German software giant SAP shares tumbled nearly 17% in early trading on Thursday after the company reported weaker-than-expected growth in its cloud contract backlog for the fourth quarter, marking its biggest daily drop in more than five years.
SAP reported Q4 non-IFRS earnings per share of €1.62, up 16% from a year earlier, slightly below analysts’ expectations of €1.76. Revenue rose 3% year-on-year to €9.68 billion, just shy of the €9.74 billion forecast.
Cloud revenue increased 19% to €5.61 billion, supported by SAP Business AI and adoption of its Cloud ERP suite.
The company’s current cloud backlog reached €21.05 billion, up 16% from the prior year, falling short of the 26% growth anticipated by analysts. Total cloud backlog rose 22% to a record €77.3 billion.
“Large transformational deals with high cloud revenue ramps in outer years and termination for convenience clauses required by law negatively impacted fourth-quarter constant currency current cloud backlog growth by approximately 1 percentage point,” SAP said.
CEO Christian Klein said the current cloud backlog laid a “strong foundation” for revenue growth through 2027, while cautioning that cloud backlog growth would “slightly decelerate” in 2026.
For full-year 2026, SAP forecast cloud revenue of €25.8 billion–€26.2 billion, up 23%–25%, and total cloud and software revenue of €36.3 billion–€36.8 billion. Non-IFRS operating profit is expected between €11.9 billion and €12.3 billion, with free cash flow around €10 billion.
SAP’s focus on cloud services and AI offerings continues to drive growth, but investors remain cautious as concerns mount over legacy software providers and the pace of cloud adoption.
Shares are on track to close at their lowest level since mid-2024, extending a period of volatility as the AI boom reshapes the software sector.