SAP SE reported total revenue of 9.878 billion euros for the second quarter, an increase of 9% year-over-year (11% at constant currency), driven by accelerating cloud business growth. The current cloud backlog stood at 22.929 billion euros, rising 27% (26% at constant currency).

Quarterly IFRS operating profit was 2.643 billion euros, up 8%, with an IFRS operating margin of 26.8%. Non-GAAP operating profit reached 2.743 billion euros, a 7% increase (9% at constant currency), yielding a non-GAAP operating margin of 27.8%. Profit growth was fueled by higher margins in cloud and software, partially offset by increased R&D investment and dilution from acquisitions.

At quarter-end, cash and cash equivalents totaled 10.511 billion euros, while free cash flow hit 3.002 billion euros, climbing 27% year-over-year. Operating cash flow for the first half was 6.666 billion euros, up 5%. The share buyback program has completed approximately 2.6 billion euros.

Cloud revenue amounted to 6.281 billion euros, a 22% increase (24% at constant currency). Within this, Cloud ERP Suite revenue surged 25% to 5.525 billion euros (27% at constant currency). Software licenses revenue fell 32% to 131 million euros, while software support revenue declined 8% to 2.439 billion euros. Services revenue decreased 3% to 1.027 billion euros.

IFRS net profit after tax was 2.209 billion euros, rising 26%. Non-GAAP net profit after tax grew 5% to 1.828 billion euros. IFRS basic earnings per share came in at 1.89 euros, up 30%, while non-GAAP basic EPS was 1.59 euros, a 6% increase.

Customer and business momentum saw "RISE with SAP" continue to win global clients during the quarter, including Airbus, Eli Lilly, Shell, and Samsonite. Companies such as PwC, BBC, and Booking.com adopted SAP's AI and data solutions.

In AI and business platforms, SAP launched its "Autonomous Enterprise" strategy and announced a new partnership with Google Cloud to deploy AI agents at scale. Strategic collaborations were also formed with Anthropic, AWS, NVIDIA, Palantir, and Accenture.

Regarding capital actions and M&A, SAP completed the acquisition of master data management (MDM) software provider Reltio for a transaction value of $1.259 billion. It also signed agreements to acquire data lakehouse platform Dremio and table foundation model (TFM) pioneer Prior Labs. Additionally, SAP successfully issued 3.5 billion euros in bonds for general corporate purposes and acquisition financing.

On the regulatory and litigation front, SAP reached a settlement with Teradata, dismissing all lawsuits in exchange for a $480 million payment. The European Commission decided to close its competition investigation into SAP's volume-based maintenance and support practices.

Outlook

SAP has updated its 2026 full-year non-GAAP operating profit expectation. At constant currency, it now forecasts 11.8 billion to 12.2 billion euros, down from a prior range of 11.9 billion to 12.3 billion euros, reflecting a dilution impact of over 100 million euros from the July acquisitions of Dremio and Prior Labs.

The company maintains its 2026 full-year cloud revenue guidance at constant currency: 25.8 billion to 26.2 billion euros, representing growth of 23% to 25%.

Full-year cloud and software total revenue guidance is also maintained at constant currency: 36.3 billion to 36.8 billion euros, a 12% to 13% increase.

SAP continues to expect full-year free cash flow of approximately 10 billion euros, with a non-GAAP effective tax rate of around 29%.

The company projects that total revenue growth at constant currency in 2026 will remain at a similar level to 2025 (10.6%), with further acceleration anticipated in 2027.