SAP lifts quarterly profit by a quarter and trims full-year operating profit guidance

SAP CEO Christian Klein had previously targeted growth of 14 to 18 percent in operating profit adjusted for special items. Due to two acquisitions, management now revised that expectation to 13 to 17 percent. For revenue metrics and the expected free cash flow of around 10 billion euros, however, the company left its full-year guidance unchanged.

Cloud business as growth driver

The cloud business once again drove performance: cloud revenue surprisingly surged 22 percent to 6.22 billion euros. Between April and June alone, SAP booked nearly 6.3 billion euros here. The cloud contract backlog – reflecting expected revenue from these contracts over the coming twelve months – rose 27 percent year-on-year to roughly 22.9 billion euros, also a new record for the group.

On operating profit, SAP fell short of expectations in the second quarter. The metric rose 8 percent to 2.64 billion euros; operating profit adjusted for special items climbed 7 percent to 2.74 billion euros. CEO Christian Klein attributed the growth, among other factors, to demand for SAP products related to artificial intelligence.

Words from the company's leadership

In a written statement, Klein said: "Dieses Ergebnis wird durch unsere Strategie für das autonome Unternehmen gestützt, in deren Rahmen unsere SAP Autonomous Suite und SAP Business AI Platform auf große Resonanz stoßen." He also said, according to the statement: "Auch in diesem Quartal haben wir ein starkes Wachstum beim Current Cloud Backlog erzielt."

CFO Dominik Asam also expressed satisfaction with the quarter: "Wir haben im zweiten Quartal erneut starke Ergebnisse geliefert und trotz eines unbeständigen gesamtwirtschaftlichen Umfelds ein kontinuierliches Wachstum beim Current Cloud Backlog und Free Cashflow erzielt." He put the expected full-year free cash flow at around 10 billion euros.

Market reaction

The news was well received on the stock market. SAP shares rose by nearly seven percent in midday trading, recovering from their lowest level since November 2023, hit the previous day. After-hours trading in New York-listed American Depositary Receipts (ADRs) had already added 6 percent. On Wednesday before the earnings release, the SAP stock on XETRA had temporarily fallen by 0.67 percent to 135.50 euros.

Analysts largely viewed the figures as solid. Oliver Frey of the private bank Metzler said: "Das zweite Quartal kann die zuletzt spürbaren Bedenken rund um das Trendthema Künstliche Intelligenz etwas mildern." Frey pointed out that the stock had recently moved notably away from its record high and fallen to its lowest level since November 2023.

Analyst expectations

On average, 18 analysts expect second-quarter revenue of 9.85 billion euros. Earnings per share consensus stands at 1.76 euros, compared with 1.46 euros a year earlier. For the full year, 28 analysts on average forecast revenue of 40.18 billion euros versus 36.80 billion euros in the prior year and EPS of 7.19 euros versus 6.14 euros.

On the TipRanks platform, there are currently 13 buy ratings, three neutral ratings, and one sell rating for SAP stock. JP Morgan Chase & Co. rated the stock "Neutral" on July 20, 2026. The latest price targets from 17 Wall Street analysts imply an average price target of 200.92 euros, representing upside potential of 47.28 percent versus the previous day's closing price of 136.42 euros.

Price action and forward outlook

The SAP stock had lost significant value since its record high in February 2025 and had been one of the weakest performers in the DAX in 2026 to date. Over the past year and a half, the price at one point halved from more than 280 euros to below 130 euros. The current gain of nearly seven percent could only partially offset the chart damage.

CEO Christian Klein had already announced ahead of the earnings release that he was going "all in on AI." He does not see SAP's business model as threatened by artificial intelligence. "Compliant AI" is the watchword with which the group intends to score points. To this end, SAP is continually restructuring internally to remain fit for the future.

The background to the lowered profit guidance, according to the company, is two acquisitions whose financial impact will be felt in the current fiscal year. SAP plans to explain the exact scope of the acquisitions and their balance-sheet impact during the quarterly conference call.

The release of the results had been preceded by a so-called quiet period, during which SAP refrained from commenting on the business situation from June 22, 2026 onward. This phase only ended with the publication of the half-year figures. Industry observers see the late Thursday evening timing of the release as a deliberate choice to reach international investors directly.

SAP is regarded as Europe's largest software vendor and is one of the few European companies playing a significant international role in the cloud business. Cloud performance and the confirmation of full-year targets traditionally take center stage in the assessment. With the 27 percent increase in the cloud contract backlog, the company has sent a clear signal on this front.

During the course of the day, discussion of the lowered outlook is likely to continue. While some highlight the cloud success, others point to the weakness in operating profit. Whether the recovery in the share price is sustainable will also depend on how SAP convinces investors of its AI strategy in the following week.