I mean, our results figures were really not that bad. What gives?
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Two key points from the earnings report: a) CCB has fallen short of guidance, indicating a slow growth trajectory for 2026 and a longer transition period for customers to move to the cloud. b) License revenue is plummeting, suggesting declining maintenance revenue. The market punishes companies that fall short of expectations and whose narratives don’t hold up.
Smells like job cuts
It does not makes much sense to be honest. 10B buybuck, solid results, and stock drops almost 20% due cloud backlog? Gold and overpriced US stocks are not reasonable alternative for SAP.
Ask your HRBP......
Simply put, there are better companies to invest in. Tech companies in Taiwan and US show massive growth. Defense companies are showing good growth. Oil and gas industry is showing growth. Gold, silver, copper and other commodities are doing well.
Even if SAP does well, the overall performance compared to the rest of the market is just average. For shareholders it makes no sense to invest in a company with average performance when there are better alternatives. Also, the SAP leadership has said some very nasty things and people who care about this (like ESG investments or who are investing in Europe instead of US) want out of companies like SAP that mistreat their employees.
Also the US dollar is declining and a third of SAP's business is in North America. That also has an impact.
CK said - two things would decline or slow in 2026: the growth rate of current cloud backlog and the level of software support revenue. So the stock will continue its downward trajectory.