Finance
SAP's 2026 cloud forecasts disappoint, shares endure biggest daily loss since 2020
Published by Global Banking & Finance Review®
Posted on January 29, 2026
2 min readLast updated: January 29, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 29, 2026
2 min readLast updated: January 29, 2026
SAP's Q4 revenue met forecasts with strong cloud demand, indicating stable enterprise spending despite a cooling global economy.
By Leo Marchandon and Danilo Masoni
Jan 29 - German software company SAP's 2026 cloud revenue forecast failed to meet market expectations on Thursday and the company's shares fell by 15%, marking their steepest one-day decline since October 2020.
JPMorgan noted that SAP's cloud backlog and 2026 revenue guidance fell short of projections, sparking a selloff despite its full-year performance aligning with analyst forecasts.
SAP briefly became Europe's largest company by market capitalisation last March, but gave up the European crown later in the year due to concerns about the potential disruptive effects of artificial intelligence on the software sector.
2026 FORECAST FALLS SHORT
SAP expects cloud revenue to grow between 23% and 25% in 2026 to between 25.8 billion euros and 26.2 billion euros.
The company also projects cloud and software revenue of 36.3 billion euros to 36.8 billion euros, growing 12% to 13% while operating profit is expected to climb by 14% to 18% to 11.9 billion euros to 12.3 billion euros.
The enterprise software maker anticipates free cash flow of approximately 10 billion euros for the year with its effective tax rate expected to improve to around 29% from 30.4%.
SAP said current cloud backlog growth will slightly decelerate in 2026 after posting 25% growth in 2025, though it expects total revenue growth to accelerate through 2027 as more customers migrate to cloud-based solutions.
YEARLY RESULTS IN LINE
For the full year, cloud revenue surged 26% at constant currencies to 21 billion euros, while total cloud backlog climbed 30% to 77.3 billion euros. CEO Christian Klein said SAP Business AI has become a driver for growth, included in two thirds of the company's Q4 cloud order entry.
SAP also announced a two-year buyback program worth up to 10 billion euros.
The Walldorf-based company has spent much of the past year racing to move its legacy database customers to the cloud while executing a 3.2-billion restructuring program. Major customers wins in the fourth quarter included Dexco, Lockheed Martin and Rolls-Royce.
($1 = 0.8341 euros)
(Reporting by Leo Marchandon and Tristan Veyet in Gdansk, additional reporting from Danilo Masoni in London; Editing by Matt Scuffham)
Cloud computing refers to the delivery of computing services over the internet, allowing users to access and store data and applications on remote servers instead of local computers.
Revenue is the total income generated by a company from its business activities, typically from the sale of goods and services before any expenses are deducted.
Enterprise spending refers to the financial investments made by large organizations in various areas such as technology, infrastructure, and services to support their operations and growth.
Financial performance is a measure of how well a company is generating revenue and managing its expenses, often assessed through metrics like profit margins and return on investment.
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