelerate our AI and the data platform. We have enough financial flexibility to do that. So SAP is now, after that share buyback, not short of money. We have the flexibility to react and we will react, but not from a financial standpoint. We will react if we find the right technology and the right company we are believing in.
No, we will at some point do M and A, but then more for technological reasons, especially in the data and AI space. Whenever we gonna see there is a technology out there which can help to accelerate our AI and the data platform. We have enough financial flexibility to do that. So SAP is now, after that share buyback, not short of money. We have the flexibility to react and we will react, but not from a financial standpoint. We will react if we find the right technology and the right company we are believing in.
Speaker #4: one doesn't come without the other, yeah? So the AI is actually part of the backlog. And AI is because oftentimes numbers people ask, what is your AI revenue?
Speaker #4: The AI sits within our apps. So, the AI brings us the apps. The AI helps us to win deals in SaaS. The AI helps us to bring more developers onto our platform.
Yeah. I I can start with, um, the total Cloud backlog. I mean, actually, um, you said it really well. I mean, at the end, the number is getting, of course, much bigger. When you look at the absolute close, we put on top to Dominic's point, I don't see any other competitor producing similar kind of numbers when it comes to the total glove, backlog, not even close. And you know this year, yes, there were, you know, larger customers coming. But when you look at the wise Journey, when we started this,
Speaker #4: So it's a natural part of everything we do. And with that, obviously, it's also part of CCB.
Speaker #3: So what's the question?
Speaker #6: What's the question on CCB?
Speaker #2: Again, explain CCB.
Dominik Asam: May I add on the financial aspects of that question. First, I want to highlight that SAP today has an extremely strong credit profile. So we have very good rating, much better than some of our competitors. And I dare say we have managed to base that rating more and more on recurring cash generation. Think about the EUR 10 billion guidance we have put out. EUR 8.2 billion that we delivered in 2025. So we don't need to hoard an excess cash pile to sustain that extremely strong creditworthiness. So that's the philosophy, and frankly we always benchmark investments like M and A against investing in our own shares. I always say why should we do an M and A if investing in our own shares would give us more value?
Dominik Asam: May I add on the financial aspects of that question. First, I want to highlight that SAP today has an extremely strong credit profile. So we have very good rating, much better than some of our competitors. And I dare say we have managed to base that rating more and more on recurring cash generation. Think about the EUR 10 billion guidance we have put out. EUR 8.2 billion that we delivered in 2025. So we don't need to hoard an excess cash pile to sustain that extremely strong creditworthiness. So that's the philosophy, and frankly we always benchmark investments like M and A against investing in our own shares. I always say why should we do an M and A if investing in our own shares would give us more value?
Speaker #6: Yeah, I presume the question might refer to the fact that we have come in at 25% in actual terms, and that we had anticipated post-Q3 to come in at 26%.
Speaker #6: Do you have to understand that when we forecast CCB, it's about also the granularity of all these contracts and if you look at into the specific composition of the contracts we sign, it was slightly different.
Speaker #6: So, the biggest impact we've seen—and we mentioned that in the introductory remarks—is that we had a lot of very large deals, with 71% of deals being $5 million or higher.
4 years back actually. Of course. We started with smaller customers. Mid-size customers. And now they are these. Make our deals and that will also continue. And they will just, you know, take a higher fare in the overall order. And we of what we are converting to the cloud with wise. So I I'm actually super proud also given that, I mean, uh, the the the TCB is always then. Also, of course, dependent on the contract you duration. And that actually, you know, was stable. So we are not actually increasing TCB with longer contract, duration. We are actually increasing it by putting real business on top. And that combined also with a lower churn as we are closing more and more healthy business.
Speaker #6: And in these large deals, it just takes longer to ramp because the customers start to start with smaller instances in the company. And then tackle the really challenging big elephants, so to speak, in the room later.
Dominik Asam: So this is why we think it's part of the mix, and I think it also is evidence to the success we have in really coming up on the free cash generation massively.
So this is why we think it's part of the mix, and I think it also is evidence to the success we have in really coming up on the free cash generation massively.
Speaker #6: And so there's a little bit of a kind of back-end loading of the ramps there. Second point is that Christian mentioned the very strong traction we had on the defense side.
Alexandra Steiger: Thank you, Barbara. You said you won't need less people. Does this apply to Germany as well?
[Analyst 1]: Thank you, Barbara. You said you won't need less people. Does this apply to Germany as well?
Speaker #6: Also, on the other side of the pond, there are sometimes procurement laws in certain jurisdictions where we have very mighty procurement departments that can impose a termination for convenience on the vendor.
Christian Klein: That applies especially to Germany because there are people here in this part of the world who are super well protected, and we are also super happy with these people. We are also investing in Munich and Berlin, and there are major hubs now, in the meantime, in Munich, more supply chain AI, Berlin. It's a lot about data, and so yes, just still, I mean I mentioned some of the headwinds we are having here. You can only always share with our government. Just look at what's happening in China and the US, and we can always agree or disagree with certain things, and if it adheres to our values, I will stay out of that. But what happens on the economic side is they are moving super fast, and when it comes to hiring new people, you have them on board in two weeks matters.
Christian Klein: That applies especially to Germany because there are people here in this part of the world who are super well protected, and we are also super happy with these people. We are also investing in Munich and Berlin, and there are major hubs now, in the meantime, in Munich, more supply chain AI, Berlin. It's a lot about data, and so yes, just still, I mean I mentioned some of the headwinds we are having here. You can only always share with our government. Just look at what's happening in China and the US, and we can always agree or disagree with certain things, and if it adheres to our values, I will stay out of that. But what happens on the economic side is they are moving super fast, and when it comes to hiring new people, you have them on board in two weeks matters.
Business is actually, for me, a super positive sign. Also, when it comes to the cloud Revenue development, not only in 2026, but then also for many, many years to come and then finally, when you look into grow, I mean, still it's a it's a smaller business than compared to our install base business but just last year I mean overall we won over, you know 3,000 net new customers and that is of course midsize customers but they will grow over time the up and the cost sell I mentioned of the business Suite. So while you know the share of midsize SME business became smaller because some of the larger transactions happened and will happen, you know, still this business is going really well, and we are adding a lot of new logos, um, to sap.
Speaker #6: And then we cannot put it in the current cloud backlog because that backlog needs to be contractually committed. And that option to walk is there.
Maybe it's also worthwhile mentioning, if you look at the
Speaker #6: Now, in reality, that option is, of course, sometimes theoretical because these are deeply embedded systems which are extremely sticky. So we're very confident that the revenues out of this will come.
TCB on a CCB which is basically the backlog year 2 and the following years um is actually that ratio is increased so it it gives you also more visibility in the order you
Speaker #6: But technically, we cannot put it into the current cloud backlog. And the last point is what we discussed: that there are more and more customers who say, 'Can I really afford to have an off-the-shelf, standard, plain vanilla U.S. hyperscaler infrastructure as a service?'
Use, we'll take our next question from Mark mler with Bernstein.
Speaker #6: Is there a risk that that might go away quickly for whatever political reasons? And look for alternatives. And these alternatives are just about to emerge.
Speaker #6: Some of them are already up and running. Some are just certified. The certification process takes some times. They also sometimes need to be built.
Sorry and my mic off 1 that it didn't want to didn't want to cause an issue. Um so I I'd like to um make sure that we're really clear on the the CCB and I know it's been a lot of the questions but on it can you give some ordering to what you think was the most impactful?
Speaker #6: So, also, from the signing of the contract till the deployment at the customer, it takes time. So these were the three factors that actually explain the delta.
Christian Klein: If you have to, you know, reskill your workforce, there's no one you need to ask on. Can I apply now these code generation tools to my workforce? There are way less regulations, and all of that is a result when we are asking ourselves why is there not another SAP here in Europe? I mean, you probably can find some of the reason. Not everything is related to that. You need also great entrepreneurs, you need CEOs who need to. We need to make the right decisions. But of course also the regulatory environment is very, very important, especially for a tech company because this industry moves much faster than any other industry in the world.
If you have to, you know, reskill your workforce, there's no one you need to ask on. Can I apply now these code generation tools to my workforce? There are way less regulations, and all of that is a result when we are asking ourselves why is there not another SAP here in Europe? I mean, you probably can find some of the reason. Not everything is related to that. You need also great entrepreneurs, you need CEOs who need to. We need to make the right decisions. But of course also the regulatory environment is very, very important, especially for a tech company because this industry moves much faster than any other industry in the world.
Speaker #6: Each of them not super big, but it's a compound together we talk about that.
Speaker #2: Thank you. Any other questions in the room? Nope. Okay. IDC. You are saying disconnecting SAP AI to industry-specific processes is critical to winning customers such as H&M.
Why the number was less than the street might have expected and can you also, um, give us any sense on the economic impact of these Sovereign, Cloud deals, does impact Revenue, lift multiple or margin in any way shape, or form. Other than that, it may take longer for the deals to close. Thank you.
With water and again it's it's absolutely positive for the year 2020 2027 plus. I mean we closed
Speaker #2: How can SAP move into AI—move AI into the industry-specific process at scale? What is your vision for that? After all, these processes vary greatly by industry.
Speaker #4: Oh, yeah. Now I have to be careful that I am not deep diving too deep in our industry technological layer. I mean, first of all, there was a certain reason why always customers lean towards SAP.
Alexandra Steiger: So we'll talk about AI in a second here in the tool. Any other, any other questions in the room?
[Analyst 1]: So we'll talk about AI in a second here in the tool. Any other, any other questions in the room?
Speaker #4: To build industry extensions. A lot of data which sits in an ERP needs to be then also flowing through an industry capability. I mean, when you do returns claims management, it would be good to have the order data from the ERP.
Dominik Asam: Yes, hi, and thank you for having my question. How important are deals with the military for your company? Thank you.
[Analyst 5]: Yes, hi, and thank you for having my question. How important are deals with the military for your company? Thank you.
Christian Klein: They are as important as every other deal we are closing. I mean, we are running a lot of military defense companies all over the world. I mean, super proud. We have project going on with the Japanese Navy, we're doing a lot with Australia and so on. So they are part of our customer base, as you know, every other customer. And of course with AI, what we are doing oftentimes there, it's not about war, it's about, you know, things how we can make them more flexible, how can we help with AI on, on asset management, on the maintenance of their fleets, etc. So that is actually, actually what SAP is doing, pretty similar to what we are also doing for other industries. So yeah, they are part of our customer base.
Christian Klein: They are as important as every other deal we are closing. I mean, we are running a lot of military defense companies all over the world. I mean, super proud. We have project going on with the Japanese Navy, we're doing a lot with Australia and so on. So they are part of our customer base, as you know, every other customer. And of course with AI, what we are doing oftentimes there, it's not about war, it's about, you know, things how we can make them more flexible, how can we help with AI on, on asset management, on the maintenance of their fleets, etc. So that is actually, actually what SAP is doing, pretty similar to what we are also doing for other industries. So yeah, they are part of our customer base.
Speaker #4: If you talk resiliency, you need to also understand how do you produce, how to transport, and so on. So you always come back to the core.
Speaker #4: So then, to extend that with industry capabilities makes total sense. And that's why a lot of customers are also turning to SAP. So we have the knowledge.
Speaker #4: We have the people also here in Germany, by the way—a lot—who understand this industry extremely well. Now, with AI, we can of course completely reimagine how these certain industry capabilities will be done.
More larger deals. And then when you think about the facing of such a deal, I mean, first of all you negotiate on the business case on the AI, the AI use cases you think about okay? What are the pillars which are really important. You think about okay do we go supply chain first Finance, first Logistics Etc. And then during the course of the quarterly, you start also then facing those deals and as you then have, many larger deals and this was actually quite significant shift. We actually saw that. A lot of the revenue moved out from the first 12 months to a year, 2 3 and 4. That was by far, by far, the highest impact we have seen compared to October on software and Cloud actually no, I mean, the the, the the deal margins are almost the same, but what dominic already alluded to I mean the deal negotiation per se. I mean you we are running not only where we Mission critical Erp systems. We are also running uh customers in regulated Industries and they have question.
Speaker #4: I mean, a machine that needs maintenance—we can actually predict this now way better than with our former asset management solution of SAP, because we have agents who are getting demand signals.
They say, hey, what is happening? If sanctions are coming, what is happening. If there's an export control coming, what is happening if this uh, AI data protection? Regulation is now redefined Etc. So, the these discussions take just longer than they have been a year ago and it's a reflection of
Speaker #4: We have agents which can weed out via an LLM, then in that case, the machine instruction, when something's happening, how to put the machine up faster.
Alexandra Steiger: Yes.
Yes.
Christian Klein: I mean maybe just from the size of the industry, the public sector is ranked number 5 when you and we are dealing with 22 industries roundabout, and it's ranked number 5 from a revenue perspective.
I mean maybe just from the size of the industry, the public sector is ranked number 5 when you and we are dealing with 22 industries roundabout, and it's ranked number 5 from a revenue perspective.
Speaker #4: We, of course, getting we have the data in our ERP where are the technical people who can fix the machine. And all of these agents are orchestrating all of that to improve the uptime.
Alexandra Steiger: So two questions from the tool. AI first or current cloud backlog first? Let's start with current cloud backlog.
[Analyst 1]: So two questions from the tool. AI first or current cloud backlog first? Let's start with current cloud backlog.
Speaker #4: Of the assets of a company. And these are these industry capabilities which we know very well from the past. And now we have to make sure that we also then co-innovate with our customers the next generation of AI industry capabilities they need.
Christian Klein: Yeah, I mean, the one doesn't come without the other. So the AI is actually part of the backlog. And AI is because oftentimes numbers people ask, what is your AI revenue? The AI sits within our apps. So the AI brings us the apps. The AI help us to win deals in SaaS. The AI helps us to bring more developers on our platform. So it's a natural part of everything what we do. And with that, obviously it's also part of CCB.
Christian Klein: Yeah, I mean, the one doesn't come without the other. So the AI is actually part of the backlog. And AI is because oftentimes numbers people ask, what is your AI revenue? The AI sits within our apps. So the AI brings us the apps. The AI help us to win deals in SaaS. The AI helps us to bring more developers on our platform. So it's a natural part of everything what we do. And with that, obviously it's also part of CCB.
Speaker #4: And so, technology-wise, I mean, it's the same like in the LOBs. We need the data scientists now. We need the people who can develop the AI, but we have those people.
Speaker #4: So now it's about going into this together, and I'm sure, especially in this industry, AI will be a big force driver for SAP. Can you standardize this 100%?
What is happening in the world? This is not a reflection of a demand issue. Actually, it's good. Look, I mean, I always also start this conversations with look when it comes to regulation. Trust on 1 Thing, sep has your back. I mean, we are spending over 1 billion on on localization, on regulations, Etc. We, we are running these businesses, uh, in over 120 countries. So we we we know how to adhere to all of these also new regulations and I see this as a competitive advantage that we can clearly say, hey, look no matter where you want to do business or where you want to expand your business, sep will have a soft and Cloud solution for you in the different parts of the world. And it is also add the is the certification step which is required in many countries. So we see new offerings on the infrastructure as a service for Sovereign in various countries, almost mushrooming up. I can say, um, and um, there are certain requirements, um, in in different countries and we now really see the first country certifying
Speaker #4: No. I mean, such an agent will look different even within one industry. One mining company will not exactly do asset management like another mining company or the Deutsche Bahn.
Dominik Asam: So, what's the, what's the question on CCB?
Dominik Asam: So, what's the, what's the question on CCB?
Alexandra Steiger: Please, again, explain CCB.
[Analyst 1]: Please, again, explain CCB.
Dominik Asam: Yeah, I presume the question might refer to the fact that we have come in at 25% in actual terms and that we had anticipated post Q3 to come in at 26%. You have to understand that when we forecast CCB, it's about also the granularity of all these contracts. If you look into the specific composition of the contracts we sign was slightly different. So the biggest impact we've seen, and we mentioned that in the introductory remarks.
Dominik Asam: Yeah, I presume the question might refer to the fact that we have come in at 25% in actual terms and that we had anticipated post Q3 to come in at 26%. You have to understand that when we forecast CCB, it's about also the granularity of all these contracts. If you look into the specific composition of the contracts we sign was slightly different. So the biggest impact we've seen, and we mentioned that in the introductory remarks.
Speaker #4: And this is where we, of course, have to have the extensibility layer so that customers can go into our agent build and can see, okay, I want to actually automate that process piece on top of what SAP provided. So this fine-tuning of agents, this extension of agents, is a super critical capability as part of our—
These products. So we really at the, um, in the embryonic phase of what, what could become something really big, but it's really happening because the capital is slowing. Their the certification agencies are getting their arms around it, but it takes some time to groom and and mature these these projects.
Our next question comes from Toby, OG with JP Morgan.
Speaker #4: solutions. If
Speaker #2: We don't have any other questions in the room, so I'll take the final one from the Two Companions room. It's about AI investments. Your peers are struggling to show real AI value.
Christian Klein: Is that we had a lot of?
Is that we had a lot of?
Dominik Asam: Very large deals, 71% of deals being EUR 5 million or higher. In these large deals it just takes longer to ramp because the customers start to start with smaller instances in the company and then tackle the really challenging big elephants, so to speak, in the room later. So there's a little bit of a kind of back end loading of the ramps there. Second point is that Christian mentioned the very strong traction we had on the defense side also on the other side of the pond. There are sometimes procurement laws in certain jurisdictions where we have very mighty procurement departments that can impose a termination for convenience on the vendor, and then we cannot put it in the current cloud backlog because that backlog needs to be contractually committed and that option to walk is there.
Very large deals, 71% of deals being EUR 5 million or higher. In these large deals it just takes longer to ramp because the customers start to start with smaller instances in the company and then tackle the really challenging big elephants, so to speak, in the room later. So there's a little bit of a kind of back end loading of the ramps there. Second point is that Christian mentioned the very strong traction we had on the defense side also on the other side of the pond. There are sometimes procurement laws in certain jurisdictions where we have very mighty procurement departments that can impose a termination for convenience on the vendor, and then we cannot put it in the current cloud backlog because that backlog needs to be contractually committed and that option to walk is there.
Speaker #2: What is SAP's value on AI? And how do you define sales goals in terms of AI for salespeople if you do not measure AI?
Speaker #2: revenues? Yeah.
Speaker #4: I mean, first on the value. I mean, I described H&M, I described Fresenius, Avelios. We are doing for other large companies in the world.
Speaker #4: Last mile delivery. So we are doing it already. Now is some of that still to be developed? Yes. But I can say I speak for everyone in this industry that these things further need to mature.
Yeah, hi. Um, hi Christian, Dominick. Thanks for the question. Just on the free cash flow guidance, um, Dominic of 10 billion. Clearly, well, ahead of expectations and looks to imply a pickup in cash conversion. I know we talked uh, through the year about cash tax FX and and the migration credit headwinds could you just help us reconcile these headwinds with the with the better free cash flow Outlook. Uh and improved cash. Conversion, you're now expecting? Thank you. Yeah, sure. I would say. Um, the upside is, is from 2 sources. Um, I'm partially from operational further improvements which we have matured to a point that we feel comfortable guiding it now, but also from the fact that the Delta on stock based compensation between the pnl and cash is increasing. You've seen it already. Now in the numbers, you will see that in 258 of the non for operating profit at background about the billion. So now I say round about the billion plus, so that gives us a part of The Upside and the good news is that sustainable
Speaker #4: The very important part is of it: Do you have the AI foundation? Do you have the data? Do you have the business process understanding?
Dominik Asam: Now, in reality, that option is, of course, sometimes theoretical because these are deeply embedded systems which are extremely sticky. So, we're very confident that the revenues out of this will come, but technically we cannot put it into Current Cloud Backlog. And the last point is what we discussed, that there is more and more customers who say, can I really afford to have an off-the-shelf standard, plain vanilla US hyperscaler infrastructure service? Is there a risk that that might go away quickly for whatever political reasons and look for alternatives? And these alternatives are just about to emerge. Some of them are already up and running, some are just certified. The certification process takes some time. They also sometimes need to be built. So also from the signing of the contract till the deployment at the customer, it takes time.
Now, in reality, that option is, of course, sometimes theoretical because these are deeply embedded systems which are extremely sticky. So, we're very confident that the revenues out of this will come, but technically we cannot put it into Current Cloud Backlog. And the last point is what we discussed, that there is more and more customers who say, can I really afford to have an off-the-shelf standard, plain vanilla US hyperscaler infrastructure service? Is there a risk that that might go away quickly for whatever political reasons and look for alternatives? And these alternatives are just about to emerge. Some of them are already up and running, some are just certified. The certification process takes some time. They also sometimes need to be built. So also from the signing of the contract till the deployment at the customer, it takes time.
Speaker #4: And I can tick mark all of that. Now, do we need some time and further investments to make that happen? Absolutely. But we are on a very good track, and customers are already seeing the first AI agents, and they are believing in it.
So that's the new base basically to jump off. Now, on the transformation credits, it's it's always the game of the overall working capital. It's not the only item there and, um, from that perspective, um, um, yeah, for 2026. Um, this is the, the best estimate we can give today. And, um, yeah, we also make sure that we have no mortgages in the future and can stick to that very simplistic formula.
Speaker #4: Just here in Germany, we had a big healthcare company. They just removed all of for cash flow because our AI foundation came in together with an LLM and showed, hey, we can do this way smarter.
Um, with with the noise that always will be there around the phasing of certain payments, but that's the trend.
Great. Well, thank you Dominic and this
Speaker #4: And then, last but not least, how do we measure that? I mean, when we are going into now the year—I mean, obviously, we review how many deals is AI part of that?
Thank you. Thank you, ladies and
Speaker #4: When you sell supply chain, when you sell HR, don't go to the customer and sell it in the old way. Sell them the new capabilities with AI and how we can help to transform the customer's business.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.
Dominik Asam: So these were the three factors that actually explain the delta. Each of them not super big, but if they compound together, we talk about that roundabout one percentage point.
So these were the three factors that actually explain the delta. Each of them not super big, but if they compound together, we talk about that roundabout one percentage point.
Speaker #4: That's what we are looking at. We are looking at the value proposition and then obviously connecting it to our product roadmap so that what we are selling can also be adopted later on.
Alexandra Steiger: Thank you. Any other questions in the room?
[Analyst 1]: Thank you. Any other questions in the room?
Dominik Asam: Nope.
Nope.
Alexandra Steiger: Okay, IDC, you are saying that connecting SAP AI to industry specific processes is critical to winning customers such as H&M. How can SAP move into AI? Move AI into the industry specific process at scale? What is your vision for that? After all, these processes vary greatly by industry.
Okay, IDC, you are saying that connecting SAP AI to industry specific processes is critical to winning customers such as H&M. How can SAP move into AI? Move AI into the industry specific process at scale? What is your vision for that? After all, these processes vary greatly by industry.
Speaker #4: And this is how we're going to steer AI inside SAP.
Speaker #2: Sales targets.
Speaker #4: Yeah, I mean, sales targets—again, yeah, people get incentives if they are selling value to our customers. We see high adoption, and AI is part of the solution.
Speaker #4: It's not like, here is a piece of AI and here is a piece of supply chain software. It needs to come together. And only when it comes together, you're going to see that you also get higher incentives, because we want to, of course, sell our customers the future.
Christian Klein: Now I have to be careful that I'm not deep diving too deep in our industry technological layer. I mean first of all, there was a certain reason why always customers lean towards SAP to build industry extensions. A lot of data which sits in an ERP needs to be then also flowing through an industry capability. I mean when you do returns claims management, it would be good to have the order data from the ERP. And if you talk about supply chain resiliency, you need to also understand how do you produce, how to transport and so on. So you always come back to the core. So then to extend that with industry capabilities makes total sense. And that's why a lot of customers also turning to SAP.
Christian Klein: Now I have to be careful that I'm not deep diving too deep in our industry technological layer. I mean first of all, there was a certain reason why always customers lean towards SAP to build industry extensions. A lot of data which sits in an ERP needs to be then also flowing through an industry capability. I mean when you do returns claims management, it would be good to have the order data from the ERP. And if you talk about supply chain resiliency, you need to also understand how do you produce, how to transport and so on. So you always come back to the core. So then to extend that with industry capabilities makes total sense. And that's why a lot of customers also turning to SAP.
Speaker #4: And that's how we steer it, and how we incentivize our people.
Christian Klein: So we have the knowledge, we have the people also here in Germany, by the way, a lot who understand these industries extremely well. Now with AI we can of course completely reimagine how these certain industry capabilities will be done. I mean a machine who needs maintenance, we can actually predict this now way better than with our, you know, former asset management solution of SAP. Because we have agents who are getting demand signals, we have agents who are which can weed out via an LLM. Then in that case the machine instruction when something's happening, how to put the machine up faster. We of course getting, we have the data in our ERP, where are the technical people who can fix the machine. And all of these agents are orchestrating all of that to improve the uptime of the assets of a company.
So we have the knowledge, we have the people also here in Germany, by the way, a lot who understand these industries extremely well. Now with AI we can of course completely reimagine how these certain industry capabilities will be done. I mean a machine who needs maintenance, we can actually predict this now way better than with our, you know, former asset management solution of SAP. Because we have agents who are getting demand signals, we have agents who are which can weed out via an LLM. Then in that case the machine instruction when something's happening, how to put the machine up faster. We of course getting, we have the data in our ERP, where are the technical people who can fix the machine. And all of these agents are orchestrating all of that to improve the uptime of the assets of a company.
Christian Klein: And these are these industry capabilities which we know very well from the past. And now we have to make sure that we also then co innovate with our customers the next generation of AI industry capabilities they need. And technologically wise, I mean it's the same like in the lobs. We need the data scientists now, we need the people who can develop the AI, but we have those people. So now it's about going into this together. And I'm sure especially this industry AI will be a big growth driver for SAP. Can you standardize this 100%? No, I mean such an Agent will look different even within one industry. One mining company will not exactly do a asset management like another mining company or the Deutsche Bahn.
And these are these industry capabilities which we know very well from the past. And now we have to make sure that we also then co innovate with our customers the next generation of AI industry capabilities they need. And technologically wise, I mean it's the same like in the lobs. We need the data scientists now, we need the people who can develop the AI, but we have those people. So now it's about going into this together. And I'm sure especially this industry AI will be a big growth driver for SAP. Can you standardize this 100%? No, I mean such an Agent will look different even within one industry. One mining company will not exactly do a asset management like another mining company or the Deutsche Bahn.
Christian Klein: And this is where we of course have to have the extensibility layer so that customers can go into our agent builder and can see, okay, I want to actually automate that process piece on top of what SAP provided. So this fine tuning of agents, this extension of agents is a super critical capability as part of our solutions.
And this is where we of course have to have the extensibility layer so that customers can go into our agent builder and can see, okay, I want to actually automate that process piece on top of what SAP provided. So this fine tuning of agents, this extension of agents is a super critical capability as part of our solutions.
Alexandra Steiger: If we don't have any other questions in the room, I'll take the final one from Reuters combining two AI investments. Your peers are struggling to show real AI value. What is SAP's value on AI and how do you define sales goals in terms of AI for salespeople if you do not measure AI revenues?
[Analyst 1]: If we don't have any other questions in the room, I'll take the final one from Reuters combining two AI investments. Your peers are struggling to show real AI value. What is SAP's value on AI and how do you define sales goals in terms of AI for salespeople if you do not measure AI revenues?
Christian Klein: Yeah, I mean, first on the value, I mean, I described H&M, I described Fresenius Avelios we are doing for other large companies in the world last mile delivery. So we are doing it already. Now is some of that still to be developed? Yes, but I can say I speak for everyone in this industry that these things further need to mature. The very important part is of it. Do you have the AI Foundation? Do you have the data? Do you have the business process understanding and I can tick mark all of that. Now do we need some time and further investments to make that happen? Absolutely. But we are on a very good track and customers already seeing the first AI agents and they are believing in it.
Christian Klein: Yeah, I mean, first on the value, I mean, I described H&M, I described Fresenius Avelios we are doing for other large companies in the world last mile delivery. So we are doing it already. Now is some of that still to be developed? Yes, but I can say I speak for everyone in this industry that these things further need to mature. The very important part is of it. Do you have the AI Foundation? Do you have the data? Do you have the business process understanding and I can tick mark all of that. Now do we need some time and further investments to make that happen? Absolutely. But we are on a very good track and customers already seeing the first AI agents and they are believing in it.
Christian Klein: Just here in Germany we had a big healthcare company; they just removed all of their 120 modules they had for cash flow. Because our AI Foundation came in together with an LLM and showed hey, we can do this way smarter. And then last but not least, how do we measure that? I mean when we are going into now, the year, I mean obviously we review in how many deals is AI part of that? When you sell supply chain, when you sell HR, don't go to the customer and sell it in the old way. Sell them the new capabilities with AI and how we can help to transform the customer's business. That's what we are looking at. We are looking at the value proposition and then obviously connecting it to our product roadmap so that what we are selling can also be adopted later on.
Just here in Germany we had a big healthcare company; they just removed all of their 120 modules they had for cash flow. Because our AI Foundation came in together with an LLM and showed hey, we can do this way smarter. And then last but not least, how do we measure that? I mean when we are going into now, the year, I mean obviously we review in how many deals is AI part of that? When you sell supply chain, when you sell HR, don't go to the customer and sell it in the old way. Sell them the new capabilities with AI and how we can help to transform the customer's business. That's what we are looking at. We are looking at the value proposition and then obviously connecting it to our product roadmap so that what we are selling can also be adopted later on.
Christian Klein: This is how we gonna steer AI inside SAP.
This is how we gonna steer AI inside SAP.
Alexandra Steiger: Sales targets.
[Analyst 1]: Sales targets.
Christian Klein: Yeah, I mean sales targets again. The people get incentives if they selling value to our customers. We see high adoption and AI is part of the solution. It's not like here's a piece of AI and here's a piece of supply chain software. It needs to come together. And only when it comes together, you're going to see that you also get higher incentives. Because we want to, of course, sell our customers the future, and that's how we steer it and how we incentivize our people.
Christian Klein: Yeah, I mean sales targets again. The people get incentives if they selling value to our customers. We see high adoption and AI is part of the solution. It's not like here's a piece of AI and here's a piece of supply chain software. It needs to come together. And only when it comes together, you're going to see that you also get higher incentives. Because we want to, of course, sell our customers the future, and that's how we steer it and how we incentivize our people.
Dominik Asam: Perfect.
[Analyst 1]: Perfect.
Alexandra Steiger: We're running out of time now. Thank you, Christian. Thank you, Dominik. Thank you, everyone, for joining us today. Virtually, of course, also here in the room.
We're running out of time now. Thank you, Christian. Thank you, Dominik. Thank you, everyone, for joining us today. Virtually, of course, also here in the room.
