SAP Tops €10bn Quarterly Revenue as Cloud Rises 26%

SAP took more than €10bn in a single quarter for the first time. Total revenue rose 13% to €10.27bn in the three months to September, and cloud revenue grew 26% to €6.67bn, the German software company said in its third-quarter results on 21 October. Non-IFRS operating profit rose 18% to €3.03bn, also a first above €3bn.

The cloud number comes with an asterisk that SAP added itself. Its quarterly statement says cloud growth was “positively impacted by several quarter-specific effects, mainly a multi-quarter revenue catch-up from customers returning from financial distress”. SAP does not say how large that catch-up was. The steadier signal is the order book: SAP’s current cloud backlog rose 28% to €24.1bn, or 26% at constant currencies.

Cloud ERP carried the quarter while old licence sales shrank

Nearly nine-tenths of SAP’s cloud revenue now comes from what it calls its Cloud ERP Suite, which brought in €5.92bn, up 29%. The older parts of the business are shrinking as customers move. Software licence revenue fell 9% to €147m and support revenue fell 5% to €2.43bn, and SAP expects that decline in support revenue to speed up “in the coming years” as more customers switch to the cloud. Services revenue slipped 4%.

Profit grew faster than sales. The non-IFRS operating margin rose to 29.5% from 28.3%, and free cash flow jumped 36% to €1.72bn. Part of the profit gain reflects a weak base: SAP says last year’s third quarter carried €0.1bn of costs each from a tax case and a workforce overhaul. Recent acquisitions, including Reltio, Dremio and Prior Labs, added €49m of revenue but reduced operating profit.

“Our Autonomous Enterprise strategy is not just resonating, it is being adopted,” chief executive Christian Klein said, pointing to Joule Work, which SAP showcased at SAP Connect on 6 October. Chief financial officer Dominik Asam credited “disciplined” cost control alongside cloud momentum.

SAP now expects 2026 cloud revenue towards the upper end of its €25.8bn-€26.2bn range at constant currencies, and cloud and software revenue towards the top of €36.3bn-€36.8bn. It kept its targets of €11.8bn-€12.2bn in non-IFRS operating profit and about €10bn of free cash flow. For UK readers, SAP named the United Kingdom, alongside Switzerland and the US, among countries where cloud revenue was “particularly strong”.

The CFO says customers now ask where SAP’s AI was built

A day after the results, Asam told Reuters that customers increasingly want to know where the AI models inside their software come from, with export controls and Europe’s sovereignty debate shaping choices, CNA reported, carrying the Reuters interview. “Could data used by that model be channelled out to end up in places where it shouldn’t end up?” he said, describing a question SAP hears regularly.

SAP builds more than 70 models from various providers into its software rather than relying on one of its own, Reuters reported. A US customer may refuse components developed with Chinese models, Asam said, while back-office work, including SAP’s own, can run on open-weight software “from wherever it comes from”. “If you’re a Department of Defense of a large nation, you will think about that differently as opposed to a mom-and-pop shop,” he added. SAP wants access to models from every region, including Europe and Canada.

Asam also said SAP was using frontier AI models to attack and test its own products. “Anyone who says I don’t have any vulnerabilities would lie to you,” he told Reuters, declining to discuss findings. SAP’s own patch cycle shows the stakes: this month it fixed a maximum-severity flaw in its Cloud SDK for Python.

A record quarter with a one-off helping hand

The cleanest way to read the quarter is to separate what is recurring from what is not. The €10bn milestone is real, but the 26% cloud growth rate includes revenue SAP is catching up from customers who had been in financial trouble, an effect SAP itself calls quarter-specific. Investors who want a forward signal should give more weight to the backlog, which grew 26% at constant currencies, and to SAP’s decision to steer towards the top of its cloud range rather than lift the range itself.

The falling support line matters as much as the rising cloud line. SAP links the support decline directly to customers moving to the cloud, and is warning that this shift will speed up. That makes cloud growth partly a transfer within SAP’s own customer base, not wholly new demand. It also makes the quality of the cloud product, and the AI layered on top, central to whether customers stay.

That is where Asam’s comments matter. SAP’s choice to use many outside models, not build its own, now doubles as a sales argument: it can offer a defence ministry one mix and a small firm another. The approach mirrors a wider shift towards multi-model platforms, seen when Google Cloud began offering OpenAI’s GPT-6 models to enterprise customers. It also sets SAP apart from the US giants reporting this week, such as Meta, whose own Q3 was dominated by a legal charge and plans for non-voting shares.

The test comes in the fourth quarter, without the catch-up. If cloud growth holds near the backlog’s 26% pace, SAP’s record will look like a trend rather than a one-off.