SAP’s Q3 earnings revealed mixed results: strong EPS growth but missed cloud revenue targets and tariff-related deal delays. Investors responded with a 2% stock decline.
Q3 Financial Results
| Metric | Actual | Expected | Change |
|---|---|---|---|
| EPS | €1.59 | Beat | +37% YoY |
| Revenue | €9.076B ($10.54B) | €9.11B | +7% YoY |
| Cloud Subscriptions | €5.29B ($6.14B) | €5.328B | +27% YoY |
| Cloud Backlog (CCB) | €18.8B ($21.8B) | 27% growth | +23% YoY |
Key Issues
- Tariff Impact: Manufacturing customer deals delayed due to trade disruptions
- CCB Miss: Current Cloud Backlog growth (23%) below estimates (27%) signals future revenue concerns
- Legal Challenge: US Supreme Court declined SAP’s appeal in Teradata antitrust lawsuit
Cloud Strategy Context
SAP is transitioning from traditional licenses to subscription-based cloud computing, following rival Oracle‘s path. Missed CCB targets raise questions about:
- Market saturation challenges
- Internal cloud strategy execution
- Ability to maintain growth momentum
Market Reaction
| Stock Performance | Change |
|---|---|
| Extended trading | -2% |
| 2025 YTD (before dip) | +14% |
| Composite Rating | 88/99 |
Outlook
Mixed signals: While strong Composite Rating (88) indicates underlying strength, missed cloud targets and tariff concerns require monitoring.
