Analysis
SAP remains largely insulated from direct financial impacts from the U.S. tariffs introduced in April 2025, as software and digital services are generally exempt from these trade measures. However, management has acknowledged that the broader environment of geopolitical and trade tensions took a "certain toll" on the company's top-line performance during FY25. This indirect impact primarily manifested through increased customer hesitance and extended negotiation cycles, particularly in sensitive sectors such as defense and state-owned enterprises.
The impact was most visible in the Current Cloud Backlog (CCB) growth for 2025, which reached 25%, missing the company's 26% guidance by 1 percentage point. Management attributed this deceleration partly to mounting geopolitical tensions that led customers to prioritize exploring "sovereign" software-as-a-service options. These more complex transactions typically require longer deployment and ramp-up periods compared to standard offerings from U.S.-based infrastructure vendors, leading to a "slight shift" of expected cloud revenue from 2026 into 2027 and beyond.
SAP has positioned itself strategically to mitigate these headwinds by leveraging its status as a leading non-U.S. software vendor. The company continues to invest in its SAP Sovereign Cloud Infrastructure (SCI) to provide an alternative for customers seeking to reduce dependencies on dominant U.S. infrastructure providers. Furthermore, management noted that SAP software acts as a tool for its customers to manage their own tariff-related costs and supply chain resilience, potentially driving demand for its resilient supply chain and financial planning solutions.
Despite the indirect pressure on deal timing, SAP achieved its overall cloud revenue outlook for 2025 and reported record total cloud backlog growth of 30%. The company has factored the current trade and geopolitical environment into its FY26 guidance, treating the 2025 conditions as the "new normal" for its operational planning. while continuing to see a path for total revenue growth to accelerate through 2027.
Data
Cloud Backlog Performance Summary
| Metric | FY2025 Performance | FY2025 Guidance |
|---|---|---|
| Current Cloud Backlog (CCB) Growth | 25.0% | 26.0% |
| Total Cloud Backlog (TCB) Growth | 30.0% | -- |
| Total Cloud Backlog Value | €77.0B | -- |
| Current Cloud Backlog Value | €21.0B | -- |
Source: Company filings, Marvin Labs
Financial Impact
- Revenue Impact (Historic): €210M
- Revenue Impact (Forward-Looking): €210M
Sources
While geopolitical and trade tensions have taken a certain toll on our top-line performance in 2025, the growing need for sovereignty and resilience also offers unique opportunities for those vendors that can offer technologies and tools to reduce dependencies from dominant offerings.
In some countries of the world, in some industries, obviously also deal cycles took a little bit longer. I mean, with the geopolitical tensions, customers have more questions around sovereignty, and actually that also then reflects in longer negotiation cycles.
As a European company, we have a kind of advanced trust and benefit from that because certain customer groups would rather rely on European software and cloud solutions.