SAP SE (NYSE:SAP) stock surged in premarket trading Friday after the German software company reported second-quarter results and highlighted continued strength in its cloud business, despite slightly missing Wall Street’s U.S. dollar-based estimates.
Total revenue increased 9% year over year, or 11% at constant currencies, to 9.9 billion euros, while cloud revenue climbed 22%, or 24% at constant currencies. The company said it expects growth to moderate later this year amid macroeconomic uncertainty.
In U.S. dollar terms, SAP reported earnings of $1.85 per share, below the analyst consensus estimate of $2.01, according to Benzinga Pro. Revenue rose to $11.48 billion, narrowly missing the Street estimate of $11.49 billion and increasing from $10.24 billion a year earlier.
Cloud Business Drives Growth
SAP’s current cloud backlog increased 27% year over year, or 26% at constant currencies, to 22.9 billion euros.
Cloud revenue rose 22%, or 24% at constant currencies, while Cloud ERP Suite revenue increased 25%, or 27% at constant currencies, and accounted for 88% of total cloud revenue.
Software license revenue declined 32% as customers continued migrating to cloud-based products.
Free cash flow reached 3 billion euros during the quarter. IFRS operating profit increased 8% at constant currencies to 2.6 billion euros, while non-IFRS operating profit rose 7%, or 9% at constant currencies, to 2.7 billion euros.
IFRS earnings per share increased 30% to 1.89 euros, while non-IFRS EPS rose 6% to 1.59 euros.
Cloud gross margin was 74.3% under IFRS and 74.6% on a non-IFRS basis as SAP continued investing in artificial intelligence and growth initiatives.
AI Expansion Continues
SAP highlighted its Autonomous Suite and Joule Work platform during the quarter and said beta programs attracted strong customer interest ahead of planned launches.
The company plans to launch nearly 50 AI assistants by the end of the third quarter of 2026 and more than 400 Autonomous Suite AI agents by year-end. It is also rolling out three ERP Migration Assistants powered by 10 AI agents to help customers modernize enterprise systems.
SAP continued expanding its AI capabilities through investments in talent, technology and acquisitions, including Dremio and Prior Labs.
The company said its AI governance framework supports compliance across more than 130 countries through identity management, access controls, data privacy and data sovereignty features.
SAP Outlook
SAP expects constant-currency total revenue growth in 2026 to remain broadly in line with 2025’s 10.6% growth rate and to accelerate in 2027.
Management expects cloud backlog growth to moderate slightly this year but said long-term demand remains strong.
The company lowered its 2026 non-IFRS operating profit outlook by 100 million euros to reflect the dilutive impact of its Dremio and Prior Labs acquisitions.
During the second half of 2026, SAP plans to focus on expanding cloud revenue, improving operating leverage, scaling AI-powered autonomous enterprise capabilities and strengthening customer trust through governance and data sovereignty initiatives.
SAP Stock Soars Premarket
SAP Price Action: SAP shares were up 5.31% at $154.16 during premarket trading on Friday, according to Benzinga Pro data.
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