Letter from the CEO

 

2025 was an inflection point. In a rapidly transforming world, Business AI graduated from a possibility to an absolute necessity. With this shift, the application of AI in and across enterprises has become a central theme in our customers' strategies and, in turn, played a key role in all our stakeholder interactions - from our customers to our partners and our over 100,000 employees worldwide.

 

In this new reality, Business AI has become a critical tool for building resilience – financially, operationally, and in the transition to a more resource‑efficient economy. By unleashing the full potential of Business AI, SAP is helping our customers navigate uncertainty and reimagine their mission-critical processes to reduce risk, build agile and resilient supply chains, and pursue sustainable growth.

 

This commitment to our customers' success is the engine of our growth, and our results for fiscal year 2025 clearly show that our strategy is working. Despite demanding global macroeconomic conditions, we not only achieved our revised 2025 financial outlook for Cloud Revenue as well as Cloud and Software Revenue. We also beat our Operating Profit and Free Cash Flow outlook in 2025. Looking back to our 2025 financial ambition set in 2020 – which we adapted over time to reflect evolving market conditions – we successfully delivered on our commitment.

 

Our Total Cloud Backlog grew by 30%¹ to €77 billion in 2025, demonstrating impressive growth on an already large base. Throughout 2025, the Current Cloud Backlog consistently reached growth rates of around 25%¹ or more year-on-year. Total Revenue grew by 11%¹ and accelerated compared to the previous year. Thanks to our focus on efficiency, including internal AI adoption, Operating Profit increased by 31%². We achieved a Free Cash Flow of €8.2 billion, nearly doubling year-on-year and demonstrating SAP’s financial strength.

 

Our performance in 2025 is the direct result of our holistic transformation. Facing an environment dominated by disruption, customers choose RISE with SAP for their cloud journey before broadening their footprint across our portfolio, proving the success of our “land and expand” model.

 

With our non-financial metrics, we fell below our target for our Customer Net Promoter Score (NPS). In contrast, our Employee Engagement Index rose 2 percentage points to 76%, and our carbon emissions continued to decline. In 2025, we also replaced the key metric “Women in Executive Roles” with the Business Health Culture Index. This index provides a more holistic view of our company culture. The score for this index was 81%, within our target range.

 

While our business delivered strong results, our share price performance reflected wider market volatility, declining 13% in 2025. Our focus, however, remains firmly on the long-term value that we are creating through our clear strategy and leadership in Business AI.

 

To that end, and to reinforce our commitment to shareholder returns, we are pleased to propose a 6.4% dividend increase compared to the previous year, to €2.50 per share. Additionally, we are initiating a new €10 billion share buyback program over the next two years.

 

Our AI momentum is built on concrete innovation. In 2025, we unveiled SAP Business Data Cloud, enabling companies to harmonize and govern both SAP and non-SAP data to create a powerful, trusted foundation for AI. We built a robust, open business data ecosystem in collaboration with new and existing partners that delivered flexibility and choice to our customers.

 

As we continued to fundamentally change how work gets done with our AI copilot Joule and its agents, we also addressed one of the key challenges companies experience when applying large language models in a business context. The fact that most business data is numeric means that enterprises need AI models that understand more than just words. With SAP RPT-1, we built a new kind of AI model that does exactly that, using this data to make high-quality predictions from just a small set of examples.

 

Responding to the shifting geopolitical landscape, we also further strengthened our commitment to digital sovereignty, data security and control. In Europe, we launched the continent's first comprehensive sovereign AI offering, providing customers with an end-to-end AI solution that enables them to operate under European governance frameworks, keep sensitive data within approved jurisdictions, and retain full oversight and decision rights.

 

Looking ahead to 2026, our confidence stems from the strong foundation we established in 2025. Based on a pipeline fueled by Business AI and SAP Business Data Cloud, we expect to maintain robust Cloud Revenue in a range between €25.8 billion to €26.2 billion. Importantly, we also continue to expect an acceleration of Total Revenue Growth not only in 2026 but through 2027, demonstrating the long-term momentum of our strategy.

 

Business AI and SAP Business Data Cloud will be key drivers of our growth. Our refreshed strategy for 2026 focuses on five strategic pillars that will create a major opportunity and fundamentally change how enterprises run.

 

–     Reinventing the user experience with our AI copilot, Joule.

 

–     Embedding intelligent agents directly into business processes to automate tasks.

 

–     Developing high-impact AI applications for specific industries to create further value.

 

–     Powering our entire strategy with SAP Business Data Cloud, which provides the rich, contextual data that is essential for true Business AI.

 

–     Using AI to accelerate our customers’ move to the cloud.

 

Our path to accelerated, profitable growth is clear. It begins with leading by example, making our own company more productive through the consistent use of Business AI across all functions. This allows us to grow our revenue faster than our costs and, in turn, reinvest in the areas that define our future. Our discipline extends to how we engage with the market, where we are streamlining processes and expanding our highly profitable partner channel to drive sustainable growth.

 

Ultimately, our success story is not just about technology; it is powered by our people. That is why we are further strengthening our growth culture, attracting world-class talent, and continuously upskilling our entire organization for the AI era. By ensuring our team has both the skills and the tools to innovate, we empower them to deliver the extraordinary outcomes our customers expect.

 

We have the strategy, the technology, and the team to lead in the era of Business AI. We continue to set the bar higher because in this new era, our ability to help enterprises grow and thrive has never been more important.

 

On behalf of the entire Executive Board, I extend my deepest gratitude to our dedicated teams, our customers and partners, and to you, our shareholders, for the trust you place in SAP.

 

Sincerely,

 

Christian Klein

CEO, SAP SE