SAP Q2 Earnings Call Highlights

SAP posted a strong Q2 2026, with current cloud backlog up 26% to nearly EUR 23 billion and cloud revenue rising 24% to EUR 6.3 billion. Total revenue increased 11%, while non-IFRS operating profit rose 9% year over year at constant currencies. AI is becoming central to SAP’s growth strategy, with management saying AI and SAP Business Data Cloud appeared in more than 90% of its 50 largest deals. SAP also outlined plans for dozens of assistants and more than 400 autonomous suite agents by year-end, alongside integrations with multiple major AI model providers. The company slightly trimmed its operating profit outlook to reflect the dilutive impact of recent acquisitions, though it kept top-line and free cash flow guidance intact. Management also noted macro uncertainty in some regions, but said it did not see broad-based deal delays in the quarter.

SAP reported a strong second quarter for 2026, with management highlighting accelerating current cloud backlog growth, continued cloud revenue gains and rising customer interest in the company’s artificial intelligence offerings. Chief Executive Officer Christian Klein called the quarter “outstanding,” pointing to SAP’s Sapphire customer conference, where the company launched its “autonomous enterprise” strategy. Klein said the event produced record attendance, added to SAP’s sales pipeline and generated positive feedback from customers on the company’s AI roadmap.

Current cloud backlog rose 26% at constant currencies to nearly EUR 23 billion, an acceleration from the first quarter. Klein said AI and SAP Business Data Cloud were included as key elements in more than 90% of SAP’s 50 largest deals during the quarter, which he said gave the company confidence heading into the second half of the year. Cloud revenue increased 24% to EUR 6.3 billion, supported by continued migrations from on-premise ERP systems to cloud ERP. Total revenue rose 11% to EUR 9.9 billion. SAP reported non-IFRS operating profit of EUR 2.7 billion, up 9% year over year at constant currencies.

SAP’s cloud ERP suite revenue increased 27% in the quarter and now represents 88% of total cloud revenue. Software license revenue declined 32%, reflecting the company’s continued shift away from traditional on-premise licensing. Cloud revenue performance was particularly strong in Asia-Pacific and Japan and in Europe, the Middle East and Africa, while the Americas delivered solid results. Brazil, France, Germany, Italy, India, South Korea and Spain were cited as having outstanding performance, with Australia, Singapore and the U.S. described as particularly strong. Management said SAP’s indirect channel continued to grow faster than direct cloud revenue, reflecting changes in its go-to-market strategy over the past two years.

Klein used much of the call to outline SAP’s AI strategy, which centers on the company’s Business AI Platform, Joule Studio, SAP Business Data Cloud and a new user experience called Joule Work. He said the platform is designed to help customers build, govern and operate AI agents across business processes while maintaining data privacy, compliance and sovereignty requirements. Klein said SAP is integrating multiple large language models into Joule Studio, including models from Anthropic, Cohere, Google, Mistral AI and OpenAI, as well as open-weight models. He said SAP’s approach is intended to avoid customer lock-in to a single AI model and allow...