SAP's Strong Start to 2026: Q1 Results Exceed Expectations Amid Macro-Economic Uncertainty
SAP, a leading enterprise software company, has kicked off the year with impressive results in its first quarter of 2026. According to CEO Christian Klein and CFO Dominik Asam during their recent conference call, the company's performance demonstrates ongoing momentum across its entire portfolio and continued success of its strategy.
The Q1 results show a strong increase in cloud revenue, growing 27% to reach almost EUR 6 billion. This growth was driven by a 30% acceleration in the company's cloud ERP suite revenue, bringing total revenue for the quarter to EUR 9.6 billion – a significant 12% increase.
The current cloud backlog increased by 25%, reaching EUR 21.9 billion, with public cloud order entry accounting for over 70% of quarterly volume. Notably, SAP's strong top-line performance translated directly into its bottom line, resulting in an operating margin of 30%, up 2.9 percentage points from the previous year.
The company's growing partner ecosystem also performed exceptionally well, with indirect channel order entry growing significantly faster than direct channel orders – accounting for almost 30% of total order entry.
However, despite SAP's resilience, the global macro-economic environment remains uncertain. Geopolitical tensions have increased, particularly in the Middle East, leading to economic impacts on many industries. CEO Christian Klein acknowledged that SAP is not completely immune to these disruptions and that predicting the impact on their year-end results is challenging.
Notably, SAP sees this uncertainty as an opportunity for customers to invest in the resilience of their businesses, with a strong pipeline coverage for 2026 demonstrating the company's preparedness.
The quarter also saw significant customer wins, including leading companies from various industries selecting RISE with SAP. These include ConocoPhillips in energy, Thales in defense, Air Liquide in industrial gases, and Bristol Myers Squibb in biotech, as well as PayPal, Hyundai (European division), and Aptiv.
Looking ahead to Sapphire 2026, the company is preparing for larger announcements that will set it up to deliver high-value business AI at scale. These details are expected to be shared during the upcoming financial analyst conference in Orlando next month.
