If an item in the Sprint Backlog cannot be finished by the end of the Sprint due to underestimated work, does this mean the Sprint is cancelled?

When a Sprint Backlog item is not completed by the end of the Sprint due to underestimation, it does not necessitate the cancellation of the entire Sprint. The purpose of a Sprint is to deliver a potentially releasable increment of the product, and not all items in the Sprint Backlog must be completed for the Sprint to be deemed successful.

The team can still achieve its commitment and potentially deliver valuable increments by focusing on the items that were completed. In this scenario, the Scrum Team reflects on what went wrong during the Sprint Review and Sprint Retrospective, and adjusts their planning and estimation practices for future Sprints instead of canceling the current one.

Cancelling a Sprint is a significant action that generally occurs under more extreme circumstances, such as when the project has lost its viability or when the work is no longer relevant. Therefore, while underestimation is something to address, it does not automatically imply that the Sprint must be cancelled.