SAP Q2 2026 Earnings Show Cloud Strength Amid Trim

SAP SE reported on July 23, 2026, that its Q2 results featured double-digit cloud revenue growth and a sharply higher current cloud backlog, while management trimmed full-year non-IFRS operating profit guidance to reflect recent AI and data acquisitions, maintaining investor interest.

Cloud Revenue Growth and Backlog Acceleration

SAP’s total revenue for Q2 2026 reached €9.9 billion, up 9% year-over-year and 11% at constant currencies. Cloud revenue rose 22% to €6.3 billion, or 24% at constant currencies. Cloud ERP Suite sales accounted for roughly 88% of cloud revenue at €5.5 billion, up 25% (27% at constant currencies). Cloud and software revenue grew 11% year-over-year on a constant-currency basis. Software license revenue declined 32% to €131 million, reflecting the ongoing shift from upfront licenses to subscriptions, while software support fell 8% to about €2.4 billion.

The current cloud backlog (CCB) stood at €22.9 billion as of June 30, 2026, up 27% year-over-year and 26% at constant currencies. Management described this as an acceleration compared with Q1 and a "trend reversal" after two quarters when backlog growth lagged cloud revenue. CEO Christian Klein said, "We delivered another quarter of strong current cloud backlog growth, up 26% at constant currencies. This performance is underpinned by our Autonomous Enterprise strategy with strong momentum across our Autonomous Suite as well as our Business AI Platform." AI and SAP Business Data Cloud featured in more than 90% of SAP’s 50 largest deals in Q2. The company plans to release 50 Joule AI assistants and over 400 Autonomous Suite agents by year-end.

Profit Outlook and AI-Related Costs

Non-IFRS operating profit for Q2 was €2.7 billion, up 7% year-over-year and 9% at constant currencies. IFRS operating profit rose 8% to €2.6 billion. Management noted a quarter-on-quarter deceleration in operating profit growth, citing slower revenue momentum compared with Q1, unusually low stock-based compensation in Q1, accelerated research and development (R&D), higher marketing expenses tied to AI and platform rollouts, and modest dilution from recent acquisitions.

SAP updated its 2026 non-IFRS operating profit guidance to €11.8–12.2 billion at constant currencies, incorporating more than €100 million of expected dilution from the July closings of Dremio and Prior Labs. These AI and data acquisitions are forecast to be loss-making in the second half of 2026 and were the primary reason for the guidance revision. Dremio, closed in July, is a high-performance data lakehouse platform providing real-time access to non-SAP data. Prior Labs, also closed in July, develops tabular foundation models for enterprise datasets.

The Reltio acquisition, completed on May 7, 2026, offers master data management for non-SAP sources and contributed less than one percentage point to current backlog growth. Management described Reltio as slightly dilutive to non-IFRS operating profit but expects to offset this effect over time.

IFRS basic earnings per share (EPS) rose 30% year-over-year to €1.89, while non-IFRS EPS increased 6% to €1.59. Free cash flow was €3.0 billion in Q2, up 27% year-over-year, and €6.3 billion for the first half, up 5%. SAP highlighted these figures as evidence of sustained cash generation despite elevated AI and platform investments.

Management expressed confidence entering the second half of 2026, citing broad geographic strength, particularly in Europe and Asia-Pacific. Market focus will likely center on margin trajectory, near-term AI-related cost pressures, and the sustainability of backlog-driven cloud growth.