Citizens Downgrades SAP SE (SAP) After CRB Growth Slows to Nine-Quarter Low

Core Viewpoint - SAP SE has been downgraded by Citizens analyst Patrick Walravens from Market Outperform to Market Perform due to a slowdown in current cloud backlog (CRB) growth, which has reached its lowest rate in nine quarters [1][3]. Financial Performance - SAP reported non-IFRS earnings per share of €1.62, surpassing consensus estimates of €1.51, and an operating profit of €2.83 billion, exceeding the expected €2.75 billion [2]. - Despite beating bottom-line expectations, total revenue was €9.68 billion, falling short of the €9.75 billion consensus, and cloud revenue was €5.61 billion, missing the anticipated €5.64 billion [2]. Growth Concerns - The slowdown in CRB growth to 25% in constant currency is attributed to a deal mix focused on larger transformations, which involve longer ramp periods or flexible structuring, as well as increasing geopolitical tensions leading customers to explore Sovereign SaaS options [3][4]. - SAP's stock has declined approximately 15% on Thursday and is down about 18% year-to-date, contrasting with a 2% increase for both the Russell 3000 and the S&P 500 [4].