SAP(US:SAP)2026-02-26 12:01Revenue Growth - The company reported significant growth in cloud revenue, which is the largest revenue stream, followed by software support revenue [29]. - In 2025, SAP's total revenue reached €36,800 million, reflecting a 7.5% increase from €34,176 million in 2024 [64]. - Cloud revenue for 2025 was €21,023 million, up from €17,141 million in 2024, indicating a growth of 22.0% [64]. Profitability Measures - Operating profit (non-IFRS) and free cash flow are primary measures used to assess profitability, with free cash flow providing insight into liquidity needs [31]. - Operating profit for 2025 reached €10,419 million, a significant increase from €8,153 million in 2024, reflecting a growth of 27.8% [67]. - Profit before tax from continuing operations (non-IFRS) for 2025 was €10,307 million, compared to €7,792 million in 2024, representing a growth of 32.4% [70]. - The operating margin improved to 28.3% in 2025, up from 23.9% in 2024, showcasing enhanced operational efficiency [67]. - Earnings per share from continuing operations for 2025 was €6.14, consistent with the previous year, indicating stable profitability per share [67]. Cash Flow and Expenses - Free cash flow for 2025 was reported at €8,239 million, up from €4,222 million in 2024, indicating a year-over-year increase of 95.5% [68]. - Net cash flows from operating activities for continuing operations increased to €9,156 million in 2025, compared to €5,207 million in 2024, marking a rise of 75.5% [68]. - Total operating expenses decreased to €26,382 million in 2025 from €29,511 million in 2024, a reduction of 7.2% [69]. - Non-IFRS operating expenses for 2025 were €26,382 million, a decrease from €27,143 million in 2024, representing a reduction of 2.8% [65]. Customer and Employee Metrics - The Cloud Customer Satisfaction (Cloud CSAT) score was reported at 75% in 2025, reflecting customer satisfaction with cloud solutions [37]. - The Employee Engagement Index measures employee satisfaction and commitment, with results expressed as a percentage of favorable responses from engagement surveys [38]. - The Business Health Culture Index (BHCI) assesses the working environment and employee engagement, with a focus on health and long-term employability [39]. Environmental and Tax Considerations - The company plans to revise its methodology for calculating Scope 3 greenhouse gas emissions in 2026, which is expected to significantly decrease reported emissions [43]. - The effective tax rate (non-IFRS) is presented for informational purposes, with no outlook provided for the IFRS effective tax rate due to uncertainties [58]. - The effective tax rate for 2025 was 30.5%, slightly lower than 32.3% in 2024, reflecting improved tax efficiency [67]. Financial Reporting and Methodology - Non-IFRS financial measures are disclosed to provide additional insights into financial performance, complementing IFRS measures [49]. - Constant currency measures are used to provide insight into sales development, with adjustments made to account for foreign currency effects [59]. - SAP's management uses non-IFRS measures for internal planning and performance reviews, emphasizing their importance in decision-making [56]. - Non-IFRS measures are widely used in the software industry, facilitating comparisons with competitors' performance metrics [61]. - The company plans to exclude expenses related to the Teradata litigation from non-IFRS operating profit starting in 2025, enhancing clarity on operational performance [53]. Research and Development - Research and development expenses were €6,628 million in 2025, slightly higher than €6,508 million in 2024, emphasizing continued investment in innovation [69].