SAP (SAP) Q1 2026 earnings summary

Executive summary

• Q1 2026 delivered strong growth in cloud and cloud ERP suite revenues, with current cloud backlog reaching €21.9B and robust customer adoption of AI and data solutions.

• Total revenue increased 6% year-over-year to €9.56B (12% at constant currencies), driven by a 30% increase in cloud ERP suite revenue.

• Operating margin improved to 30%, with operating profit up 17% to €2.9B (24% at constant currencies), and notable internal AI-driven productivity gains.

• Indirect channel order entry grew faster than direct, now nearly 30% of total order entry.

• Significant customer wins and operational efficiencies achieved through AI integration.

Financial highlights

• Cloud revenue up 19% year-over-year to €5.96B (27% at constant currencies); cloud ERP suite revenue up 23% (30% at constant currencies).

• Cloud and software revenue rose 8% to €8.55B; services revenue declined 6% to €1.01B.

• IFRS cloud gross margin at 74.6%, non-IFRS at 75.2%; total gross margin at 73.4%.

• IFRS operating profit increased 17% to €2.7B; non-IFRS operating profit up 24% to €2.9B at constant currencies.

• Free cash flow was €3.25B, down 9% year-over-year, impacted by a €408M litigation settlement.

• Basic non-IFRS EPS rose 20% to €1.72; IFRS EPS up 9% to €1.66.

Outlook and guidance

• 2026 cloud revenue expected at €25.8–26.2B, up 23–25% at constant currencies; cloud & software revenue at €36.3–36.8B, up 12–13%.

• Non-IFRS operating profit forecasted at €11.9–12.3B, up 14–18% at constant currencies.

• Free cash flow projected at approximately €10B.

• Outlook assumes near-term de-escalation in the Middle East and consolidation of Reltio; currency headwinds expected to reduce reported growth by 1.5–2.0 percentage points.

• Acceleration in total revenue growth expected in 2027, driven by backlog ramp.