Today‘s Morning Meeting

Research evidence excerpt

Today‘s Morning Meeting

Europe Equity Research

Europe First to Market 24 July 2026

Today’s Morning Meeting | Also Published Today | Key Changes | JPM Events | Upcoming Earnings

Today’s Morning Meeting

SAP (Toby Ogg) (SAP GR, N)

Current cloud backlog of 26% above expectations but margin miss and EBIT guidance trimmed on

dilutive M&A

Our Take: SAP reported Q2 current cloud backlog (CCB) of 26% Y/Y CC which is above buyside expectations of around ~25%

Y/Y CC and ~2pt above Bloomberg consensus of ~24% Y/Y CC. Whilst the current cloud backlog is above expectations, Q2

EBIT came in 5% below consensus with a Q2 EBIT margin of 27.8% which is down 70bps Y/Y (down 40bps Y/Y CC). Within

this, the cloud gross margin was 74.6%, down 70bp Y/Y CC. With respect to the profit development, the release indicates “The

sequential profit decline is mainly caused by the sequential deceleration of cloud and total revenue growth, an unusually low

stock-based compensation expense in the first quarter, accelerated investments into research and development as well as the

dilutive impact of the Reltio acquisition.” With respect to the 2026 outlook, SAP is lowering the midpoint of the constant

currency EBIT guidance by ~€100m at the midpoint, which is a ~1% cut to the EBIT growth expectation (the midpoint of the

new EBIT guidance accounting for FX implies 1% downside to consensus 2026 EBIT) to reflect the dilutive impact of the

Dremio and Prior Labs acquisitions closed in July (projected to be in excess of €100m dilution). Overall, whilst the current

cloud backlog of 26% is above expectations, the EBIT miss and Y/Y compression in the margin is ultimately a negative

surprise relative to expectations. Despite the Q2 margin situation being cited as abnormal due to a range of cost