SAP: Current cloud backlog of 26% above expectations but margin miss and EBIT guidance trimmed on dilutive M&A

Research evidence excerpt

SAP: Current cloud backlog of 26% above expectations but margin miss and EBIT guidance trimmed on dilutive M&A

J P M O R G A N Europe Equity Research

24 July 2026

SAP

Current cloud backlog of 26% above expectations but Neutral

margin miss and EBIT guidance trimmed on dilutive SAPG.DE, SAP GR

M&A Price (23 Jul 26):€128.62

Price Target (Dec-27):€175.00

Our Take: SAP reported Q2 current cloud backlog (CCB) of 26% Y/Y CC which is European Tech Software & IT

above buyside expectations of around ~25% Y/Y CC and ~2pt above Bloomberg Services

consensus of ~24% Y/Y CC. Whilst the current cloud backlog is above expectations, Toby Ogg AC

Q2 EBIT came in 5% below consensus with a Q2 EBIT margin of 27.8% which is (44-20) 7742-3278

down 70bps Y/Y (down 40bps Y/Y CC). Within this, the cloud gross margin was toby.ogg@jpmorgan.com

74.6%, down 70bp Y/Y CC. With respect to the profit development, the release J.P. Morgan Securities plc

indicates “The sequential profit decline is mainly caused by the sequential Joseph George

deceleration of cloud and total revenue growth, an unusually low stock-based (44-20) 3493-6990

joe.george@jpmorgan.com

compensation expense in the first quarter, accelerated investments into research and J.P. Morgan Securities plc

development as well as the dilutive impact of the Reltio acquisition.” With respect to Priya R Suneja

the 2026 outlook, SAP is lowering the midpoint of the constant currency EBIT (91-22) 6157 4721

guidance by ~€100m at the midpoint, which is a ~1% cut to the EBIT growth priya.suneja@jpmchase.com

expectation (the midpoint of the new EBIT guidance accounting for FX implies 1% J.P. Morgan India Private Limited

downside to consensus 2026 EBIT) to reflect the dilutive impact of the Dremio and Giulio Gambardella