SAP: Backlog of cloud business orders grew faster than expected, indicating accelerated growth in fiscal 2027, reiterated buy (Deutsche Bank)
The core highlight is that cloud current backlog (CCB) increased by 26% year-on-year, exceeding expectations and higher than cloud revenue growth.
The core highlight is that cloud current backlog (CCB) increased by 26% year-on-year, exceeding expectations and higher than cloud revenue growth. This indicates that the group's constant currency growth in fiscal 2027 will accelerate from approximately 10.5% to approximately 12%. SAP's revenue and free cash flow in the second quarter were solid, and initial customer interest in new AI products was strong. The current free cash flow yield of about 7% shows that the valuation is very attractive. Based on a valuation of about 20 times FY27 expected EV/free cash flow, Deutsche Bank believes that accelerated growth in the coming year will improve investor sentiment. One-sentence conclusion: SAP's cloud business backlog (CCB) is the strongest leading indicator of future growth. Its better-than-expected growth provides solid visibility for acceleration in 2027, and it is significantly attractive at current valuations. Positive/negative: Positive for SAP (SAP.GR). SAP's CCB data is a leading indicator of future revenue, and its above-expected growth strongly suggests that the company's fundamentals are improving, a trend that the current stock price has not yet fully reflected. Catalyst: The financial report for fiscal year 2027 will verify whether CCB growth can be converted into revenue acceleration as expected. New AI product commercialization progress and customer signing status. Is the pricing power of traditional SaaS business stable?