SAP passes concerns on relative demand resilience. US ADR shares +5% after hours. SAP delivered upside to more cautious Q2 investor expectations and raised FY25 EBIT target, helping US ADR shares +5% in after-hours trading. In our Q2''24 preview we highlighted the key leading indicator Current Cloud Backlog (CCB) growth as the primary focus: sustaining the +28% ccy seen at Q1 and was above investor expectations of a slight deceleration. Cloud Revenue was in line, while Cloud ERP growth accelerated to +33% ccy. Strong cost control drove an 8% adj. Op Income beat with FCF well ahead of expectations both de-risking FY24 guidance. Headline: SAP raises FY25 EBIT target. Detail: SAP raises underlying FY24/25 FCF. The headline raise of FY25 adj. EBIT to EUR10.2bn (from EUR10.0bn) on increased savings from a larger than expected take-up of its voluntary redundancy plan should be overlooked in favour of the more impressive underlying FCF upgrades to FY24/25 in our view. By reiterating FY24/25 FCF targets while absorbing an extra EUR0.8bn in restructuring charges, SAP is lifting underlying FCF targets by 6-9% and paves a way for similar Consensus upgrades to FY2026 FCF in our view. Relative resilience, upgrades to Cons estimates coming and undemanding valuation. SAP has been an outlier YTD: 1) shares are +33% vs. IGV Software Index +6%, and 2) so far has shown greater resilience in its Growth drivers against a backdrop of weakness from Software peers including disappointments from Salesforce, Workday, Dassault Systemes and further deterioration picked up in our most recent Reseller Channel Checks. We sensed some tactical investor caution into the print among both European and US investors which showed in our recent Know Thy Neighbour report. Put together the combination of a solid Q2 print, de-risking FY24 EBIT guidance, raising FY25 EBIT (and underlying FCF) targets and likely driving high-single digit % upgrades to Cons FY26 FCF estimates we would expect the...