Financial Data and Key Metrics Changes - The total revenue for the full year approached EUR 37 billion, up 11% year-on-year [33] - Cloud revenue grew 26% year-on-year, primarily driven by the strong performance of the Cloud ERP Suite, which increased by 32% [32][33] - The current cloud backlog reached EUR 21 billion, up 25%, while the total cloud backlog grew 30% to a record EUR 77 billion [31][32] Business Line Data and Key Metrics Changes - The Cloud ERP Suite accounted for 86% of total cloud revenue for the year, highlighting its significance as a growth engine [33] - Software licenses revenue decreased by 27%, indicating a shift in focus towards cloud offerings [33] Market Data and Key Metrics Changes - The U.S. public sector was one of the best-performing businesses in Q4, showing resilience despite geopolitical tensions [41] - The company noted that customers are increasingly exploring sovereign software-as-a-service solutions due to geopolitical factors [31] Company Strategy and Development Direction - The company emphasized its transformation strategy, "RISE and GROW with SAP," as core pillars for large-scale enterprises and mid-sized companies [30] - AI and the Business Data Cloud are becoming significant contributors to customer decisions and deal activity, with large cloud transactions contributing a record 71% to cloud order entry in Q4 [30] - The company plans to further develop its SAP Sovereign Cloud Infrastructure to meet growing demand for sovereignty and resilience in software solutions [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's outlook for 2026, despite challenges faced in 2025 due to geopolitical tensions [28][30] - The company anticipates total revenue growth to accelerate, supported by the foundation built in previous years [37] - Management highlighted the importance of reskilling employees to adapt to the changing landscape influenced by AI [24] Other Important Information - The company announced a new two-year share repurchase program of up to EUR 10 billion, reflecting confidence in sustainable business strengths [36] - Free cash flow for the full year was EUR 8.2 billion, at the high end of the revised outlook range, indicating strong cash management [35] Q&A Session Summary Question: Are there hurdles in the U.S. due to geopolitical tensions? - Management noted that the U.S. public sector performed well in Q4, and customers are less concerned about the origin of the software as long as it meets regulatory standards [41] Question: Are solutions intended to replace non-European providers? - Management clarified that the focus is on competitiveness and delivering stronger AI solutions rather than replacing specific providers [43] Question: How do U.S. tariffs affect the business? - Management stated there are no direct tariffs on software or services, and the company hopes this remains the case [58] Question: Why is the company starting a share buyback program instead of investing in future revenue? - Management explained that share buybacks are part of a strategy to return capital to shareholders while maintaining flexibility for future investments in technology [59][60]

Financial Data and Key Metrics Changes - The total revenue for the full year approached EUR 37 billion, up 11% year-on-year [34] - Cloud revenue grew 26% year-on-year, primarily driven by the strong performance of the Cloud ERP Suite, which increased by 32% [32][34] - The current cloud backlog reached EUR 21 billion, up 25%, while the total cloud backlog grew 30% to a record EUR 77 billion [31][32] Business Line Data and Key Metrics Changes - The Cloud ERP Suite accounted for 86% of total cloud revenue for the year, highlighting its position as a key engine of growth [34] - Software licenses revenue decreased by 27%, indicating a shift in focus towards cloud offerings [34] Market Data and Key Metrics Changes - The company reported a significant increase in deal volumes greater than EUR 5 million, contributing a record 71% to cloud order entry in Q4 [30] - The public cloud business was growing five times faster than the private cloud business, showcasing the success of the cloud transformation [5] Company Strategy and Development Direction - The company emphasized its transformation strategy, "RISE and GROW with SAP," as core pillars for large-scale enterprises and high-growth mid-sized companies [30] - AI and the Business Data Cloud are emerging as meaningful contributors to customer decisions and deal activity, with a focus on enhancing customer value [30][40] - The company aims to leverage its strong position in the market to address the growing demand for sovereign software-as-a-service solutions [31][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's outlook for 2026, despite geopolitical tensions impacting business [28][39] - The company anticipates total revenue growth to accelerate, supported by the foundation built in previous years [38] - Management acknowledged the challenges faced in 2025 but highlighted the resilience demonstrated in cloud revenue performance [52] Other Important Information - The company plans to initiate a two-year share repurchase program of up to EUR 10 billion, reflecting confidence in sustainable business strengths [37] - Free cash flow for the full year was approximately EUR 8.2 billion, at the high end of the revised outlook range [36] Q&A Session Summary Question: Are there hurdles in the U.S. due to geopolitical tensions? - Management noted that the U.S. public sector performed well in Q4, with customers less concerned about the origin of the software as long as regulatory standards are met [43][44] Question: Are solutions intended to replace offerings from non-European providers? - Management clarified that the focus is on competitiveness and delivering stronger AI solutions rather than replacing non-European offerings [45] Question: How do U.S. tariffs affect the business? - Management stated there are no direct tariffs on software or services, and the indirect impact has been manageable, with Q4 showing strong performance in the U.S. public sector [61] Question: Why initiate a share buyback program instead of investing in future revenue? - Management explained that share buybacks are part of a balanced approach to capital returns, and future M&A opportunities will be considered for technological advancements [63][64]

Financial Data and Key Metrics Changes - Total revenue for the full year approached EUR 37 billion, up 11% year-on-year [33] - Cloud revenue grew 26% year-on-year, primarily driven by the strong performance of Cloud ERP Suite, which increased by 32% [32][33] - Non-IFRS basic earnings per share increased by 36% to €6.15 [37] - Free cash flow for the full year was EUR 8.2 billion, at the high end of the revised outlook range [36] Business Line Data and Key Metrics Changes - Cloud ERP Suite accounted for 86% of total cloud revenue for the year, highlighting its importance as a growth engine [33] - Software licenses revenue decreased by 27%, indicating a shift in focus towards cloud solutions [33] - The current cloud backlog reached EUR 21 billion, up 25%, while total cloud backlog grew 30% to a record EUR 77 billion [31][32] Market Data and Key Metrics Changes - The public cloud business grew five times faster than the private cloud business, showcasing a significant shift in customer preferences [5] - The company reported its best bookings result in Q4, contributing to a strong finish for the year [3][10] Company Strategy and Development Direction - The company emphasizes AI and the Business Data Cloud as core components of its transformation strategy, aiming to enhance customer decision-making and deal activity [30] - The strategy includes a focus on large-scale enterprises and high-growth mid-sized companies undergoing complex transformations [30] - The company plans to further develop its SAP Sovereign Cloud Infrastructure to meet growing demand for sovereign software solutions [40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate geopolitical tensions and emphasized the importance of operational discipline [29][39] - The outlook for 2026 includes expectations for total revenue growth to accelerate, supported by the foundation built in 2025 [38] - Management acknowledged the challenges faced in 2025 but highlighted the resilience demonstrated in cloud revenue performance [51] Other Important Information - The company announced a new two-year share repurchase program of up to EUR 10 billion, reflecting confidence in sustainable business strengths [36][37] - The company is committed to reskilling its workforce to adapt to the changing landscape influenced by AI [25] Q&A Session Questions and Answers Question: Are there hurdles in the U.S. due to growing tensions between countries? - Management noted that the U.S. public sector performed well in Q4, with customers less concerned about the origin of the software as long as regulatory standards are met [42][43] Question: Are solutions intended to diversify or replace offerings from non-European providers? - Management clarified that the focus is on competitiveness rather than replacing non-European offerings, emphasizing the need for stronger AI capabilities [44] Question: How do geopolitical tensions impact the business outlook? - Management indicated that the 2025 environment is considered the new normal, with resilience shown despite geopolitical challenges [51][52] Question: What is the rationale behind the share buyback program? - Management explained that share buybacks are part of a balanced approach to capital returns, alongside potential future M&A for technological advancements [60][62]

Core Insights - SAP achieved its best bookings result in Q4, with lower churn and stable discounting, indicating a successful quarter amidst ongoing transformation efforts [1][3] - The company met its 2025 outlook for cloud and software despite challenges in the first half of the year, attributing strong performance to cost discipline and AI integration [2][3] Financial Performance - Cloud revenue increased by 26%, with the Cloud ERP Suite growing by 32%, contributing to a full-year non-IFRS operating profit of €10.4 billion [4][16] - Total cloud backlog reached a record €77 billion, up 30%, while current cloud backlog grew by 25%, reflecting a shift towards larger public-sector deals [5][16] - Free cash flow for 2025 was approximately €8.2 billion, with a new €10 billion share repurchase program announced [15][17] AI and Product Strategy - AI is driving significant deal momentum, with over two-thirds of Q4 cloud orders including Business AI, and 90% of the largest deals incorporating AI or SAP Business Data Cloud [6][11] - The Business Data Cloud generated over €2 billion in order entry since its launch, emphasizing its strategic importance for integrating SAP and non-SAP data [9] - SAP's product strategy focuses on a unified platform for business transformation, enhancing user experience and embedding AI into core workflows [10][12] Market Position and Growth - The mid-market segment is now the fastest-growing area for SAP, with several thousand new customers acquired in recent years [7] - SAP's public cloud business grew five times faster than its private cloud business in 2025, indicating strong market demand [7] - The company expects to accelerate total revenue growth and achieve record free cash flow of approximately €10 billion in 2026 [17] Geopolitical and Market Considerations - SAP's performance in the U.S. public sector remained strong, with customers focusing on regulatory compliance rather than vendor origin [18] - Management acknowledged the impact of geopolitical tensions on deal closures but remains optimistic about future growth [2][18]

Financial Data and Key Metrics Changes - The total cloud backlog reached EUR 77 billion, up 30% year-on-year, indicating strong underlying business momentum [7][26] - Cloud revenue grew 26% year-on-year, primarily driven by the strong performance of the Cloud ERP Suite, which increased by 32% [27][29] - Total revenue for the full year approached EUR 37 billion, up 11% [29] Business Line Data and Key Metrics Changes - The Cloud ERP Suite accounted for 86% of total cloud revenue for the year, highlighting its role as a key growth engine [27] - The number of customers using the AI copilot tool grew ninefold over the year, with over 60% of existing cloud customers actively using AI [6][56] Market Data and Key Metrics Changes - Strong performances were noted in Brazil, France, Germany, India, Italy, South Korea, and Spain, while China, Japan, Saudi Arabia, the UK, and the US also showed significant strength [28] - The company outperformed the cloud market by 10 percentage points in 2025 [15] Company Strategy and Development Direction - The ongoing transformation of SAP's operating model, combined with AI integration, is expected to drive future growth and revenue acceleration through 2027 [14][22] - The company is focusing on a Partner-First approach for the mid-market and expanding its sovereign cloud capabilities [12][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged geopolitical uncertainty and macroeconomic volatility but emphasized the increasing demand for AI solutions among customers [4][24] - The company expects a record free cash flow of approximately EUR 10 billion in 2026, supported by continued efficiency improvements [32] Other Important Information - The non-IFRS cloud gross margin for the full year expanded by 1.6 percentage points to 75%, driving cloud gross profit up by 29% [28] - A new two-year share repurchase program of up to EUR 10 billion is set to start in February, reflecting confidence in the business's sustainable strengths [30] Q&A Session Summary Question: Insights on CCB and pipeline for Q1 - Management noted that the CCB ended at 25%, with larger deals contributing to longer ramp periods and some slippage, but overall bookings performance was ahead of plan [39][41] Question: AI-driven cost savings and R&D focus - The company aims to achieve EUR 2 billion in cost efficiencies through business growth and AI integration, with no current restructuring plans [46][48] Question: AI adoption among existing customers - Approximately 60% of existing cloud customers are actively using AI, with significant revenue uplift observed from early adopters [56][60] Question: Dynamics of TCB growth and BDC momentum - Management acknowledged a deceleration in TCB growth but emphasized a strong pipeline and the expected contribution from the Business Data Cloud in 2026 [72]

Financial Performance - The total cloud backlog reached EUR 77 billion, up 30% year-on-year, indicating strong underlying business momentum [7][14][26] - Cloud revenue grew 26% year-on-year, primarily driven by the strong performance of the Cloud ERP Suite, which increased by 32% [27][29] - Total revenue for the full year approached EUR 37 billion, up 11% [29] Business Lines and Key Metrics - The Cloud ERP Suite accounted for 86% of total cloud revenue, highlighting its significance as a growth engine [27] - The number of customers using the AI copilot tool grew ninefold over the year, with 60% of existing cloud customers actively using SAP's AI offerings [6][54] Market Performance - Strong performances were noted in Brazil, France, Germany, India, Italy, South Korea, and Spain, while China, Japan, Saudi Arabia, the UK, and the US also showed significant strength [28] - The company outperformed the cloud market by 10 percentage points in 2025 [15] Company Strategy and Industry Competition - The ongoing transformation of SAP's operating model, combined with AI integration, has positioned the company to capitalize on business AI opportunities [8][20] - The company is focused on a Partner-First approach for mid-market growth and expanding its sovereign cloud capabilities [12][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged geopolitical uncertainties and macroeconomic volatility but expressed confidence in the company's ability to drive growth through AI and cloud solutions [4][23] - The company expects a record free cash flow of approximately EUR 10 billion in 2026, supported by operational efficiency improvements [32] Other Important Information - The non-IFRS cloud gross margin for the full year expanded by 1.6 percentage points to 75%, driving cloud gross profit up by 29% [28] - A new two-year share repurchase program of up to EUR 10 billion is set to start in February, reflecting confidence in the business's sustainable strengths [30] Q&A Session Summary Question: Concerns about CCB growth and deal slippage - Management noted that the 25% CCB growth was impacted by a higher share of large deals with longer ramp periods and some government deals with termination clauses [38][40] Question: AI-driven cost efficiencies - The company aims to achieve EUR 2 billion in cost efficiencies through business growth without a restructuring plan, focusing on scaling operations with AI [44][46] Question: Customer adoption of AI offerings - Approximately 60% of existing cloud customers are actively using SAP's AI, with a significant increase in adoption noted [54][56] Question: Future cloud revenue growth trajectory - Management indicated that while some deceleration is expected, it will be less than in 2025, with a strong pipeline for 2026 [66][68]

Financial Data and Key Metrics Changes - The total cloud backlog reached EUR 77 billion, up 30% year-on-year, indicating strong underlying business momentum [6][25] - Cloud revenue grew by 26% year-on-year, primarily driven by the strong performance of the Cloud ERP Suite, which increased by 32% [27] - Total revenue for the full year approached EUR 37 billion, up 11% [27] Business Line Data and Key Metrics Changes - More than two-thirds of Q4 cloud order entry included business AI, which increased by over 20 percentage points compared to Q3 [5] - The Cloud ERP Suite accounted for 86% of total cloud revenue for the year, reinforcing its position as a key growth engine [27] - Software licenses revenue decreased by 27%, contrasting with the growth in cloud revenue [27] Market Data and Key Metrics Changes - Brazil, France, Germany, India, Italy, South Korea, and Spain showed outstanding performances in cloud revenue, while China, Japan, Saudi Arabia, the UK, and the US were particularly strong [28] - The company outperformed the cloud market by 10 percentage points in 2025 [15] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance business resilience and productivity, with a clear strategy to embed AI into business processes [4][5] - The RISE and GROW with SAP initiatives remain core pillars of the transformation strategy, targeting large-scale enterprises and mid-sized companies [24] - The company aims to achieve a run rate of around EUR 2 billion in real cost efficiencies by the end of 2028 through internal AI usage [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged geopolitical uncertainty and macroeconomic volatility as challenges but expressed confidence in the company's ability to drive growth through AI and cloud solutions [4][24] - The outlook for 2026 anticipates a moderation in CCB growth but expects total revenue growth to accelerate, supported by a strong foundation [32] Other Important Information - The company plans to initiate a new two-year share repurchase program of up to EUR 10 billion, reflecting confidence in sustainable business strengths [31] - Non-IFRS basic earnings per share increased by 36% to EUR 6.15 for the fiscal year 2025 [31] Q&A Session Summary Question: Concerns about CCB growth and pipeline for Q1 - Management noted that the 25% CCB growth was impacted by a higher share of large deals with longer ramp periods and some deals with cancellation clauses, but bookings performance was ahead of plan [40][41] Question: AI-driven cost savings and R&D focus - The company plans to achieve EUR 2 billion in savings through business growth without a restructuring plan, focusing on scaling the business with AI [47][49] Question: Customer adoption of AI offerings - Approximately 60% of existing cloud customers are actively using the AI offerings, with a significant increase in adoption of the AI copilot tool [57] Question: TCB growth dynamics and BDC contribution - Management acknowledged a steep deceleration in TCB growth but emphasized the strong pipeline and expected contributions from the Business Data Cloud in 2026 [74]

SAP (NYSE:SAP) Q4 2025 Earnings call January 29, 2026 01:00 AM ET Speaker1Today are CEO Christian Klein and CFO Dominik Asam. On this call, we will discuss SAP's fourth quarter and full year results for 2025. You can find the deck supplementing this call, as well as our quarterly statement on our website investor relations website. During this call, we will make forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expe ...

Investment Rating - The report indicates a positive investment outlook for the enterprise SaaS sector, particularly highlighting the growth potential driven by AI-native and AI-embedded solutions [5]. Core Insights - The enterprise SaaS sector is experiencing a significant technological transformation due to the maturation of artificial intelligence, creating a dichotomy between AI-embedded incumbents and AI-native challengers [5][10]. - While 78% of organizations have adopted AI, 95% of AI integration attempts fail to accelerate revenue, indicating a substantial opportunity for new vendors [5][24]. - The total addressable market (TAM) for AI-native and AI-embedded workflows is estimated to grow from $65 billion in 2025 to $190 billion by 2030, with growth rates between 18% and 27% [41][42]. Summary by Sections The Radical Transformation in SaaS - The enterprise SaaS sector is undergoing its most significant shift in a generation, driven by advancements in AI, particularly large language models [6]. AI-Embedded Incumbents - AI-embedded solutions are primarily offered by legacy SaaS companies, enhancing existing platforms with AI capabilities [12]. - By 2026, 80% of software vendors are expected to embed AI into their applications, making this the fastest-growing segment of AI capabilities [12][15]. AI-Native Challengers - AI-native platforms are designed from the ground up around intelligent processes, offering potentially higher efficiency and scalability compared to AI-embedded solutions [14][16]. - These platforms are transforming core enterprise functions and are seen as creating agile, high-efficiency businesses [16][17]. Market Development and Investment - The enterprise adoption of AI has surged, with 78% of organizations using AI in at least one business function, up from 55% the previous year [23]. - Despite high adoption rates, a significant execution gap exists, with 95% of AI integration attempts failing to yield meaningful revenue [24]. Market Sizing and Growth - The estimated TAM for AI-native and AI-embedded workflows is projected to grow from $65 billion in 2025 to $190 billion by 2030, with the fastest growth in vertical agentic AI [41][42]. Opportunities and Constraints - Key factors accelerating adoption include improved model access, data access patterns, and measurable time-to-value metrics [51][52]. - Constraints include governance and lineage requirements, pricing confusion, and change management challenges [52]. Defensibility and the Tech Stack - A new AI-first foundation is essential for both incumbents and challengers to build durable value [53]. - The architecture of AI-enabled applications now includes a data plane, model/agent layer, workflow layer, and experience layer [54]. The New Moats - Defensibility in the market is increasingly reliant on data capture, agentic orchestration, domain tuning, and observability [59][61]. Incumbents and Challengers Meet - Incumbents are leveraging their distribution and governance capabilities, while challengers focus on speed and clarity of architecture [62][67]. The Investor Perspective - Investors are encouraged to identify companies that either replace workflows with AI-native solutions or embed AI agents into existing platforms [72][74].

Core Viewpoint - Cell Press is launching a new high-quality open-access journal, Cell Press Blue, by the end of 2025, focusing on innovative research in life sciences, material sciences, medicine, sustainable development, and applied sciences [4][5]. Group 1: Journal Features and Standards - Cell Press Blue aims to publish groundbreaking research with high academic value and industry impact, maintaining rigorous quality control and providing personalized publishing services [5][12]. - The journal will operate with a target impact factor of 15-20 and will initially accept only peer-reviewed transfer manuscripts from upstream journals, emphasizing a "boutique" publishing approach [7][8]. - All accepted manuscripts in the first year will be exempt from open access fees, promoting accessibility [7]. Group 2: Scope and Research Focus - The journal welcomes significant advancements in biology, medicine, chemistry, physics, materials science, energy, environmental science, and sustainable development, particularly those that challenge existing paradigms and offer transformative solutions to global challenges [8][9]. - It also invites authoritative review and opinion articles to showcase emerging opportunities and stimulate scientific discussions [9]. Group 3: Editorial Team and Support - The editorial team consists of experts in various fields, including Dr. Andy Jobbins, who specializes in molecular and cell biology, and Dr. Jiqing Sun, who focuses on emerging materials and electrochemistry [11][12]. - Authors will receive comprehensive support throughout the publishing process, including direct communication with editors and streamlined submission procedures [20][21]. Group 4: Promotion and Visibility - The journal will implement targeted marketing campaigns and media outreach to enhance the visibility of published research, ensuring that each paper reaches a broad audience [21]. - Collaborative special issues and promotional activities will create a strong academic resonance, increasing the chances of research being recognized within the scientific community [20][21].