SAP shares see biggest drop since 2020 after fourth-quarter cloud contract growth disappoints

▤ Summary

SAP shares plunged up to 16% after fourth-quarter cloud contract backlog growth came in below expectations. The company's current cloud backlog rose 16% to €21.1 billion, short of analyst expectations near 26%, which UBS said was the key disappointment. SAP attributed part of the shortfall to deal structures and legal clauses and said the backlog still provides a foundation to accelerate revenue through 2027 while forecasting a slight deceleration in 2026. Total Q4 revenue rose to €9.7 billion and operating profit to €2.6 billion, and the CFO warned that AI could fundamentally change how companies develop software, prompting a focus on R&D and AI adoption.

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