Adam Wood

Adam Wood asked about the Current Cloud Backlog (CCB) performance, specifically the 25% growth versus the 26% target, inquiring if the deviation was solely due to large deals with later ramps and cancellation clauses or if slippage occurred. He also sought insight into the Q1 pipeline and clarification on the expected 'slight deceleration' for 2026 CCB growth.

Answer

CEO Christian Klein explained that the 25% CCB was primarily due to a higher share of larger deals with longer ramp periods and more government deals with termination-for-convenience clauses, not slippage. He noted strong bookings and a better pipeline for 2026, adding that 'slight deceleration' would not be a 4% decline. CFO Dominik Asam highlighted the high accuracy of cloud revenue forecasts due to recurring revenues.

Adam Wood asked about the Current Cloud Backlog (CCB) ending at 25% versus the 26% target, inquiring if the deviation was solely due to large deals with later ramps and cancellation clauses, or if slippage also played a role. He also sought insight into the Q1 pipeline, the precise rounding of the CCB percentages, and clarification on the term 'slight deceleration' for future growth.

Answer

CEO Christian Klein explained that despite overachieving bookings and maintaining low churn and stable discount rates, the CCB deviation was primarily due to a higher share of larger deals with back-end loaded ramps and an increased number of government deals with termination for convenience clauses. He noted that while slippage occurs in every quarter, sales execution was strong, and the Q1 2026 pipeline coverage is better than in 2025. Klein clarified that 'marginal decline' for 2026 CCB growth would not be a 4% decline like in 2025, anticipating a better trend with AI and Business Data Cloud driving growth. CFO Dominik Asam added that the accuracy of cloud revenue forecasts is high due to recurring revenues, and the TCB forecast is more challenging due to deal granularity.

Adam Wood with Morgan Stanley questioned SAP's confidence in revenue acceleration for the next year, given the projected current cloud backlog (CCB) exit rate of EUR 26 billion and an implied Q4 cloud growth exit rate of around 25%, suggesting limited room for error.

Answer

Christian Klein, CEO of SAP, attributed the cloud revenue guidance to stalled pipeline in the first half, which will now fully contribute to next year's revenue. He expressed optimism for a CCB exit rate higher than 25%, citing a strong and mature pipeline for Q4. Dominik Asam, CFO of SAP, added that the delta between CCB growth and cloud revenues should be minimal, noting that transactional business, particularly Concur due to lower travel activity, is currently languishing but doesn't impact CCB.

Adam Wood from Morgan Stanley sought further insight into SAP's confidence in revenue acceleration for the next year, considering the projected Current Cloud Backlog (CCB) and cloud revenue growth rates, and whether other cloud revenues or a less dramatic CCB slowdown contribute to this outlook.

Answer

CEO Christian Klein attributed the cloud revenue guidance to stalled pipeline from H1, which will now fully contribute to next year's backlog. He expressed optimism for CCB to exceed 25%, setting up total revenue acceleration. CFO Dominik Asam added that the delta between CCB growth and cloud revenues should be minimal, with transactional business (like Concur) still facing headwinds.

Adam Wood of Morgan Stanley asked about the expected slowdown in operating margin improvement in the second half of 2025, questioning the balance between macroeconomic caution and planned investments for growth.

Answer

CFO Dominik Asam explained that H1 2025 operating profit was significantly boosted by a €331 million improvement in stock-based compensation, an effect that will not repeat in H2. He also noted ongoing workforce adjustments will incur costs. CEO Christian Klein added that SAP is focused on long-term margin expansion by decoupling expense and revenue growth through internal AI adoption and operational efficiencies.

Adam Wood of Morgan Stanley inquired about the company's flexibility to protect profitability and cash flow if revenue weakens, and asked about the potential deal size uplift from adding Business Data Cloud to a RISE contract.

Answer

CFO Dominik Asam confirmed they have flexibility through hiring controls and discretionary spending but must balance this with long-term investments. CEO Christian Klein added that deal sizes for Business Data Cloud vary, with significant potential for customers migrating from BW systems, and that premium margins will come from the semantic data products.

Adam Wood from Morgan Stanley inquired about how SAP is managing the risks of its sales force reorganization and workforce changes to avoid disruption in the critical fourth quarter, and asked for a breakdown of the strong free cash flow between structural improvements and one-off benefits.

Answer

CEO Christian Klein stated that the bookings plan is built on continued RISE adoption, net-new customer growth via GROW, and significant cross-sell potential. He emphasized his personal involvement and the new leadership's focus on streamlining the go-to-market model and empowering partners, expressing confidence in the Q4 execution. CFO Dominik Asam later clarified that the strong free cash flow was more of a phasing topic but solidified the company's confidence in its 2025 ambition.

Adam Wood inquired whether the strong adoption of Business AI is driven by a general customer desire for the technology, an acceleration of S/4HANA migrations, or if specific use cases are resonating most.

Answer

CEO Christian Klein confirmed that specific use cases are driving adoption. He highlighted Joule for efficiency gains in HR, finance, and supply chain, and noted significant traction in document management, citing 150,000 weekly users of GenAI features in Concur for automated expense processing. He also mentioned strong interest in AI for managing supplier and customer contracts.

Inquired about how a weaker macro environment might affect the pace of wallet share gains and whether Adyen's focus on Total Cost of Ownership (TCO) could be an advantage. Also asked why the take rate for the Platforms business is lower than other segments.

Answer

The executive stated that wallet share opportunities remain strong and that Adyen has proven resilient in past cycles. The focus on TCO with products like Adyen Uplift is a constant and beneficial dialogue with customers. The lower take rate in Platforms is due to the large scale and volume of its current enterprise clients, though it was acknowledged that there are more monetization opportunities in that segment.