SAP (SAP) investor relations material

Executive summary

• Q1 2026 delivered strong results with total revenue up 6% to €9.56B (12% at constant currencies) and cloud revenue up 19% (27% at constant currencies), driven by robust customer adoption, cloud ERP suite momentum, and internal AI productivity gains.

• Cloud ERP suite revenue accelerated by 23% (30% at constant currencies), driving market share gains, especially against best-of-breed vendors.

• Operating margin improved to 30% (up 2.8–2.9pp YoY), with operating profit up 17% to €2.87B (24% at constant currencies).

• Cloud backlog reached €21.9B, up 20% YoY (25% at constant currencies), reflecting strong demand and future revenue visibility.

• Significant customer wins across industries, strong partner ecosystem, and notable operational efficiencies achieved through AI integration.

Financial highlights

• Cloud and software revenue rose 8% to €8.55B; cloud revenue up 19% to €5.96B; cloud ERP suite revenue up 23% to €5.21B.

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

• IFRS operating profit up 17% to €2.7B; non-IFRS operating profit up 17% to €2.87B (24% at constant currencies).

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

• Basic EPS rose 9% to €1.66 (IFRS) and 20% to €1.72 (non-IFRS).

Outlook and guidance

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

• Non-IFRS operating profit forecasted at €11.9–12.3B (+14–18% at constant currencies); free cash flow projected at approx. €10B.

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

• Slight deceleration in cloud backlog and revenue growth expected over the year; acceleration in total revenue growth anticipated for 2027 as backlog ramps.

• Effective tax rate (non-IFRS) expected at ~29%.