Track market-moving stories before they get noisy

A logo on the SAP exhibition space at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022.... Purchase Licensing Rights, opens new tab Read more

July 23 (Reuters) - SAP's (SAPG.DE), opens new tab finance chief said on Thursday that artificial intelligence in enterprise software must move beyond chatbots and coding tools into more ​complex business processes, where clean data, reliability and cost control matter ‌more than access to the most powerful model.

Companies have poured money into generative AI but are still seeking evidence of broad productivity gains, and SAP is arguing that ​the returns will come less from general-purpose models than from ​governed systems embedded in specific business processes.

The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here.

CFO Dominik Asam told reporters ⁠after SAP's second-quarter results that the "lion's share" of AI token consumption ​today was spent in "low-hanging fruits" coding assistant and chatbots, where AI's hallucinations matter ​less because the output carries limited risk if it fails.

But applying AI to finance, supply chain or other core business processes is harder because errors carry over multiple ​steps, increasing risk against compliance standards, he said.

"If you have some hallucinations ​in the process, the errors will actually compound statistically over many steps," Asam said, ‌referring ⁠to finance workflows. "It requires much more excruciating assurance levels."

The "high-hanging fruit" of AI, Asam said, is less about applying a generic plug-and-play large language model across a company than about building systems around specific businesses.

That requires companies to ​make their own ​data usable and ⁠governed, so AI can operate with the knowledge of the company. "The idea that AI will solve all these problems ​if they are messy, legacy data silos is not ​true," Asam ⁠said, adding that such an approach came with "extremely high token costs."

The most advanced model is not always the right one, he said. In practice, he ⁠said, ​companies will use the cheapest reliable tool that ​can deliver the required outcome safely, whether that is simple software, an open-source model or ​an expensive frontier model.

Reporting by Leo Marchandon in Gdansk; Editing by Alistair Bell

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Leo's stories appear regularly on the technology and media desk, with a particular focus on France, Ukraine, and Europe's tech build up. He has reported extensively on major players across media & entertainment, artificial intelligence, and digital regulations. A background in tech-related law, Leo started his journalism career in Bordeaux, where he covered the full spectrum of the technology beat, from AI and spacetech to payment systems and regulations. He is now based in Gdansk, covering business, tech and entertainment news across Europe with Reuters.

, /PRNewswire/ -- SAP SE (NYSE: SAP) announced today its financial results for the second quarter ended June 30, 2026.

Current cloud backlog of €22.9 billion, up 27% and up 26% at constant currencies Cloud revenue up 22% and up 24% at constant currencies Cloud ERP Suite revenue up 25% and up 27% at constant currencies Total revenue up 9% and up 11% at constant currencies IFRS operating profit up 8%, non-IFRS operating profit up 7% and up 9% at constant currencies 2026 non-IFRS operating profit outlook updated to reflect dilutive impact from Dremio and Prior Labs acquisitions Christian Klein, CEO:

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. Customers are choosing SAP to enable accurate and compliant AI outcomes grounded in their most critical business processes and data.

Dominik Asam, CFO:

Q2 was another strong quarter, highlighted by sustained current cloud backlog and free cash flow growth against a volatile macroeconomic backdrop. These results reflect our disciplined execution and our ability to deliver against our operating objectives. As part of that execution, we aggressively drive our own transformation into an Autonomous Enterprise, leveraging AI to boost both effectiveness and efficiency at the same time.

Group Results at a Glance

Second quarter 2026

IFRS

Non-IFRS1

€ million, unless otherwise stated

Q2 2026

Q2 2025

∆ in %

Q2 2026

Q2 2025

∆ in %

∆ in % const. curr.

Current cloud backlog

22,929

18,052

27

26

SaaS/PaaS2

6,216

5,045

23

6,216

5,045

23

25

Thereof Cloud ERP Suite2

5,525

4,422

25

5,525

4,422

25

27

Thereof Extension Suite2

692

624

11

692

624

11

12

IaaS2

65

85

–23

65

85

–23

–22

Cloud revenue

6,281

5,130

22

6,281

5,130

22

24

Software licenses revenue

131

194

–32

131

194

–32

–32

Software support revenue

2,439

2,642

–8

2,439

2,642

–8

–7

Cloud and software revenue

8,851

7,966

11

8,851

7,966

11

13

Services Revenue

1,027

1,061

–3

1,027

1,061

–3

–2

Total revenue

9,878

9,027

9

9,878

9,027

9

11

Cloud gross profit

4,664

3,833

22

4,687

3,856

22

23

Cloud gross margin (in %)

74.3

74.7

–0.5pp

74.6

75.2

–0.6pp

–0.7pp

Gross profit

7,228

6,620

9

7,250

6,643

9

11

Gross margin (in %)

73.2

73.3

–0.2pp

73.4

73.6

–0.2pp

–0.2pp

Operating profit (loss)

2,643

2,456

8

2,743

2,568

7

9

Operating margin (in %)

26.8

27.2

–0.5pp

27.8

28.5

–0.7pp

–0.4pp

Profit (loss) after tax

2,209

1,749

26

1,828

1,747

5

Earnings per share - Basic (in €)

1.89

1.45

30

1.59

1.50

6

Net cash flows from operating activities

3,153

2,577

22

Free cash flow

3,002

2,357

27

1 For a breakdown of the individual adjustments see table Non-IFRS Operating Expense Adjustments by Functional Areas in this Quarterly Statement.

2 For a definition of Cloud ERP Suite and Extension Suite, see the Performance Management System chapter in the 2025 Integrated Report. For an Explanation of IaaS, SaaS, and PaaS, see the Notes to the Consolidated Financial Statements of the Integrated Report 2025, Note (A.1).

Six months ended June 2026

IFRS

Non-IFRS1

€ million, unless otherwise stated

Q1–Q2

2026

Q1-Q2

2025

∆ in %

Q1–Q2

2026

Q1-Q2

2025

∆ in %

∆ in % const. curr.

Current cloud backlog

22,929

18,052

27

26

SaaS/PaaS2

12,112

9,935

22

12,112

9,935

22

27

Thereof Cloud ERP Suite2

10,739

8,673

24

10,739

8,673

24

29

Thereof Extension Suite2

1,373

1,262

9

1,373

1,262

9

12

IaaS2

131

188

–30

131

188

–30

–28

Cloud revenue

12,244

10,124

21

12,244

10,124

21

26

Software licenses revenue

247

377

–34

247

377

–34

–33

Software support revenue

4,908

5,403

–9

4,908

5,403

–9

–6

Cloud and software revenue

17,399

15,904

9

17,399

15,904

9

13

Services Revenue

2,033

2,136

–5

2,033

2,136

–5

–2

Total revenue

19,432

18,040

8

19,432

18,040

8

11

Cloud gross profit

9,114

7,553

21

9,168

7,601

21

25

Cloud gross margin (in %)

74.4

74.6

–0.2pp

74.9

75.1

–0.2pp

–0.4pp

Gross profit

14,201

13,226

7

14,263

13,275

7

11

Gross margin (in %)

73.1

73.3

–0.2pp

73.4

73.6

–0.2pp

–0.3pp

Operating profit (loss)

5,383

4,789

12

5,609

5,024

12

16

Operating margin (in %)

27.7

26.5

1.2pp

28.9

27.8

1.0pp

1.2pp

Profit (loss) after tax

4,155

3,545

17

3,830

3,428

12

Earnings per share - Basic (in €)

3.55

2.98

19

3.31

2.94

12

Net cash flows from operating activities

6,666

6,357

5

Free cash flow

6,250

5,939

5

1 For a breakdown of the individual adjustments see table Non-IFRS Operating Expense Adjustments by Functional Areas in this Quarterly Statement.

2 For a definition of Cloud ERP Suite and Extension Suite, see the Performance Management System chapter in the 2025 Integrated Report. For an Explanation of IaaS, SaaS, and PaaS, see the Notes to the Consolidated Financial Statements of the Integrated Report 2025, Note (A.1).

Supplementary Information[1]

Financial Results

Current cloud backlog growth benefited from the first-time inclusion of Reltio, which contributed less than 1 percentage point to the constant currencies growth rate.

The sequential decline in both IFRS and non-IFRS operating profit growth is mainly caused by the sequential deceleration of cloud- and total revenue growth, an unusually low stock-based compensation expense in the first quarter, accelerated investments into research and development as well as the dilutive impact of the Reltio acquisition.

IFRS effective tax rate was 26.5% and non-IFRS effective tax rate was 30.8%. The IFRS effective tax rate is lower than the non-IFRS effective tax rate due to tax benefits from tax-exempt income.

Share Repurchase Program

In January 2026, SAP announced a new share repurchase program with an aggregate volume of up to €10 billion and a term until December 31, 2027. As of June 30, 2026, SAP had repurchased 16,280,097 shares at an average price of €161.16 resulting in a purchased volume of approximately €2.6 billion under the program.

Outlook

Financial Outlook

For 2026, SAP is updating its non-IFRS operating profit outlook to reflect the dilutive impact of the Dremio and Prior Labs acquisitions closed in July, which is projected to be in excess of €100 million. SAP now expects: 

€11.8 – 12.2 billion non-IFRS operating profit at constant currencies (2025: €10.42 billion), up 13% to 17% at constant currencies. The previous outlook was €11.9 – 12.3 billion. SAP continues to expect:

€25.8 – 26.2 billion cloud revenue at constant currencies (2025: €21.02 billion), up 23% to 25% at constant currencies. €36.3 – 36.8 billion cloud and software revenue at constant currencies (2025: €32.54 billion), up 12% to 13% at constant currencies. Approximately €10 billion free cash flow at actual currencies (2025: €8.24 billion). An effective tax rate (non-IFRS) of approximately 29% (2025: 30.5%)[2]. Constant currencies current cloud backlog growth to slightly decelerate (2025: 25%). SAP further expects:

Constant currencies total revenue growth in 2026 to remain at similar levels as in 2025 (10.6%) and to accelerate in 2027. Total operating expenses to grow at 80% to 90% of total revenue growth in 2027. Constant currencies software support revenue decline rate to accelerate in the coming years as a consequence of an acceleration of customers transforming to the cloud. SAP's financial outlook for the full-year 2026 is based on the assumption of a near-term de-escalation of the conflict in the Middle East. Other impacts due to the evolving situation in the Middle East are currently unknown and could potentially subject our business to materially adverse consequences should the situation continue or even further escalate beyond its current scope.

While SAP's 2026 financial outlook for the income statement parameters is at constant currencies (including an average exchange rate of 1.13 USD per EUR), actual currency reported figures are expected to be impacted by currency exchange rate fluctuations as the company progresses through the year, as reflected in the table below.

Currency Impact Assuming June 30, 2026 Rates Apply for 2026

In percentage points

Q3 2026

FY 2026

Cloud revenue growth

1.5pp

-1.5pp

Cloud and software revenue growth

1.0pp

-1.5pp

Operating profit growth (non-IFRS)

0.0pp

-2.0pp

This includes an exchange rate of 1.14 USD per EUR.

Non-Financial Outlook

For 2026, SAP continues to expect:

Cloud Customer Satisfaction (Cloud CSAT) to be in a range of 75% to 76% (2025: 75%). The Employee Engagement Index to be in a range of 74% to 78% (2025: 76%). The Business Health Culture Index (BHCI) to be in a range of 80% to 82% (2025: 81%). To steadily decrease carbon emissions across the relevant value chain (2025: 3.6 Mt). Business Highlights

In the second quarter, customers around the globe continued to choose the "RISE with SAP" journey. These customers included: ACCIONA, AIRBUS, City of Osnabrueck, Electrolux, Eli Lilly, Gilead Sciences, HARTING, Hindustan Zinc, The Humboldt University of Berlin, JET, Ørsted, Samsonite Group, Shell, The Shoprite Group, SIGNAL IDUNA, SPAR (CH), Sun Pharma, Vonovia.

Gooroo Crédito, Modular Data Centers, Parloa, Tarrant County, Techem chose "SAP GROW".

AMADEUS, BBC, Booking.com, GOL, Oki Electric Industry, PwC, University Hospital Zurich, Vale chose SAP's AI and data solutions.

Key customer wins across SAP's solution portfolio included: Birlasoft, Capgemini, Haier Group, KaDeWe.

Döhler, FANUC Europe, Fonterra, Natura Cosméticos, SABESP, TEAG went live on SAP solutions in the second quarter.

In the second quarter, SAP's cloud revenue performance was particularly strong in APJ and EMEA and solid in the Americas region. Brazil, France, Germany, Italy, India, South Korea and Spain had outstanding performance, while Australia, Singapore and the U.S. were particularly strong.

On April 10, SAP announced that it has extended the contract of Gina Vargiu-Breuer, Chief People Officer of SAP SE, for another three years until January 31, 2030.

On April 22, SAP and Google Cloud announced a new partnership that will help marketers put AI agents to work at scale.

On May 4, SAP and Dremio announced that SAP has agreed to acquire Dremio, an open, high-performance data lakehouse platform built to accelerate agentic AI and expand SAP Business Data Cloud's ability to combine SAP and non-SAP data to more effectively run analytical and AI workloads in real time. The acquisition was completed on July 6.
In addition, SAP and Prior Labs, the pioneer of Tabular Foundation Models (TFMs), announced that they have entered into a definitive agreement for SAP to purchase Prior Labs, accelerating SAP's success in TFMs that started with SAP-RPT-1, and bringing one of the world's leading TFM research teams into the SAP family. The acquisition was completed on July 16.

On May 5, SAP held its Annual General Meetings of Shareholders, with all agenda items achieving strong shareholder support. 

On May 7, SAP announced that it has completed the acquisition of Reltio, a leading master data management (MDM) software provider.

On May 12, SAP introduced the Autonomous Enterprise to help enhance the world's most critical business workflows, so that humans and AI work together to meet the accelerating demands of global business profitably, strategically and safely. In addition, SAP also announced strategic partnerships with Anthropic, Amazon Web Services, n8n, NVIDIA, Parloa, Palantir and Accenture.

On May 28, SAP rated A1 (stable) by Moody's and A+ (stable) by S&P Global, successfully completed a Eurobond transaction with a total volume of €3.5 billion across four tranches with tenors of two, three, five and seven years. The net proceeds from this transaction are used for general corporate purposes, including (re)financing of recently announced acquisitions.

On July 9, SAP announced that it welcomes the European Commission's decision to conclude its competition investigation into certain aspects of SAP's on-premise maintenance and support practices through a commitment decision, following a constructive and cooperative dialogue.

Additional Information

This quarterly statement and all information therein are preliminary and unaudited. Due to rounding, numbers may not add up precisely. The Q2 2026 Quarterly Statement can be downloaded from: https://www.sap.com/investors/sap-2026-q2-statement.

SAP Performance Measures

For more information about our key growth metrics and performance measures, their calculation, their usefulness, and their limitations, please refer to the following document on our Investor Relations website: https://www.sap.com/investors/en/financial-documents-and-events/reporting-framework.html.

Webcast
SAP senior management will host a financial analyst conference call on Thursday, July 23rd at 11:00 PM (CEST) / 10:00 PM (BST) / 5:00 PM (EDT) / 2:00 PM (PDT). The conference will be webcast on the Company's website at https://www.sap.com/investor and will be available for replay. Supplementary financial information pertaining to the first quarter results can be found at https://www.sap.com/investor

About SAP

As a global leader in enterprise applications and business AI, SAP (NYSE: SAP) stands at the nexus of business and technology. For over 50 years, organizations have trusted SAP to bring out their best by uniting business-critical operations spanning finance, procurement, HR, supply chain, and customer experience. For more information, visit www.sap.com.

For more information, financial community only:

Alexandra Steiger +49 (6227) 7-767336  [email protected], CET

Follow SAP Investor Relations on LinkedIn at SAP Investor Relations.

For more information, press only:

Marcus Winkler +46 (6227) 7-67497    [email protected], CET

Daniel Reinhardt +49 (6227) 7-40201    [email protected], CET

For customers interested in learning more about SAP products:

Global Customer Center: +49 180 534-34-24

United States Only: +1 (800) 872-1SAP (+1-800-872-1727)

Note to editors:

To preview and download broadcast-standard stock footage and press photos digitally, please visit www.sap.com/photos. On this platform, you can find high resolution material for your media channels.

This document contains forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations, forecasts, and assumptions that are subject to risks and uncertainties that could cause actual results and outcomes to materially differ. Additional information regarding these risks and uncertainties may be found in our filings with the Securities and Exchange Commission, including but not limited to the risk factors section of SAP's 2025 Annual Report on Form 20-F.

© 2026 SAP SE. All rights reserved.

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE in Germany and other countries. Please see https://www.sap.com/copyright for additional trademark information and notices.

[1] The Q2 2026 results were also impacted by other effects. For details, please refer to the disclosures on page 22 of this document. 

[2] The effective tax rate (non-IFRS) is a non-IFRS financial measure and is presented for supplemental informational purposes only. We do not provide an outlook for the effective tax rate (IFRS) due to the uncertainty and potential variability of gains and losses associated with equity securities, which are reconciling items between the two effective tax rates (non-IFRS and IFRS). These items cannot be provided without unreasonable efforts but could have a significant impact on our future effective tax rate (IFRS).

SOURCE SAP SE

Key Takeaways SAP reports Q2 2026 results on July 23 as cloud growth, AI progress and margins remain in focus.SAP is seeing strong demand for cloud ERP, AI offerings and S/4HANA migrations supporting growth.SAP faces slower cloud tailwinds, geopolitical risks and declining software support revenue. SAP SE (SAP - Free Report) is scheduled to post results for the second quarter of 2026 on July 23, after market close.

The Zacks Consensus Estimate for second-quarter earnings is $2 per share, indicating a 17.6% increase from the year-ago reported number. The Zacks Consensus Estimate for revenues is currently pinned at $11.4 billion, implying a 11.4% jump from the year-ago figure.

SAP's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 6.5%. Shares of the company have plunged 48.2% in the past year compared with the Computers - Software industry's loss of 29.4%.

Image Source: Zacks Investment Research

Cloud Momentum, AI Strategy & Margins Under the SpotlightSAP’s cloud-first strategy, successful migration of customers to subscription-based offerings and disciplined cost management are likely to have cushioned its performance in the second quarter. The rapid adoption of Rise with SAP and Grow with SAP solutions is driving sales, while SAP Business AI, Business Data Cloud and Sovereign Cloud are gaining solid traction. In the first quarter, the cloud backlog rose 25% and cloud revenue increased 27%. Cloud ERP Suite revenue accelerated 30%, driven by strong demand, with more than 70% of order entry coming from public cloud solutions.

Another major focus will be customer adoption of SAP S/4HANA, the company's next-generation ERP platform. Every successful migration not only increases cloud revenue but also creates opportunities to cross-sell additional SAP products. Key indicators include the number of S/4HANA customers, cloud migration rates, new enterprise wins and expansion within existing customers. AI monetization strategy is also paying off. SAP believes broader adoption of its AI-powered autonomous suite across industries will accelerate long-term growth. It is leveraging AI across engineering, customer support and sales to boost productivity and streamline operations, targeting €2 billion in efficiencies by 2028 through AI-driven transformation.

In May, SAP made plans to make its sustainability AI agents generally available by the end of 2026. Currently in beta, the agents have delivered strong results, including a 50% reduction in packaging compliance review time, scenario simulations cut from a day to 20 minutes, up to 80% less manual GHS classification effort and more than 20% fewer packaging compliance errors.

SAP's frequent acquisitions strengthen its master data governance capabilities across SAP and non-SAP environments, while its open-platform strategy protects proprietary expertise and enables partner and customer innovation. In May, SAP agreed to acquire Prior Labs to strengthen its leadership in Tabular Foundation Models. As part of the deal, SAP will invest more than €1 billion over the next four years to help Prior Labs grow into a leading AI research lab focused on structured business data, while continuing to operate independently. SAP also agreed to acquire Dremio to strengthen SAP Business Data Cloud with faster, real-time analytics and AI capabilities by better integrating SAP and non-SAP data. Financial details were not disclosed, and the deal is awaiting regulatory approval.

Profitability has become an equally important investment theme. SAP has undertaken significant restructuring efforts over the past two years aimed at improving operational efficiency while reallocating resources toward high-growth cloud and AI initiatives. In the first quarter, non-IFRS cloud gross profit increased 20% year over year, while operating profit rose 17%, boosting the margin to 30%.

However, quarter-specific cloud revenue tailwinds may lead to slower growth in the second quarter. Additionally, geopolitical tensions, especially the Middle East conflict, could disrupt supply chains, delay customer spending decisions and adversely impact deal activity. While SAP is not fully protected from these disruptions, the increased economic uncertainty also makes it more difficult to accurately predict the company’s quarterly performance. 

Although SAP maintains a strong position and pipeline in this area, these more complex, regulated deals—particularly in government, defense and sensitive industries—take longer to negotiate, deploy and scale compared to standard cloud offerings. Some of its businesses also rely on an operational cyberspace, which exposes them to issues resulting from cybersecurity breaches, affecting both their reputation and the time and resources needed to resolve legal claims. Meanwhile, complex data integration, hybrid ERP environments and strict compliance demands make AI implementation more difficult, potentially slowing enterprise adoption.

Furthermore, software support revenue is likely to decline faster as more customers shift to the cloud.

What Our Model Predicts for SAPOur proven model does not predict an earnings beat for SAP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

SAP has an Earnings ESP of -1.25% and a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they’re reported with our  Earnings ESP Filter.

Stocks With Favorable CombinationHere are some companies with the right combination of elements to post an earnings beat in their upcoming releases.

Cincinnati Financial Corporation (CINF - Free Report) has an Earnings ESP of +7.22% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

CINF is set to report quarterly numbers on July 27, after market close. The Zacks Consensus Estimate for Cincinnati Financial’s second-quarter 2026 earnings is pegged at $1.82 per share, indicating a year-over-year decrease of 7.6%. Its earnings beat estimates in each of the past four quarters, delivering an average surprise of 27.5%. The Zacks Consensus Estimate for CINF's revenues is pegged at $3.01 billion, indicating an 8.4% increase from the year-ago reported figure.

The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +10.88% and a Zacks Rank #3 at present. ALL is gearing up for quarterly results on Aug. 5, after market close.

The Zacks Consensus Estimate for Allstate’s second-quarter 2026 earnings is pegged at $5.33 per share, indicating a year-over-year decrease of 10.3%. Its earnings beat estimates in each of the last four reported quarters, delivering an average surprise of 51.1%. The Zacks Consensus Estimate for ALL's revenues is pegged at $17.73 billion, indicating a 5.7% increase from the year-ago reported figure.

Chubb Limited (CB - Free Report) has an Earnings ESP of +1.09% and a Zacks Rank of #3 at present. CB is set to report quarterly earnings on July 21, after market close.

The Zacks Consensus Estimate for Chubb’s second-quarter 2026 earnings is pegged at $6.6 per share, indicating a year-over-year increase of 7.5%. Its earnings beat estimates in each of the last four reported quarters, delivering an average surprise of 12.4%. The Zacks Consensus Estimate for Chubb's revenues is pegged at $15.89 billion, indicating a 7.3% increase from the year-ago reported figure.