Abstract

SAP SE will report its fourth-quarter 2025 results on January 29, 2026 Pre-Market; investors will focus on whether cloud momentum sustains double-digit growth, margins hold recent gains, and earnings per share expands in line with guidance.

Market Forecast

Market expectations point to a steady top-line advance and expanding operating earnings for the current quarter. Based on the company’s latest aggregated estimates, SAP SE’s fourth-quarter 2025 revenue is projected at $9.72 billion, up 6.36% year over year, with estimated EBIT of $2.75 billion, up 22.47% year over year, and adjusted EPS of $1.53, up 10.01% year over year. A formal forecast for gross profit margin and net profit margin is not available; the market expects margins to benefit from mix shift to cloud and continued efficiency. SAP SE’s core enterprise cloud and software franchise remains the central growth engine, supported by strong cloud intake and resilient maintenance, while services is expected to provide steady implementation and support revenue. The most promising segment is cloud (within “Cloud and Software”), with year-over-year growth highlighted at 22.00% in the last reported quarter and continued pipeline strength expected to support double-digit expansion into the current period.

Last Quarter Review

In the third quarter of 2025, SAP SE delivered revenue of $9.08 billion, a gross profit margin of 73.77%, GAAP net profit attributable to the parent company of $2.00 billion, a net profit margin of 22.08%, and adjusted EPS of $1.59, with revenue up 7.16% year over year and adjusted EPS up 29.27% year over year. A notable positive was the quarter-on-quarter improvement in profit, with net profit rising by 18.09%, reflecting favorable operating leverage and a constructive mix shift. Within the main businesses, Cloud and Software revenue was $8.02 billion and Services revenue was $1.06 billion; cloud posted a 22.00% year-over-year increase, underpinned by robust adoption trends.

Current Quarter Outlook (with major analytical insights)

Core Enterprise Cloud and Software

The central driver this quarter remains the enterprise cloud and software portfolio, where sustained double-digit subscription growth and rising renewal quality are expected to support the company’s revenue outlook of $9.72 billion, up 6.36% year over year. The operating leverage implied by the $2.75 billion EBIT estimate, up 22.47% year over year, suggests improved unit economics from higher recurring mix and disciplined cost control. Gross margin resilience is likely to persist as cloud scale offsets investment in growth initiatives and as software maintenance continues to provide a high-margin ballast. Management’s execution focus continues to be on migrating the installed base into modern cloud suites and cross-selling adjacent capabilities that lift average contract values. This transition supports both revenue visibility and margin stability by expanding recurring revenue and reducing cyclicality tied to large on-premise deals. Investors should track conversion of cloud backlog to revenue and net retention rates, as these are critical to validating the margin and EPS trajectory suggested by the current $1.53 EPS estimate, up 10.01% year over year. Enterprise demand indicators remain constructive, with prior-quarter cloud growth of 22.00% year over year providing a base for sustained momentum. The balance of subscription growth and stable support revenue reinforces consistency in cash generation, which, combined with careful operating expense management, underpins the stronger EBIT growth outlook relative to revenue.

Most Promising Growth Business: Cloud

Cloud remains the largest and most promising growth vector, with the last reported period showing 22.00% year-over-year expansion, outpacing group revenue growth. At $8.02 billion for the broader Cloud and Software segment in the previous quarter, scale benefits are accruing as the mix tilts toward subscription and standardized cloud delivery. The operational thesis is that higher utilization and platform standardization reduce marginal delivery costs, enabling EBIT to grow faster than revenue, as reflected in the estimated 22.47% year-over-year EBIT increase for the current quarter. New cloud wins, ongoing migrations from on-premise, and upsell into analytics, AI-enabled processes, and automation layers deepen wallet share and enhance multi-year revenue visibility. Success here also buffers short-cycle license variability, improving predictability through high renewal rates and contract expansions. Monitoring growth in cloud backlog and revenue conversion will be essential to confirm whether the 10.01% projected EPS growth can be met or exceeded. From a risk perspective, timing of large cloud migrations, elongated approval cycles for transformational deals, and cost intensity tied to implementation and customer success could influence near-term margins. However, the recurring nature of cloud subscriptions typically smooths quarter-to-quarter volatility and supports the durability of the EBIT outlook.

Primary Stock Price Drivers This Quarter

Investors are likely to key in on three areas that can move the stock around the print. First, revenue composition and cloud momentum: confirmation that cloud continues to grow at a double-digit pace relative to the overall 6.36% revenue growth estimate will be taken as a positive signal for FY margin durability. Second, operating profitability: with EBIT expected to advance 22.47% year over year, any indication of higher gross efficiency or lower customer acquisition costs could offer upside to the $1.53 EPS estimate. Third, deal intake, renewals, and guidance cadence: clarity on backlog conversion, renewal uplifts, and any color on 2026 growth guardrails will influence the multiple as investors evaluate the sustainability of mid-teens profit growth. On balance, the last quarter’s 73.77% gross margin and 22.08% net margin provide a solid starting point for this quarter’s profitability narrative, though the absence of a formal gross margin forecast implies that commentary on mix and productivity will carry added weight. Strong cash conversion, if reiterated, would further support confidence in capital allocation flexibility while maintaining focus on organic growth investments.

Analyst Opinions

Institutional views are predominantly bullish heading into the report window, with multiple well-followed firms reiterating positive stances in recent months; buy-leaning opinions outnumber neutral or cautious takes by a wide margin. TD Cowen reiterated a Buy rating with an emphasis on strengthening fundamentals and sustained cloud momentum, underscoring confidence in the revenue growth and operating margin setup. Citi maintained a Buy view, highlighting consistency in execution and supportive subscription dynamics that align with the projected $9.72 billion revenue and $2.75 billion EBIT for the quarter. Barclays also kept a Buy rating with a higher-end target framework, citing improving operating leverage as recurring revenue mix increases. BMO Capital reiterated a Buy stance, pointing to durable demand for enterprise transformation and the accelerating contribution from cloud subscriptions. The majority view emphasizes that the combination of steady top-line growth at 6.36% year over year, improving operating efficiency indicated by the 22.47% projected EBIT growth, and double-digit EPS expansion at 10.01% creates a constructive backdrop. Bulls argue that cloud’s 22.00% growth in the last reported period demonstrates runway for continued mix improvement, and they expect management to reinforce backlog health, renewal rates, and cost discipline. The central debate centers on how quickly cloud scale and operating improvements can translate into further margin expansion; bullish analysts believe the fourth quarter can validate that trajectory with upside risk if deal timing and conversion are favorable.