SAP Doubles Down on Utilities with Centrica and Itron – Cloud Backlog Swells to €21.9B, but Stock Still Languishes

SAP cloud revenue rises 27% in Q1 2026; signs Centrica for RISE with SAP, partners with Itron for utility integrations, yet stock remains 44% below high.

The German software giant is quietly building a beachhead in one of the most capital-intensive sectors on the planet. Two recent moves – a flagship digital transformation deal with British energy conglomerate Centrica and a new integration connector for utility network provider Locusview, now part of Itron – signal that SAP intends to make regulated energy and water companies a cornerstone of its cloud growth story.

Centrica, a 20-year SAP customer, will adopt the full RISE with SAP package, including Business Data Cloud and the Joule AI assistant, with a phased rollout starting in finance from July 2026. The company already went live with SAP Business Data Cloud in February 2026, unifying SAP and non-SAP data on a single platform. Now it will layer in Joule and Microsoft Copilot to enable conversational interactions with enterprise systems. SAP declined to disclose the financial value of the contract, but the deal serves as a high-profile reference for the energy sector, where data quality and regulatory compliance are critical.

Just days earlier, on May 27, 2026, SAP announced a connector built by Itron that ties the Locusview project-management platform directly into SAP S/4HANA. The tool automates the exchange of construction, work-order and asset data, cutting manual intervention for utilities managing multi-billion-euro smart-grid rollouts and infrastructure upgrades. Itron acquired Locusview in January 2026 and is now weaving the software into its utility IT portfolio. For SAP, the partnership strengthens its industry-specific cloud offering in a segment that generates long-term, high-value contracts.

These sector-focused pushes come atop robust first-quarter numbers. Cloud revenue hit €6.0 billion in Q1 2026, up 27% in constant currency (19% as reported). The current cloud backlog reached €21.9 billion, a 25% increase at constant exchange rates, while the cloud ERP Suite grew 30% on the same basis. Total revenue rose 6% to €9.6 billion. SAP reiterated its full-year guidance: cloud revenue of €25.8–26.2 billion and non-IFRS operating profit of €11.9–12.3 billion, with analysts penciling in earnings per share of €7.28.

Despite the operational momentum, the stock has been hammered. On Thursday, SAP shares traded around €151.36, up barely 0.7% on the day. The price sits 44% below the 52-week high of €271.60 touched in June 2025, and has lost 25% since the start of the year. The relative strength index of 82 signals short-term overbought conditions following a recovery from the mid-May trough of €137.62. The disconnect between business performance and market valuation remains stark.

Whether recent utility-sector moves – and the broader cloud acceleration they represent – can close that gap will depend on how quickly cloud growth translates into margin expansion. The Q2 earnings report, expected in July, will offer the next hard test of that narrative.