Q2 noisy from FY guidance tweaks. Overshadows promising underlying KPIs The strong share price performance YTD and series of mid-term catalysts in Apr/May meant SAP needed a clean quarter to avoid near-term relief in the shares. The headline trimming of the high end of the Cloud Revenue guidance by EUR200m (2%) overshadowed an otherwise solid print where margins beat by ~150bps, FCF was above expectations and the key leading indicators in Current Cloud Backlog (+25% ccy) and S/4HANA growth continued to flash green. SAP''s shift to reporting after European hours meant the ADR traded down 6% intra-day in a market where its US peers were down 2-6%; a fair reflection of the noisier-than-hoped Q2 however underlying trends remain intact in our view, with a first meaningful glimpse of GenAI upside revealed. First meaningful insight at SAP''s GenAI opportunity including timing and monetisation Our highlight from the Q2 conf call was CEO Christian Klein''s commentary on the GenAI roadmap to embed its functionality across a large portion of the SAP portfolio from as soon as (late) this year, and the scope to monetise. We saw glimpses of SAP''s GenAI potential in its HCM integration with Microsoft Teams at the CMD, and SAP''s recently announced GenAI investments have added further credibility. However the scope to infuse GenAI technology across a large portion of SAP''s product portfolio including core ERP / Financials in such a short time horizon was a key positive to us. Furthermore, like Microsoft and Salesforce, SAP is planning to price this technology at a notable premium with a ~30% uplift touted by management during the conf call. We recently embedded GenAI into our US Enterprise Software estimates (The Software FLASH Technologist - GenAI Edition) from 2025 onwards, and have now done the same with SAP using the same methodology, lifting our 2025 Cloud Revenue growth estimates by 2pp as a result. Raising TP to EUR150 as SAP continues on its path to...