SAP is refusing to change tack on renewal discounts despite lower-than-expected cloud forecasts prompting its biggest share price slide in five years.

Amid a tumultuous week for enterprise software vendors' market caps, the European ERP giant saw [1]its value drop 22 percent on January 29 after forecasting a slight fall in the growth of its cloud backlog.

The company met revenue expectations by posting €36.8 billion ($43.1 billion) for calendar 2025, an 8 percent increase on the prior year. Operating profit for Q4 2025 was €2.554 billion, 27 percent higher than the same quarter last year.

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However, SAP's current cloud backlog – a measure of how quickly it is converting on-prem customers to a cloud and SaaS model – fell from 2024 to 2025 and was set to "slightly decelerate" further in 2026. Growth would remain around 25 percent, however.

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SAP provides core business software for some of the world's largest industrial and manufacturing companies. CEO Christian Klein said plans for renewal discounts for existing customers would not alter in response. He explained to investors that the drop in cloud backlog was down to it signing up larger customers to its cloud transformation deals.

Five years ago, [5]SAP launched a lift-shift-and-transform package with systems integrators and cloud hyperscalers to help move its apparently intransigent installed base to the new delivery model and SaaS commercial terms.

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Klein told investors last week that early take-up of the package – dubbed RISE with SAP – had been skewed toward smaller and medium-sized customers. But more recently, it had signed up some of its biggest clients. "Now there are these mega deals, and that will also continue, and they will take a higher share in the overall order entry of what we are converting to the cloud with RISE."

But larger customers meant some delays in realizing all of the revenue despite the total cloud backlog climbing to €77 billion, the CEO said.

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"Large customers often don't move their mission-critical ERP in the first year. These deals always have more back-end-loaded ramps and as a consequence, a limited impact on current cloud backlog in the first 12 months," Klein said.

Nonetheless, he insisted SAP would not adjust its discounting policy in response to stem the short-term growth deceleration.

"Should we now incentivize our people to keep the first 12 months up? That would be the wrong thing to do because it's against the nature of how these transformations work. I don't want to discount the renewal base. What matters for [SAP in] the mid and the long term is the renewal base because that is what is driving the cloud revenue and the profits," Klein told investors on an earnings call.

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Renewals have become a bone of contention among some SAP watchers. Last year, [12]Gartner said customers opting for private cloud have seen price increases of 10 percent or more on renewal proposals if they fail to negotiate a renewal price cap in the original deal. SAP later said Gartner's analysis was "factually incorrect." ®

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[1] https://www.cnbc.com/2026/01/29/sap-earnings-q4-shares-cloud-contract-value.html

[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/databases&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aYDYNHq8HkUz349Gi50I0AAAARQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

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[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/databases&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aYDYNHq8HkUz349Gi50I0AAAARQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[5] https://www.theregister.com/2021/01/29/rise_with_sap_presentation/

[6] https://www.theregister.com/2025/12/09/dsag_sap_business_data_cloud/

[7] https://www.theregister.com/2025/12/04/uk_sap_business_suite/

[8] https://www.theregister.com/2025/11/25/employee_trust_sap/

[9] https://www.theregister.com/2025/11/17/sap_for_me_outage/

[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/databases&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aYDYNHq8HkUz349Gi50I0AAAARQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/databases&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aYDYNHq8HkUz349Gi50I0AAAARQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[12] https://www.theregister.com/2025/10/14/sap_private_cloud_hikes/

[13] https://whitepapers.theregister.com/