SAP CEO Christian Klein's Vision for Cloud and AI Growth
SAP's third quarter delivered clear momentum in cloud and AI. The company lifted growth, expanded margins, and increased the share of predictable revenue-while signaling confidence heading into Q4.
Leadership message was direct: SAP is winning net-new ERP in the cloud, customers are adopting AI across the suite, and the company expects the pace to hold.
Q3 at a glance
- Cloud backlog: €18.84bn (US$21.9bn), up 23% year over year; at constant currencies, growth would be ~4% higher.
- Cloud revenue: €5.29bn (US$6.15bn), up 22%.
- Cloud ERP Suite: €4.59bn (US$5.33bn), up 26%-driven by S/4HANA Cloud and related solutions.
- Total revenue: €9.08bn (US$10.55bn), up 7%.
- Operating profit (IFRS): €2.49bn (US$2.89bn), up 12%; non-IFRS: €2.57bn (US$2.98bn), up 14%.
- Predictable revenue: 87% of total-reflecting the shift from licenses to subscription.
- EPS: up 37% (IFRS) and 29% (non-IFRS).
This performance absorbed roughly €0.2bn (US$0.23bn) in combined headwinds from tax litigation and workforce transformation costs, while still expanding margins-showing discipline and cloud scale benefits.
Leadership signals
Dominik Asam, Chief Finance Officer: "Q3's strong performance underscores the strength and agility of our model. Through disciplined execution and a sharp focus on profitability and cash flow, we've maintained forward momentum despite an uncertain macroeconomic backdrop. We enter the fourth quarter confident in our ability to deliver on our commitments, as reflected by an improved outlook for operating profit and free cash flow."
Christian Klein, CEO: "We are gaining market share as our customers are adopting solutions across the entire Business Suite, including Business Data Cloud and AI at accelerated pace. For Q4 we are executing against a strong pipeline - which gives us confidence in our accelerating total revenue growth ambition for 2026."
Strategy: scale through AI and subscription
In January 2024, SAP kicked off a company-wide transformation to increase scalability, infuse AI, and focus on growth areas like Business AI. The plan supports 2025 ambitions of ~€10bn non-IFRS operating profit and €8bn free cash flow.
The move away from software licenses is working: subscriptions lifted the share of predictable revenue to 87%. On capital returns, SAP completed its share repurchase on August 13, 2025-buying 26,010,591 shares at an average price of €188.24 (US$219.13), totaling about €3.2bn (US$3.72bn) of purchases within the broader €5bn (US$5.82bn) program.
Demand signals: who's buying
SAP credits Q3 traction to customers adopting the RISE with SAP program for end-to-end transformations. New and expanding names include:
- Alphabet
- ANA HOLDINGS
- BarmeniaGothaer
- Computacenter
- Jack Wolfskin
- DXC Technology
- Japan Aviation Electronics Industry
- The Magnum Ice Cream Company
Partnerships: AI and sovereign cloud
SAP and OpenAI launched "OpenAI for Germany" to apply AI to public sector use cases-pairing enterprise application depth with frontier models. In parallel, SAP and Amazon Web Services plan to bring SAP's Sovereign Cloud capabilities to the AWS European Sovereign Cloud, backed by Amazon's planned €7.8bn (US$9.1bn) investment.
Further reading: SAP Newsroom and AWS European Sovereign Cloud.
What this means for executives
- Revisit your ERP timeline: if you're still on ECC or hybrid, accelerate to S/4HANA Cloud to capture subscription economics, AI features, and faster upgrade cycles.
- Lock in AI value: clarify entitlements across Business AI, data access in Business Data Cloud, and model governance. Bake AI usage metrics into quarterly reviews.
- Simplify your stack: standardize processes where possible to reduce customization, implementation time, and cost-to-serve.
- Plan for sovereignty: if you operate in the EU public sector or regulated industries, align security and data residency with upcoming sovereign cloud options.
- Align incentives: tie transformation milestones to OpEx efficiency, working capital improvements, and service levels-not just go-live dates.
- Pressure-test ROI: require unit economics for each AI use case (time saved, error reduction, revenue lift) and sunset pilots that don't clear the bar.
Bottom line
SAP's cloud engine is compounding: larger backlog, faster Cloud ERP growth, stronger margins. Partnerships in AI and sovereign cloud expand the addressable field-and give regulated customers a clear path to modernize.
If upskilling your team is on the roadmap, see practical AI curricula by role here: AI courses by job.
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