SAP’s Cloud Backlog Crosses €22bn as €3.5bn Bond Backs AI Acquisition Spree

SAP raises €3.5B in its largest bond issuance to fund AI acquisitions and cloud growth, with a €22B cloud backlog and €10B buyback plan, despite a 22% YTD stock decline.

SAP has sealed its largest single bond issuance in years, raising €3.5 billion in a four-tranche Eurobond that matures across two, three, five and seven years. The transaction closed on 28 May and drew heavy demand, giving the German software group fresh firepower for its accelerating artificial-intelligence push. The proceeds will go toward general corporate purposes, including the refinancing of recent acquisitions — a trio of deals that together underscore how seriously Walldorf is taking its AI agenda.

The same day, SAP unveiled its “Advanced Success Plan,” a program designed to help enterprise customers deploy AI solutions more quickly. The initiative complements the vision of an “Autonomous Enterprise” that CEO Christian Klein pitched at the Sapphire conference, with AI agents embedded directly into the ERP system as a key monetisation lever. Klein will elaborate on that strategy during a fireside chat at the BNP Paribas Exane CEO Conference in Paris on 3 June, a session that analysts see as a critical gauge of investor sentiment ahead of the second-quarter numbers on 23 July.

The cloud business, the main engine of SAP’s transformation, continues to gain momentum. The cloud backlog has swelled to nearly €22 billion, up 20 percent year on year. Management is guiding for currency-adjusted cloud revenue of between €25.8 billion and €26.2 billion for the full year, while free cash flow is expected to land at roughly €10 billion. Those metrics will be vital in determining how comfortably SAP can service its increased debt load, fund its €10 billion share buyback programme (running through 2027) and integrate the three acquisitions now in train.

The purchases — Reltio (closed on 7 May), Dremio and Prior Labs — follow a clear logic. Reltio helps clean and unify data from both SAP and non-SAP systems, Dremio improves data connectivity, and Prior Labs brings models specialised for tabular data. Together, they strengthen the Business Data Cloud and HANA Cloud as foundations for AI workloads. For Dremio and Prior Labs alone, SAP plans to spend more than €1 billion over four years, pending regulatory approvals.

SAP’s existing financial cushion remains comfortable. At the end of the first quarter, the company held €9.648 billion in cash and equivalents, against short-term debt of €2.824 billion and long-term debt of €5.038 billion. The new bond is not yet reflected in those figures. Revenue for Q1 reached €9.555 billion, up 6 percent year on year, while operating profit jumped 17 percent to €2.741 billion, pushing the operating margin to 28.7 percent. That operational strength provides a buffer as leverage increases.

The stock closed last Friday at €156.40, a gain of 1.33 percent over the previous seven days. Yet the year-to-date decline remains steep at 22.57 percent, and the share price is still 42.42 percent below its 52-week high of €271.60. The relative strength index has climbed to 75.8, putting the short-term rebound into overbought territory. Analysts are split: Deutsche Bank, UBS, Jefferies and Berenberg all reiterated buy ratings in May, with price targets ranging from €200 to €230, while JP Morgan remains neutral and DZ Bank continues to rate the stock a sell.

In the coming week, macro data will also move the tape for tech stocks. The preliminary eurozone inflation reading is due on 2 June, followed by the U.S. jobs report on 5 June. For SAP, the spotlight will be firmly on Klein’s Paris appearance — and whether he can convince the market that the bond-funded AI spree and the swelling cloud backlog are two sides of the same growth story.