SAP’s Cloud Backlog Hits €22.9 Billion, but Acquisition Costs Force a Profit Guidance Trim
Published on 07/24/2026 at 04:52 | Redaktion boerse-global.de
SAP’s second-quarter earnings landed with a split personality on Thursday evening after US markets closed: the cloud business delivered another double-digit growth spurt, yet the company trimmed its full-year profit outlook, citing the drag from two recently completed acquisitions. The stock, which had just touched a fresh 52-week low during the session, initially rallied in after-hours trading — a sharp contrast to its year-to-date slide of nearly 38%.
The cloud order backlog, a closely watched forward-looking metric, swelled to €22.9 billion, up 27% year-on-year (26% in constant currency). Cloud revenue rose 22% to €6.3 billion, with the cloud ERP suite accelerating at 25%. Operating profit under IFRS climbed 8% to €2.6 billion, while free cash flow jumped 27% to €3.0 billion, underscoring the underlying health of the business.
Yet the headline numbers were overshadowed by a guidance revision. SAP now expects operating profit of €11.8 billion to €12.2 billion at constant currencies, down from the prior range of €11.9 billion to €12.3 billion. The culprit: a dilution effect from the July closings of acquisitions Dremio and Prior Labs, which management estimates will weigh on the second half of 2026 by a low triple-digit million euro amount. The company stressed that the two purchases contribute little to the cloud backlog — unlike the earlier Reltio acquisition, which added nearly a percentage point of growth.
“We’re investing heavily in our own AI transformation, and there’s simply no room for a meaningful organic margin improvement right now,” management explained during the earnings call. The combined impact of the acquisitions and internal AI spending leaves the margin story on hold for the near term.
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The stock closed regular trading at €128.76, just 0.97% above its intraday 52-week low of €127.52. With a relative strength index of 36.2, the shares are approaching oversold territory — a sign of heightened nervousness rather than a stable trend reversal. The distance to the 200-day moving average stands at minus 26.1%, underscoring the depth of the selloff since the start of the year.
The strategic rationale for the acquisitions became clearer during the call. Dremio is designed to give SAP customers real-time access to external data — from supply chain planning to financial forecasting — without requiring data duplication. That capability is central to SAP’s “Business AI” pitch, but the near-term payoff remains elusive. “Dremio and Prior Labs don’t meaningfully contribute to the cloud backlog,” management acknowledged, distinguishing them from earlier, more accretive deals.
For the stock, the critical question is whether the robust cloud growth can eventually translate into a more stable margin profile. Until then, the fresh acquisitions will weigh on earnings — a burden the company has already priced into the second half of 2026. All other targets remain unchanged: cloud revenue of €25.8 billion to €26.2 billion at constant currencies, cloud and software revenue of €36.3 billion to €36.8 billion, and free cash flow of around €10 billion at actual exchange rates.
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The broader market backdrop adds another layer of uncertainty. Analysts have flagged lengthening sales cycles, geopolitical risks from the Iran conflict driving European energy costs, and internal disruption from SAP’s second top-management reshuffle in 2026. The company’s recent EU antitrust settlement over maintenance practices could, however, accelerate cloud migration — a potential silver lining that analysts will scrutinize when they update their models on Friday.
For now, the €127.52 level remains the line in the sand. A sustained break below it would open the door to further speculative short-selling, while a hold above could set the stage for a technical recovery toward the 50-day moving average at €144.10. The after-hours bounce suggests some relief, but the real test comes when the market digests the full implications of a guidance cut that, for the moment, is purely acquisition-driven — not a reflection of deteriorating demand.
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