SAP changes
Pick any two versions below to diff them.
- About
- SAP sells enterprise resource planning (ERP) software. Companies use this software to run finance, supply chain, and other core operations. SAP used to sell this software as a one-time license. SAP now sells most of it as a cloud removed: subscription, priced per user. added: subscription. Cloud revenue was 57% of total revenue in 2025 and 63% in the first half of 2026. SAP prices its main cloud ERP product by a weighted count of users, called Full Use Equivalents. The main cloud product is S/4HANA Cloud, sold as RISE to existing customers and GROW to new customers.
- Thesis
- Investors fear that AI agents will let companies cut the paid removed: user seats added: users SAP's cloud software is priced removed: around. This fear drove added: around, and that AI tools will take work away from classic business software. A miss in the cloud backlog on January 29, 2026 started a sharp SAP removed: selloff in early added: selloff, and this fear kept the price down for most of the first half of 2026. removed: That happened even as SAP's added: SAP answered in April 2026 added: with a new API added: policy. The policy removed: pushed added: does not let outside AI removed: agents toward SAP's own Business Data Cloud or Joule. The policy discourages those agents from running added: systems plan and run their own added: sequences of calls against SAP removed: data. added: data, except through tools SAP supplies, such as Joule and Business Data Cloud. The gap can close if SAP keeps posting strong cloud growth without leaning only on removed: seat count. added: user counts. In the second quarter of 2026, cloud revenue grew 24% at constant currency and the added: current cloud backlog grew removed: 26%. added: 26% at constant currency. That is evidence growth had not yet slowed the way the removed: seat-count added: user-count fear implies. removed: The new API policy still faces pushback from DSAG, the removed: largest added: German-speaking SAP user group, removed: over added: criticized the API policy for unclear terms. So the removed: routing strategy added: policy is not yet removed: proven added: proven, and added: it could draw more customer or regulatory pushback instead of new revenue. removed: In added: Mainstream maintenance for SAP ECC ends on December 31, 2027, added: so many legacy on-premises customers must decide whether to move to the new cloud product. That decision will show whether the lock-in argument holds up. The next check comes at Q3 2026 earnings on October 21, 2026. A fuller picture is likely over the next two to four quarters, as the API policy and the 2027 upgrade cycle play out.
- Risks
- SAP prices its main cloud added: ERP product removed: per user. added: by a weighted count of users. If AI agents cut a customer's headcount, SAP's revenue from that customer can fall at renewal. removed: In 2027, many added: Mainstream maintenance for SAP ECC ends on December 31, 2027. Many older customers must decide whether to upgrade to the new cloud removed: product. added: product, pay for extended maintenance to 2030, or leave. This can bring more revenue, or push some customers to a competitor added: or to third-party support instead. SAP's April 2026 API policy has drawn public criticism from DSAG, the removed: largest independent added: German-speaking SAP user group, over unclear terms and unclear coverage. Analysts warn it can raise customer lock-in and integration cost. If the backlash grows, it could slow adoption of Joule or invite regulatory scrutiny, which would weaken the case that the policy strengthens SAP's moat. SAP does not publish user-count data. This makes it hard to confirm whether the risk above is already happening. removed: SAP pays a German dividend withholding tax. Only a non-registered account gets a full tax credit for this. Other account types lose added: Germany withholds 26.375% of SAP's dividend. A US holder can claim back part of added: it under the removed: dividend added: US-German tax treaty, down to added: 15%. In a taxable account, the 15% is usually a credit against US tax. added: In a tax-deferred account such as an IRA, that tax is lost.
- Balance sheet
- Cash: €11.4B Debt: €8.6B Net cash: €2.9B Interest cover: 38× Debt due within 12 months: €1.5B Ratings: Moody's A1 (stable outlook), S&P A+ (stable outlook) SAP reports in euros and has more cash than debt. Its debt is almost all Eurobonds (nominal €8.05 billion), plus €500 million of commercial paper, and SAP has no bank loans. Cash is group liquidity, added: debt is at nominal value (€8.2 billion at carrying value), and debt does not include leases of €1.7 billion. In the first half of 2026, SAP repaid €1.1 billion of bonds. In May, it issued €3.5 billion of new Eurobonds with tenors of two to seven years. It also drew and repaid €1.0 billion from a €2.0 billion bridge facility. Interest cover uses net interest paid of only €141 million against IFRS operating profit of €5.4 billion in the first half of 2026. Free cash flow was €6.25 billion, helped by customers who pay cloud contracts in advance. The ratings are as stated by SAP in May 2026. Goodwill of €30.4 billion is the largest asset. Net liquidity fell from €3.4 billion at the end of 2025. SAP spent €2.6 billion on buybacks, €2.9 billion on dividends and €1.0 billion on acquisitions. In July 2026, it paid about removed: €0.5 added: €0.9 billion more in cash for removed: Dremio. added: Dremio and Prior Labs. The balance sheet gives room to continue the €10 billion buyback program to the end of 2027. It also gives room for more small AI acquisitions without much new debt. As of Jun 30, 2026.
- Recent events
- Oct 6, 2026: SAP agreed to buy TechWolf, an AI company that maps the skills and work of large workforces. TechWolf will become added: a core part of SAP SuccessFactors. SAP did not disclose the price and expects the deal to close in Q4 removed: 2026. added: 2026, after regulatory approval. Oct 6, 2026: At SAP Connect, SAP started the customer rollout of Joule Work, an AI interface that works across SAP and outside data. SAP also launched SAP Pay, a payments service inside SAP Cloud removed: ERP. added: ERP, now available in the US and the UK. Aug 26, 2026: UBS lowered its rating on SAP from Buy to Neutral and raised its price target to €201. The stock had risen almost 50% in about four weeks after its July low. Jul 23, 2026: SAP reported Q2 2026 results. Cloud revenue was €6.281 billion, up 24% at constant currency, and the current cloud backlog reached €22.929 billion, up removed: 26%. Non-IFRS operating profit missed estimates, and added: 26% at constant currency. SAP removed: trimmed added: cut its removed: full-year added: 2026 non-IFRS operating profit outlook to removed: reflect added: €11.8 to €12.2 billion because of the removed: dilutive cost of its Dremio and Prior Labs removed: acquisitions, while keeping added: acquisitions. It kept its cloud added: revenue, cloud and removed: total revenue guidance unchanged. added: software revenue, and free cash flow outlook. On the same day, before the results, the stock fell to about €127.5, the lowest price since November 2023. It rose about 9% the next day. Jul 16, 2026: SAP completed the purchase of Prior Labs, an AI company for tabular data, for about €0.4 billion in cash. On July 6, it completed the purchase of Dremio, a data lakehouse company, for about €0.5 billion in cash. May removed: 1, added: 12, 2026: added: At its Sapphire conference, SAP removed: and Anthropic announced removed: that added: plans to expand its partnership with Anthropic. Claude removed: now powers added: becomes a primary reasoning added: and agent model inside Joule, SAP's AI assistant, removed: as part of added: and connects to the new SAP Business AI Platform. added: SAP continues to use more than one AI model. Apr 29, 2026: added: DSAG, the German-speaking SAP removed: published a added: user group, publicly criticized SAP's new API policy. removed: It blocks added: The policy does not let outside AI removed: agents from planning and running added: systems plan, select or run their own removed: sequence added: sequences of added: API calls against SAP removed: data. Agents must now go added: data, except through removed: SAP's own Business Data Cloud or Joule instead. The user group added: tools SAP supplies. DSAG removed: publicly criticized added: said the removed: policy for unclear terms and an unclear list of covered removed: APIs. added: APIs, the fair-use rules and the contract terms are unclear, and that customers have too little time to adapt. Feb removed: 1, added: 4, 2026: SAP stock fell to €162.10, the lowest price since February 2024. Software stocks fell broadly across this period. Jan 29, 2026: SAP stock fell about 15% in one removed: day. added: day, its worst day since October 2020. The removed: market reacted to weak added: current cloud removed: growth guidance added: backlog for removed: 2026. Jul 1, 2025: added: Q4 2025 missed expectations, and SAP removed: began to bundle AI usage, called AI Units, into its added: gave a cautious cloud removed: contracts. This is added: outlook for 2026. On the same day, SAP announced a removed: new way added: share buyback of up to removed: price AI agent work, separate from added: €10 billion that runs to the removed: per-user price. added: end of 2027.