QS Research · Michael Burry's Scion Capital analyst template · 2006
SAP SE (SAP)
As of 2026-11-08 · 9/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case +22% · downside -10% · upside +33%
At $233.45 the ADS trades at the given 23.4x EV/EBITDA and 35.9x P/E on FY2025 (N30, N33), roughly today's multiple on the stale S1 TTM EBITDA base, while my FY2026-guidance base is ~$284/ADS. Q3 2026 shows real momentum - current cloud backlog €24.1B +26% cc and revenue above €10B for the first time (S25) - but the price already capitalizes that growth, and accelerating legacy support decline plus cloud gross-margin pressure cap near-term upside. Using 23.4x on €13.31B FY2026 EBITDA (midpoint €12.0B non-IFRS operating profit + €1.31B D&A) plus €2.07B net cash gives $284/ADS (+22%); €9.8B downside EBITDA gives $210 (-10%), and €14.5B upside EBITDA gives $310 (+33%). That is quality at a full price, not a deep-value long; I pass.
Key numbers
- Share price: $233.45
- Market cap: $286.79B
- Latest financial period: FY Dec 2025 to Dec 31, 2025
- Revenue (FY Dec 2025): €36.80B
- EV / EBITDA (FY Dec 2025): 23.4x
- P/E (FY Dec 2025): 35.9x
- Price / book: 5.77x
The 15 boxes
- ○ 1. Long-form business notes
S21 is a consolidated six-year XBRL table in EUR, not a business description: it shows SAP SE revenue rising from €27.34B in FY2020 to €36.80B in FY2025, with gross profit €19.45B to €26.81B, operating income €6.62B to €9.62B, net income €5.14B to €7.16B and operating cash flow €7.19B to €9.16B. The newest annual figures are FY2025, year ended 2025-12-31. The source gives no segment, channel, unit-economics, history, guidance or quarterly data, so how SAP makes money and how the business mix changed cannot be described from this source alone.
- ○ 2. Competitive advantage
The advantage is a switching-cost and installed-base one, not a cost one: revenue rose from €27.34B (FY2020) to €36.80B (FY2025) with gross margin holding 71%–73%, and per the FY2025 20-F filed 2026-02-26 cloud is now the largest revenue stream ahead of software support, with contractually committed cloud backlog (CCB) covering the next 12 months. FY2025 IFRS operating income of €9.62B and operating cash flow of €9.16B (versus €4.67B and €5.21B in FY2024) show strong cash economics, but SAP's own non-IFRS measure strips restructuring and Teradata litigation costs, so the IFRS line is not clean. The same filing concedes competition could reduce market share and profit, and the sources name no competitors and give no market-share or retention data. FY2025 (period 2025-12-31) is the newest period in these sources; no 2026 quarter is included, so current scale is anchored on that year.
- ✓ 3. 10-Q takeaways
SAP's Q3 2026 (quarter ended September 30, 2026) was its strongest growth quarter in the window: current cloud backlog €24.1bn (+28%, +26% cc), cloud revenue €6,668m (+26%, +25% cc) and total revenue €10,270m (+13%, +12% cc) — the first quarter above €10bn of revenue and €3bn of non-IFRS operating profit, with non-IFRS operating profit €3,030m (+18%) at a 29.5% margin. The growth is cloud-led and increasingly cannibalizing the old lines: software licenses €147m (-9%), software support €2,434m (-5%) and services €1,021m (-4%) all fell, and total/cloud gross margins slipped 0.4pp/0.7pp on higher cost of cloud. Cash generation is strong (Q3 free cash flow €1,718m, +36%; nine-month free cash flow €7,968m) and buybacks are large (25.2m shares for ~€4.2bn of a €10bn program as of September 30, 2026), with FY2026 guidance nudged up only to the upper end of the existing revenue ranges.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ○ 9. Insider trading interpretation
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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