SAP has trimmed its 2026 operating profit outlook to €11.8-€12.2 billion, citing a €100 million impact from recent AI-focused acquisitions like Dremio and Prior Labs. The adjustment highlights the near-term costs of adapting to AI. Despite this, the company's cloud division remains strong, with Q2 cloud revenue growing 24% to €6.28 billion, beating analyst expectations as customers shift away from legacy software.
2026 profit outlook revision
- ▪SAP cut its 2026 non-IFRS operating profit outlook to a range of €11.8 billion to €12.2 billion
- ▪The German company's previous 2026 operating profit forecast was between €11.9 billion and €12.3 billion
AI acquisition costs
- ▪The costs associated with AI-focused acquisitions demonstrate the near-term expense for enterprise software makers adapting to artificial intelligence
- ▪CFO Dominik Asam stated the profit adjustment was "driven solely by mergers and acquisitions."
- ▪The profit outlook was lowered due to a dilutive impact of over €100 million from its acquisitions of Dremio and Prior Labs
Enterprise AI infrastructure demands
- ▪Vendors like SAP are investing in infrastructure and automation to connect AI tools with protected data for finance, supply chain, and HR processes
- ▪Enterprise AI relies on structured, secured, and regulatory compliant company data
Cloud revenue performance
- ▪SAP's 2026 cloud revenue target remains unchanged at €25.8 billion to €26.2 billion
- ▪In the second quarter, SAP's cloud revenue grew 24% in constant currencies to €6.28 billion, exceeding analysts' average forecast of €6.26 billion
- ▪The company's current cloud backlog, signaling contracted revenue over the next 12 months, increased by 26% to €22.93 billion
Business model transition
- ▪SAP's software license revenue fell 32% at constant currencies to €131 million, reflecting the company's shift to subscriptions
- ▪Customers are moving away from on-premises licenses as SAP's deadline to halt support for its legacy software approaches
Story comments
Loading comments…