SAP · SAP SE

SAP delivered a robust Q1 2026 performance anchored by accelerating cloud momentum: current cloud backlog grew 25% at constant currencies to €21.9 billion, and cloud revenue rose 27% at constant currencies (€5.96 billion), significantly outpacing total revenue growth of 12% at constant currencies. This strength was broad-based across regions—with standout performance in APJ, EMEA, and the U.S.—and powered by Cloud ERP Suite revenue growth of 30% at constant currencies, underscoring deepening customer adoption of RISE with SAP and AI-integrated solutions. Management explicitly tied this outperformance to 'momentum in Business AI' and customers expanding across the Suite, reinforcing SAP’s positioning as a leader in enterprise AI. The Reltio acquisition—announced in Q1—directly supports that strategy by embedding best-in-class master data management to make enterprise data AI-ready, addressing a critical infrastructure gap for customers scaling AI workloads. Financial discipline remained evident: non-IFRS operating profit grew 24% at constant currencies, aided by lower share-based compensation, while free cash flow of €3.25 billion reflected strong underlying cash generation despite a €408 million Teradata litigation payout. The company also advanced its capital return plan, completing €2.6 billion of its €10 billion share repurchase program by April 1, 2026. Critically, SAP raised its full-year 2026 cloud revenue outlook to €25.8–26.2 billion (23–25% cc growth), up from €21.02 billion in 2025, signaling confidence in sustained execution and market share gains. While management flagged near-term cloud revenue deceleration in Q2 due to quarter-specific effects, the upward revision to annual guidance and strategic M&A underscore a durable inflection toward cloud-led growth and AI monetization.