SAP's strong 2025 results couldn't prevent a stock drop due to cautious 2026 guidance and slower backlog growth.

SAP reported strong fiscal 2025 results with 11% constant-currency revenue growth and a 29.2% operating margin, driven by 26% cloud revenue growth and robust demand for its AI-powered cloud solutions. Despite beating earnings and free cash flow expectations, the stock dropped over 11% as cloud backlog growth of 25% at constant currencies fell slightly short of forecasts, and guidance for 2026—projecting 23% to 25% cloud revenue growth—was seen as cautious amid concerns over large, back-end-loaded deals and slowing backlog momentum. The company announced a €10 billion share buyback and maintained a positive long-term outlook, but investor skepticism persists over the pace of cloud monetization and broader software sector volatility.