SAP stock holds firm as cloud revenue and RISE backlog underpin outlook

SAP SE (ISIN DE0007164600) reported continued progress in its cloud transition, and SAP stock mirrors this focus on recurring revenue and margin expansion as the German software group pushes customers toward its RISE with SAP offering and S/4HANA cloud platform.

In its financial report for the first quarter of 2026, SAP stated that total cloud revenue reached approximately EUR 4.0 billion, up from around EUR 3.3 billion in the first quarter of 2025, underscoring the momentum behind its shift from traditional license sales toward subscription-based services according to SAP investor information for Q1 2026.

The company highlighted that its RISE with SAP and S/4HANA cloud portfolios continue to drive a growing current cloud backlog, which supports multi-year revenue visibility for the business, as outlined in the same investor materials for the first quarter of 2026.

Cloud revenue up 20 percent

According to SAP’s Q1 2026 financial disclosure, cloud revenue of about EUR 4.0 billion represented year-on-year growth of roughly 20 percent compared with the approximately EUR 3.3 billion recorded in Q1 2025, illustrating how quickly customers are migrating workloads to the company’s cloud platforms.

Management indicated in the Q1 2026 report that this cloud expansion contributed to an improvement in operating profit, with non-IFRS operating profit rising versus the same period in 2025, and that higher-margin cloud and software revenue is gradually lifting the overall profitability profile of the group.

The company also reported that its current cloud backlog, which reflects contracted but not yet recognized cloud revenue, increased further in Q1 2026 compared with Q1 2025, giving SAP a clearer line of sight on future subscription and support revenue flows.

RISE with SAP drives backlog

RISE with SAP has been positioned by the company as a key growth engine by bundling cloud infrastructure, S/4HANA software, and managed services into a single subscription, and SAP noted in its Q1 2026 investor presentation that a substantial portion of new cloud orders stemmed from RISE with SAP and S/4HANA deals.

In the same Q1 2026 materials, SAP reported that its current cloud backlog surpassed EUR 18 billion, compared with a level of somewhat above EUR 15 billion a year earlier in Q1 2025, indicating an increase of more than EUR 3 billion in contracted future cloud revenue over twelve months.

For investors, this growing backlog suggests that SAP’s push to move existing on-premise ERP customers to cloud-based S/4HANA solutions is gaining traction, potentially supporting more predictable cash flows and a higher share of recurring revenue within total sales over the coming years.

S/4HANA and application revenue

SAP’s Q1 2026 report indicated that the S/4HANA cloud segment continued to grow faster than the broader cloud portfolio, with S/4HANA cloud revenue increasing at a year-on-year rate above the overall cloud growth rate, reflecting strong demand from large enterprises modernizing their core ERP systems.

In addition, SAP disclosed that software licenses and support revenue remained an important contributor to total revenue in Q1 2026, but its relative share is declining over time as cloud services expand, signaling a structural shift toward subscription-based revenue streams.

The company’s total revenue in the first quarter of 2026 increased compared with the first quarter of 2025, supported by both cloud and software segments, and management reiterated in the report that they expect cloud to represent a growing share of total revenue over the next several years.

Profitability and cash flow trends

According to SAP’s Q1 2026 financial communication, non-IFRS operating profit grew compared with Q1 2025 as higher-margin cloud revenue scaled and cost disciplines supported the bottom line, while IFRS operating profit was influenced by restructuring and share-based compensation expenses.

The company reported that its Q1 2026 non-IFRS operating margin improved versus the same period a year earlier, demonstrating that the business is beginning to capture operating leverage from its cloud investments and from the migration of existing customers to recurring models.

SAP also highlighted stable free cash flow generation over the last twelve months through Q1 2026, supported by recurring support and cloud subscription payments, even as it continues to invest in research and development for artificial intelligence features and industry-specific cloud solutions.

Key SAP business applications

A flagship product for SAP is its S/4HANA cloud suite, which provides enterprise resource planning functionality such as finance, logistics, and manufacturing modules on a cloud-native architecture, and is central to the RISE with SAP subscription model described in the company’s Q1 2026 investor documents.

The company also continues to expand surrounding cloud applications such as human capital management, procurement, and customer experience solutions, which are designed to integrate with S/4HANA and to increase customer stickiness across the SAP ecosystem.

SAP stock and market context

SAP stock is listed on Xetra in Frankfurt and is included in the DAX index, giving it significant weight in European equity benchmarks and making the company a core holding for many institutional investors focused on the region.

According to recent market data from a major European exchange portal as of 16 July 2026, SAP’s market capitalization stood in the range of EUR 180 billion, underlining its status as one of the largest software groups in Europe by equity value.