SAP Stock Drops 15% After Earnings. Europe’s Tech Darling Can’t Play With the Big Boys.
SAP stock tumbled Thursday after the German software company reported better-than-expected earnings but disappointed investors with weaker-than-anticipated cloud revenue growth.
https://www.barrons.com/articles/sap-earnings-stock-price-6e124de8
SAP’s American depositary receipts fell about 15% in early trading to roughly $200, putting the stock on track for its steepest one-day decline in more than five years. The S&P 500 was roughly flat.
The company reported fourth-quarter non-IFRS earnings of 1.62 euros per share on revenue of €9.68 billion, up 3% from a year earlier. Analysts had expected earnings of 1.51 euros per share on revenue of €9.75 billion, according to FactSet.
The primary concern for investors was SAP’s cloud business, which has benefited in recent years from demand tied to artificial intelligence. Cloud revenue rose 19% year over year to €5.61 billion, but came in slightly below Wall Street expectations of €5.64 billion.
For the current fiscal year, SAP forecast cloud revenue of between €25.8 billion and €26.2 billion. The midpoint of that range is slightly above analysts’ consensus estimate of €25.98 billion.
The company said several large customers, including Lockheed Martin and Rolls-Royce Holdings, signed deals during the quarter. Still, SAP acknowledged some hesitation among customers amid geopolitical uncertainty. Chief Financial Officer Dominik Asam said the company saw deal slippage in the quarter due to rising geopolitical tensions.
SAP’s results followed a weak reaction a day earlier to Microsoft’s cloud earnings, which also raised concerns about slowing growth in the sector.
The company’s board authorized a new share buyback program of up to €10 billion, set to run from February 2026 through the end of 2027.
SAP is one of Europe’s largest technology companies, with a market value of about $267 billion. That is significantly smaller than Microsoft, but comparable to large U.S. software peers such as Oracle and Salesforce.
Through Wednesday’s close, SAP shares were down 9.1% for the year. Over the same period, Salesforce shares had fallen 9.4%, Microsoft was down 11%, and Oracle had dropped 37%.