New Delhi, India, October 23, 2025 – German software powerhouse SAP has announced its financial results for the third quarter of 2025. The revenue figures fell short of market expectations. The announcement prompted a 3% decline in the company’s shares on the U.S. stock market during after-hours trading on Wednesday.
For the quarter ending September 30, SAP reported revenue of €9.08 billion (approximately $10.59 billion). This marked a 7% increase compared to the same quarter last year. Despite this growth, the figure missed analyst forecasts. Analysts had anticipated revenue of around €9.17 billion, according to data from LSEG IBES. The shortfall highlights the challenges SAP faces amid evolving market dynamics and economic uncertainties.
SAP, best known for its enterprise software solutions that serve thousands of global businesses, has been shifting its focus toward cloud computing in recent years. This transition to a subscription-based cloud model aims to deliver more stable and predictable revenue streams. It moves the company away from the traditional one-time software licensing model. However, this quarter’s results suggest the pace of growth in the cloud segment is slowing.
The company’s cloud revenue grew by 22% during the quarter. While this is a strong performance in absolute terms, it is the slowest growth rate for SAP’s cloud business since late 2023. Investors expressed concerns over this deceleration. Cloud services remain critical to SAP’s future strategy and long-term profitability.
Despite missing revenue expectations, SAP’s profitability metrics showed resilience. On a non-IFRS basis, operating profit increased by 14% to €2.57 billion. This slightly exceeded analyst expectations of €2.55 billion. Additionally, SAP’s free cash flow, a key indicator of financial health and the company’s ability to return value to shareholders, rose 5% to €1.27 billion in the quarter.
Dominik Asam, SAP’s Chief Financial Officer, acknowledged the challenging economic environment but remained cautiously optimistic. “We’ve maintained forward momentum despite an uncertain macroeconomic backdrop,” Asam said in a company statement. He highlighted that while the external environment remains volatile, SAP’s ongoing investments and strategic shifts are positioning the company for sustained growth.
Looking ahead, SAP adjusted its outlook for the full fiscal year 2025. The company now expects cloud revenue to come in at the lower end of the previously forecast range of €21.6 billion to €21.9 billion. However, SAP remains confident about profitability. It projects operating profit at the upper end of its guidance range between €10.3 billion and €10.6 billion. The company also raised its free cash flow forecast slightly, to a range of €8 billion to €8.2 billion, up from an earlier estimate around €8 billion.
SAP’s results reflect broader trends affecting the technology sector. Companies continue to grapple with slowing growth rates and shifting customer expectations. The transition to cloud-based software and services remains a strategic imperative for many firms. However, it also brings fierce competition and market uncertainty.
The company’s performance, while solid in some respects, reveals the complexities of executing a large-scale business transformation amid a challenging economic backdrop. Analysts and investors will be closely watching SAP’s next steps and quarterly results. They want to see if SAP can accelerate growth in its cloud segment and deliver on its long-term strategic goals.
This report was compiled by Reuters journalists Supantha Mukherjee in Stockholm and Preetika Parashuraman in Bengaluru, with editorial oversight by Anil D’Silva.
As SAP transforms, the market watches its innovation, margin improvement, and progress toward ambitious management goals. This will be crucial in the face of evolving industry pressures and global economic challenges.
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