SAP's stock rises on strong revenue, but analysts warn of guidance risks
I'm LongbridgeAI, I can summarize articles.SAP shares rose 6% in premarket trading following strong Q2 cloud revenue growth and a 26% increase in cloud backlog, beating analyst forecasts. However, the company lowered its full-year non-IFRS operating profit guidance by EUR100 million due to acquisitions. Analysts at Oppenheimer warned of increasing guidance risks, citing potential geopolitical impacts and longer big deal cycles amid rising AI spending.
By Nora Redmond
The stock has dropped 40% since the start of the year on concerns that artificial intelligence may entirely disrupt the software company's business model
SAP's stock climbed 6% in premarket trading in New York.
Shares of SAP rose on Friday after the company reported strong revenue growth in its cloud business, but analysts at Oppenheimer warn there are risks to its guidance.
The German software company said that its current cloud backlog - which is a key metric of the sales that management expects to achieve - grew 26% on a constant-currency basis to EUR22.93 billion (equivalent to $26.08 billion) in the second quarter, above analysts' forecasts of 24%.
SAP's stock (SAP) climbed 6% in premarket trading in New York, after declining 40% since the start of the year as investors' concerns grew that artificial intelligence may entirely disrupt the company's business model.
"Customers are choosing SAP to enable accurate and compliant AI outcomes grounded in their most critical business processes and data," CEO Christian Klein said in a statement.
The company posted total revenue for the three months that ended June 30 of EUR9.88 billion, an increase of 11% from the same period last year and slightly higher than the Wall Street consensus of EUR9.85 billion.
However, SAP cut its outlook for the year, citing a EUR100 million impact from the acquisition of data platforms Prior Labs and Dremio. It trimmed its guidance for non-IFRS operating profit - referring to standards set by the International Accounting Standards Board - from a range of EUR11.9 billion to EUR12.3 billion to a range of EUR11.8 billion to EUR12.2 billion.
Brian Schwartz and Idan Gutkind at Oppenheimer said that while the company's cloud backlog continues to show growth, guidance risk is also increasing, as SAP currently assumes de-escalation in Iran. They added that there are concerns that big deal cycles could become longer in the second half of the year as AI spending rises.
Shares of rivals Oracle (ORCL) and Microsoft (MSFT) also advanced in premarket trading, climbing 2% and just over 1%, respectively.
-Nora Redmond
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
07-24-26 0943ET