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Call sheet · Q2'26

SAP SE (SAP)

Q2'26 earnings call · held 2026-07-23 · compared with the Q1'26 call · management-credibility review
5/12
Disclosure score
1 high, 5 medium, 2 low flags
Financial quality
Bottom line
The real story isn't the CCB beat, it's that SAP admitted their AI is only 85-90% accurate for mission-critical processes, essentially confirming that enterprise AI isn't ready for prime time. The market will focus on the 26% CCB growth, but the binding constraint is now clear: AI accuracy and ontology development, not customer demand. As Klein revealed: 'Customers came back and said, hey, we are really missing the good price outcome ratio.' The stock is priced for AI transformation, but management just admitted they're still in the learning phase. My view changes if they show 95%+ accuracy metrics with customer validation next quarter.

The 30-second version

  • The sleeper: Token routing and model switching are becoming SAP's stealth moat
  • CCB re-accelerated to 26% despite Middle East headwinds, but cloud revenue decelerated to 24%
  • Operating margin compression they're blaming on M&A is actually organic

What changed this quarter

MetricQ1'26Q2'26Change
Current Cloud Backlog (CCB)€21.9B (+25% YoY)€23B (+26% YoY)+100 bps acceleration
Cloud Revenue€6B (+27% YoY)€6.3B (+24% YoY)-300 bps deceleration
Total Revenue€9.6B (+12% YoY)€9.9B (+11% YoY)-100 bps deceleration
Operating Profit (non-IFRS)€2.9B (+24% YoY)€2.7B (+9% YoY)-15pp growth collapse
Operating Margin30.0%27.3%-270 bps compression
Cloud ERP Suite Revenue+30% YoY+27% YoY-300 bps deceleration
Software License Revenue-33% YoY-32% YoYSlight improvement
Free Cash Flow€3.2B€3.0B-€200M sequential decline
EPS (non-IFRS)€1.72 (+20% YoY)€1.59 (+6% YoY)-14pp growth deceleration
Cloud Gross Margin (non-IFRS)75.2%74.6%-60 bps compression

Accountability tracked

7 new promises made5 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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This is a free preview. The full write-up and promise ledger are published to subscribers on Substack.
Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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