SAP (SAPG)

Equity Research 24 July 2026 | 3:29AM BST

SAP (SAPG.DE): 2Q26: CCB stronger while EBIT below; FY26 EBIT guidance trimmed to reflect acquisition dilution; Buy

Results Mohammed Moawalla | We see scope for slight negative revisions to consensus operating profit forecasts for Goldman Sachs International SAP on the back of the updated FY26 EBIT guidance, which now reflects the dilutive Deepshikha Agarwal impact of the Dremio and Prior Labs acquisitions that closed in July, as well as | modestly softer EBIT growth in the quarter. Having said that, we expect a broadly Goldman Sachs India SPL

neutral share price reaction given the relief from the CCB beat. Uzair Merchant | SAP’s 2Q26 results demonstrated continued top-line resilience, with CCB remaining Goldman Sachs International sequentially steady at 26% yoy ex-fx (c.25% yoy ex-fx organic), ahead of GSe and Ahlam Haouach | consensus expectations of 25%/24%, driven by continued strength in the Cloud ERP Goldman Sachs International Suite. Management also highlighted momentum across its Autonomous Suite and Business AI Platform, resulting in improved coverage and a stronger pipeline post SAPPHIRE. Total revenues came broadly in line with GSe and consensus expectations, while Non-IFRS EBIT came in below expectations (2%/5% below GSe/consensus), growing 9% yoy ex-fx (vs. GSe/consensus at 10%/14%). The sequential deceleration was driven by lower cloud growth, higher SBC (reversing the unusually low SBC in 1Q), slightly higher investment in R&D and S&M, and the dilutive impact of the Reltio acquisition. FCF, however, came in above expectations at c.€3.0bn (up 27% yoy).

Guidance More importantly, SAP updated its FY26 operating profit outlook to €11.8-12.2bn (previously €11.9-12.3bn) at constant currencies, implying growth of 13-17% (vs. 14-18% previously). This is broadly in line with GSe at c.15% at the midpoint, while consensus sits slightly above at c.16%, and reflects the dilutive impact of the Dremio and Prior Labs acquisitions that closed in July. SAP reiterated its FY26 guidance on all other metrics. Based on GSe calculations, the midpoint of the FY26 cloud growth guidance implies 2H26 cloud revenue growth of c.22%. Given the CCB strength exhibited in 1H26, we see greater visibility into 2H cloud growth, which we view as broadly de-risked given the unchanged guidance. Management, however, reiterated its expectation of a slight deceleration in CCB through the year, largely on account of macro risks. Overall, we believe the market will continue to weigh the top-line strength against operating profit headwinds and await evidence of AI product traction and monetisation over the coming quarters.

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Key takeaways from the conference call: n SAP reiterated ongoing global macroeconomic uncertainty: The company noted that the fluid situation in the Middle East continues to weigh on customer decision-making, particularly in directly affected industries and supply chains. n CCB growth sequentially accelerated, though management continues to expect a slight deceleration exiting the year: Current cloud backlog reached almost €23bn (+26% yoy ex-fx). While the underlying trajectory remains intact and the post-SAPPHIRE pipeline is tracking better than expected, management flagged that H2, when the bulk of bookings typically occurs, carries a wider range of outcomes than usual given the volatile backdrop. n Cloud revenue growth decelerated sequentially, reflecting tough comparables and the reversal of Q1-specific effects: Management noted that Q2 2025 benefited from a strong comparable base (roughly two percentage points higher growth than Q1 2025). Despite this sequential…