SAP Beats Q3 Cloud Revenue Estimates With €6.67B as Backlog Hits €24.1B

SAP SE reported third-quarter cloud revenue of €6.67B ($7.49B), up 25% in constant currencies and ahead of the €6.57B average analyst estimate compiled by Bloomberg. Total Q3 revenue increased 12% in constant currencies to €10.27B. The German software maker's current cloud backlog, which measures expected sales growth over the next 12 months, grew 26% in constant currencies to €24.1B. SAP previously noted this growth rate will slow as customers finish transitioning to the cloud. SAP shares closed at €208.65 in Frankfurt on Wednesday, up more than 60% from their July 23 low following an earlier sector-wide software selloff driven by fears that AI tools would replace traditional enterprise applications. CEO Christian Klein has reorganized the company around AI and taken direct oversight of its development after customers were initially slow to adopt SAP's AI offerings and criticized their value for money. While TD Cowen analysts noted before the release that SAP's AI adoption is progressing better than many competing enterprise products, they stated it is still not a primary driver of bookings. Meanwhile, SAP plans to end regular support for older on-premise software products next year, increasing the cost for clients to maintain legacy systems. "progressing better than many other enterprise AI products, though still not a primary driver of bookings" — Derrick Wood, Analyst at TD Cowen.