Cloud Backlog and Revenue Growth
SAP reported current cloud backlog of €22.9 billion for Q2 2026. That is up 27% as reported and 26% at constant currencies versus a year ago.
Cloud ERP Suite revenue reached €5.525 billion, up 25% as reported and 27% at constant currencies. Total cloud revenue grew 22% as reported and 24% at constant currencies.
Total revenue reached €9.878 billion, up 9% as reported and 11% at constant currencies. Non-IFRS free cash flow rose 27% to €3.002 billion in the quarter.
One number moved against the trend. Software support revenue fell 8% year over year to €2.439 billion. Software licenses revenue dropped 32% to €131 million. The quarterly statement does not attribute a cause to either decline.
The quarterly statement notes that current cloud backlog growth benefited from the first-time inclusion of Reltio, which contributed less than one percentage point to the constant-currency growth rate.
What Drove the Operating Profit Results
IFRS operating profit grew 8% and non-IFRS operating profit grew 7%, or 9% at constant currencies. The IFRS cloud gross margin came in at 74.3%, down 0.5 percentage points year over year. The non-IFRS cloud gross margin was 74.6%, down 0.6 percentage points year over year.
The quarterly statement identifies the main causes of the sequential decline in both IFRS and non-IFRS operating profit growth. Among the factors listed was the sequential deceleration of cloud and total revenue growth. An unusually low stock-based compensation expense in the first quarter added to the effect. Accelerated investments into research and development and the dilutive impact of the Reltio acquisition contributed as well.
The statement also references other effects and directs readers to the disclosures on page 22 of the document.
Those effects are separate from the forward outlook revision. SAP updated its 2026 non-IFRS operating profit outlook to reflect the dilutive impact from Dremio and Prior Labs acquisitions. SAP completed both acquisitions before the earnings release.
The retained quarterly statement text does not state the revenue contribution from Dremio or Prior Labs, nor when their dilutive impact on operating profit will reverse.
What the Executives Said
CEO Christian Klein said SAP delivered another quarter of strong current cloud backlog growth, up 26% at constant currencies. He attributed the performance to the Autonomous Enterprise strategy, momentum across the Autonomous Suite, and the Business AI Platform. He said customers are choosing SAP to enable accurate and compliant AI outcomes grounded in their most critical business processes and data.
CFO Dominik Asam described Q2 as another strong quarter, highlighted by sustained current cloud backlog and free cash flow growth against a volatile macroeconomic backdrop. He noted that SAP is aggressively driving its own transformation into an Autonomous Enterprise, leveraging AI to boost effectiveness and efficiency.
What Changes for CIOs and CFOs
Three things in this release are worth acting on.
First, the operating profit story has two distinct parts. The sequential Q2 growth deceleration reflects Q1 base effects, R&D spending, and Reltio, among other effects noted in the quarterly statement. The forward outlook revision reflects Dremio and Prior Labs. CFOs modeling 2026 unit economics should keep these as separate line items, though neither source states when either effect will reverse.
Second, software support revenue fell 8% and software licenses revenue fell 32% in Q2. The quarterly statement does not state a cause. Teams still on support or perpetual license contracts should watch whether this trend continues in Q3.
Third, the quarterly statement's footnote 2 defines Cloud ERP Suite and Extension Suite metrics by reference to the Performance Management System chapter of the 2025 Integrated Report. The quarterly statement reports 27% year-over-year growth to €22.9 billion. CIOs planning SAP cloud investment timelines should calibrate against this trajectory when setting internal roadmap expectations for 2027 and beyond.