SAP closed 2025 with more than two-thirds of its Q4 cloud orders including business AI, up over 20 percentage points from the previous quarter.
Among the 50 largest deals signed in the quarter, 90% included either AI or SAP Business Data Cloud.
The numbers suggest SAP’s messaging around embedded AI is starting to land with enterprise buyers.
Indeed, CEO Christian Klein spent much of the earnings call drawing a line between what SAP offers and the flood of generic AI tools hitting the market:
“Customers are facing geopolitical uncertainty, macroeconomic volatility, and they would like to leverage AI to make their companies more resilient and more productive, driving growth as well as cost efficiencies.”
He was also quick to add that customers are realizing “they don’t gain value by developing a number of custom AI agents or by applying commodity large language models on top of transactional business applications.”
Where LLMs Fall Short
Klein walked through a few examples of customers who tried building AI solutions with large language models alone and hit a wall.
A German customer attempted to create a cash flow agent using an LLM. Klein said it delivered “no value” because the model couldn’t access inventory data, financial bank statements, or other business context needed to understand why a customer wasn’t paying.
After bringing in SAP’s AI foundation and Knowledge Graph, the customer scrapped over 200 predictive models they’d built themselves.
H&M got a similar treatment. SAP built a prototype for personalized shopping that combined an LLM with its AI foundation to pull in purchase history and browsing behavior.
The deal also covered returns claims management, an area where SAP is “reimagining” old industry capabilities with AI.
Klein said SAP won that deal because of what it could do with last mile delivery, not just because of cloud migration.
“We are winning deals because of AI. We are not losing deals because of AI,” he added.
Joule Grows Ninefold
Away from Klein’s thoughts on LLMs, the CEO also discussed Joule, SAP’s copilot tool, which saw adoption grow ninefold over 2025.
The tool works across SAP’s application suite and has access to business data that sits outside the reach of general-purpose LLMs.
Klein pointed to Siemens as a case study, highlighting how consultants there are now reinvesting 25% of their weekly time into higher-value work thanks to Joule for Consultants.
The growth in Joule usage lines up with SAP’s broader argument: that AI needs to be embedded in workflows, not layered on top as an afterthought.
Why SAP Thinks It Can Win
SAP’s confidence comes down to a few structural advantages.
First, it has access to what Klein called “the world’s largest volume of business data” through its ERP and Business Suite footprint.
Second, it controls the application layer where business processes actually run, so AI can be built in rather than bolted on.
Third, SAP is betting enterprises will favor integrated solutions over a mess of point products, especially as they try to govern and scale AI across the organization.
Klein also pointed to internal results. SAP has launched an AI transformation program targeting around €2 billion in cost efficiencies by the end of 2028, equal to 15% to 20% of addressable costs.
“Because AI isn’t just about technology, it first needs to be enabled by our people,” Klein said.
CFO Dominik Asam backed up the claims of AI momentum with deal data, detailing that almost two-thirds of deals over €1 million in Q4 involved four or more lines of business, a jump of 25 percentage points.
That suggests customers are buying across SAP’s portfolio rather than picking individual products, which aligns with the company’s “best of suite” pitch over “best of breed.”
The Numbers
SAP finished 2025 with total cloud backlog of €77 billion, up 30% year over year, and current cloud backlog of €21 billion, up 25%.
Cloud revenue grew 26%, with Cloud ERP suite revenue climbing 32%.
The company expects 2026 cloud revenue to stay above 5% growth in constant currency and projects that free cash flow will hit around €10 billion.
