SAP said its cloud revenue in the second quarter was up 24% with total revenue up 9%.
The company reported second quarter net profit of €2.46 billion, or €1.45 a share, on revenue of €9.03 billion, up 9% from a year ago. A weaker US dollar was a currency headwind in the quarter. Adjusted earnings were €1.50 a share.
Cloud ERP revenue in the second quarter was €4.42 billion, up 20% from a year ago.
As for the outlook, SAP laid out the following:
- Cloud revenue at constant currency of €21.6 billion to €21.9 billion, up 26% to 28%.
- Cloud and software revenue of €33.1 billion to €33.6 billion, up 11% to 13%.
- The company also said its current cloud backlog growth in constant currencies will slightly decelerate in 2025. In the second quarter, current cloud backlog was €18.05 billion, up 22% from a year ago.
CEO Christian Klein touted SAP's efforts with its Joule AI agent and SAP Business Data Cloud. CFO Dominik Asam said:
"Our performance was supported by continued customer demand and disciplined cost control. As we move into the second half, we remain cautiously optimistic, keeping a close eye on geopolitical developments and public sector trends."
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Constellation Research analyst Holger Mueller said:
"SAP had a good quarter, and manages to grow - albeit nominally. The expected reductions in cloud backlog means SAP is seeing customers go live on the cloud and expanding capacity. The cloud revenue slowdown maybe part of the seasonality where Q1s are strong and the second and third quarters are affected by vacations in Europe. Interesting to see Spain having an outstanding quarter."
Key takeaways from SAP's earnings call from Klein:
- SAP is including Business Data Cloud in deals with Adobe and BAE Systems as wins. Klein added that SAP "is deepening our partnership with Palantir in the context of Business Data Cloud."
- "The debate on digital sovereignty and the best way to achieve it has picked up speed in recent weeks. SAP stands out as the only vendor that can offer sovereignty over the entire stack, from the infrastructure to the application. Our platform runs on any hyperscaler and many local providers, but we also operate data centers of our own across the world. Our unique capabilities ensure that customers stay in control of their data at all times. They can be sure, regardless of how their local sovereignty requirements evolve, we will be able to meet them."
- "By the end of the year, we expect the total number of available AI agents to reach 40. The agents will work across business functions."
- "SAP also uses business AI internally to boost productivity. This is reflected in the solid expansion of our operating profit. We are decoupling expenses from revenue growth thanks to our transformation program."
- "Uncertainty in global markets from earlier this year remains. A few individual industries have been impacted by uncertainty, and we are seeing extended approval workflows on the customer side in the US public sector and among manufacturers affected by tariffs. Whatever the market environment may bring, SAP is really well prepared."
