SAP’s third-quarter results met expectations, with 2025 guidance maintained. Cloud revenue and backlog grew by 27% in constant currency. US public sector business is improving, and the fourth quarter outlook is positive. SAP plans to accelerate revenue growth in 2026 and 2027. Shares dropped 2% intraday.

Despite market concerns, SAP’s position is secure against generative AI threats. Shares are slightly undervalued at EUR 265 (ADR $311) fair value estimate. Cloud revenue for 2025 is expected to be at the bottom of the range, while EBIT will be at the top.

SAP anticipates strong performance in the fourth quarter, with cloud backlog growth of 26% or better by the end of 2025. The company is gaining market share and remains confident in its growth strategy. Maintains guidance for 2025, with revenue expected to be at the lower end of the range.

Read more at Morningstar: SAP Earnings: Solid Results With Growing Confidence for 2026; Shares Slightly Undervalued