FRANKFURT — SAP SE saw its shares climb 6.2% to €136.28 on Friday, driven by stronger-than-expected cloud contract commitments, even as the company trimmed its annual profit forecast. The rally added approximately €9.8 billion to the German software giant's market capitalization during intraday trading on Xetra.
The cloud backlog, representing contracted revenue expected over the next 12 months, grew 26% at constant currencies in the second quarter, surpassing the consensus estimate of around 24%. This metric is closely watched by investors as a leading indicator of future revenue. The cloud backlog now stands at €22.93 billion, with Reltio's acquisition contributing less than one percentage point to the constant-currency growth.
Notably, the growth in cloud backlog outpaced cloud revenue growth for the first time in recent quarters, a four-percentage-point swing from the prior period. In Q2, cloud revenue increased 24% at constant currencies, compared with 27% in Q1, while backlog growth accelerated from 25% to 26%. This reversal signals improving forward demand, which investors rewarded despite a mixed earnings report.
On the profit side, SAP lowered its non-IFRS operating profit guidance to a range of €11.8 billion to €12.2 billion, citing dilution of over €100 million from the acquisitions of Dremio and Prior Labs. CFO Dominik Asam emphasized that the adjustment was solely M&A-driven, with no change to the underlying business outlook. Cloud revenue guidance remained unchanged at €25.8 billion–€26.2 billion, and free cash flow expectations held steady at around €10 billion.
The quarterly results were not uniformly positive. Cloud revenue was just 0.4% above consensus, while non-IFRS operating profit came in 4.8% below estimates. Non-IFRS cloud gross margin slipped 0.7 percentage points to 74.6%, and IFRS research spending rose 14%. Software license revenue fell 32%, and support revenue declined 7%, reflecting the ongoing shift to cloud subscriptions.
Cloud ERP Suite revenue rose 27% to €5.53 billion, accounting for roughly 88% of total cloud revenue. Asam also addressed enterprise AI, framing it primarily as a data governance challenge. “The idea that AI will solve all these problems if they are messy, legacy data silos is not true,” he said.
Despite Friday's rally, SAP shares remain 35% lower year-to-date, underperforming the STOXX 600 technology index, which has gained 16%. The gap stands at 51 percentage points. Risks persist, including declining cloud margins, falling support revenue, and expectations of a slightly slower backlog growth pace ahead. The company also noted that current June exchange rates could reduce full-year cloud revenue growth by 1.5 percentage points and profit growth by two percentage points.
Investors are now watching whether the favorable backlog gap translates into revenue acceleration. Management continues to forecast a pickup in overall revenue growth in 2027. Friday's market action suggests that the market is betting on that longer-term trajectory, valuing forward demand over near-term margin pressures.
