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SAP SE reported strong third quarter 2025 results, with cloud revenue rising 27% and total revenue reaching €9.08 billion, as management highlighted accelerating adoption of its Business Suite and AI-driven cloud offerings.
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Significant public sector wins, including a €1 billion contract with the U.S. Army and new AI-powered solutions, contributed to upgraded full-year guidance and reinforced SAP’s position as a leader in enterprise cloud transformation.
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We’ll examine how SAP’s robust Q3 cloud revenue growth and major contract wins could influence its investment narrative going forward.
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To be a shareholder in SAP, one needs to believe in its transition to a cloud-first enterprise software model and sustained growth in cloud and AI-driven services. The latest Q3 results, with 27% cloud revenue growth and a €1 billion U.S. Army contract, provide positive momentum for short-term catalysts like cloud bookings and reinforce the leadership narrative. However, the company’s confirmation that full-year cloud revenue will land at the lower end of guidance highlights persistent risks from elongated public sector sales cycles.
Among recent announcements, SAP’s completion of the SmartRecruiters acquisition supports cloud expansion efforts and addresses one of its biggest revenue and margin catalysts, broadening the portfolio and increasing the value of recurring cloud contracts. This acquisition not only enhances SAP’s HR cloud functionality but also adds further scale to its subscription-based offering, reinforcing cloud-led revenue catalysts in the wake of strong Q3 figures.
Yet, despite these growth signs, investors should be aware that pressure on sales cycles in sectors like the U.S. public sector could still…
Read the full narrative on SAP (it’s free!)
SAP’s outlook envisions €50.9 billion in revenue and €10.3 billion in earnings by 2028. This is based on analysts’ expectations of 12.3% annual revenue growth and a €3.8 billion increase in earnings from the current €6.5 billion.
Uncover how SAP’s forecasts yield a €287.60 fair value, a 23% upside to its current price.
Simply Wall St Community members provided 20 fair value estimates for SAP, ranging from €234.97 to €345 per share. While many see substantial upside, risks remain around the pace of cloud revenue growth and the impact of protracted enterprise purchasing cycles on future results, so you may want to consider other views before making a decision.