QS Research · Michael Burry's Scion Capital analyst template · 2006
SAP SE (SAP)
As of 2026-11-06 · 9/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction low · base case 0% · downside -34% · upside +24%
The market is not missing SAP's operating momentum: Q3 2026 revenue was €10,270m (+13%), cloud revenue €6,668m (+26%) and current cloud backlog €24,144m (+28%), with FY2026 guidance of €11.8–12.2bn non-IFRS operating profit cc and ~€10bn FCF (S24). But at $233.45 the ADS already sits at section 13's mid case: 23.4x EV/EBITDA (N28) on $12.18B EBITDA equals about $285.0B EV versus the stated $284.49B EV (N26), so the base case is 0%. Section 13's downside is $140–$169/ADS (-28% to -40%) on 13.9x–16.9x EV/EBITDA, midpoint -34%, and upside is $277–$299 (+19% to +28%) on 27.8x–30x, midpoint about +24%; those inputs are quoted from S1/N22/N23/N7/N1 and use section 13's same $12.18B EBITDA base. I use that FY2025 EBITDA base even though it is 10 months old and Q3 2026 is stronger, because it is the only base with named peer multiples; with the base at 0%, neither the long nor the short rule is met, so this is a pass, not a deep-value long.
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 only a six-year XBRL financial table (FY2020-FY2025, EUR) and gives no segment, channel, product, customer, unit-economics, history, or guidance detail. It shows revenue rising from €27.34B in FY2020 to €36.80B in FY2025, gross profit from €19.45B to €26.81B, and FY2025 operating income of €9.62B with operating cash flow of €9.16B. The newest period in the source is FY2025 ended 2025-12-31; with no Q2 2026 or later figures and no guidance, share price, or market cap in S21, current scale and valuation cannot be updated from this source alone.
- ○ 2. Competitive advantage
The sources describe a scale-and-switching-cost franchise: cloud is now the largest revenue stream, support is attached to the vast majority of software licenses, and cloud revenue is tracked as contractually committed backlog (CCB/TCB) rather than one-time sales. The margin record is good at the gross line — gross profit rose every year from €19.45B (FY2020) to €26.81B (FY2025) on revenue of €27.34B to €36.80B — but the operating line was uneven, falling from €6.62B (FY2020) to €4.67B (FY2024) before jumping to €9.62B (FY2025), with no split of one-offs in the excerpt. Cash generation confirms the annuity character: operating cash flow of €9.16B in FY2025 versus €5.21B in FY2024, against only €1.31B of D&A. The excerpt names no individual competitors, only the risk that competition, consolidation and new business models erode share and profit.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended September 30, 2026): total revenue €10,270m, up 13% (12% at constant currencies) versus €9,076m in Q3 2025, the first quarter above €10bn, with cloud revenue €6,668m up 26% and current cloud backlog €24,144m up 28%. IFRS operating profit was €2,930m (+18%, 28.5% margin) and non-IFRS €3,030m (+18%, 29.5% margin), though the growth rate leans on €0.1bn of prior-year charges, and cloud gross margin slipped 0.7pp to 73.9%. Cash was strong: Q3 2026 free cash flow €1,718m (+36%), €7,968m for Q1–Q3 2026, and 25.2m shares (~€4.2bn) were repurchased by September 30, 2026 under the €10bn program. FY2026 guidance is unchanged in profit/cash terms (non-IFRS operating profit €11.8–12.2bn cc, ~€10bn free cash flow) with cloud revenue pointed to the upper end of €25.8–26.2bn cc.
- ✓ 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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