SAP's Q2 Profit Tops Estimates, Cloud Revenue Growth Slows

SAP reported Q2 profits that exceeded estimates, with adjusted EPS of €1.50 ($1.76), up from €1.10 in the year-ago quarter. However, cloud revenue growth slowed to 24% from over 25% YoY, missing estimates. SAP maintained its FY cloud revenue forecast of €21.6 billion to €21.9 billion and CEO Christian Klein highlighted the company's AI assistant Joule. Shares were down close to 2% in extended trading, despite a 25% gain this year.

SAP SE (SAP) reported its second-quarter 2025 earnings, with adjusted earnings per share (EPS) of €1.50 ($1.76), up from €1.10 in the year-ago quarter, exceeding analysts' estimates [3]. However, cloud revenue growth slowed to 24%, down from over 25% year-over-year (YoY), missing estimates [3]. SAP maintained its full-year cloud revenue forecast of €21.6 billion to €21.9 billion [3]. CEO Christian Klein highlighted the company's AI assistant Joule, stating that it is becoming available "everywhere and for everything" [3]. Despite the strong earnings, SAP shares were down close to 2% in extended trading, but the stock has been up nearly 25% for 2025 through Tuesday’s close [3].

SAP's Q2 revenue of €9.03 billion (approximately $10.61 billion) was roughly in line with estimates, driven by a significant increase in its cloud segment, which grew by 24% [3]. The Cloud ERP Suite revenue surged by 30%, reflecting the growing demand for cloud-based enterprise solutions [2]. SAP's non-IFRS operating profit also saw a substantial increase, climbing to €2.6 billion, which represents a 32% gain [2]. The company's ongoing cloud transformation, led by its flagship RISE with SAP and Grow with SAP solutions, is expected to continue driving growth [1].

However, SAP faces potential challenges, including revenue fluctuations due to long sales cycles, complex licensing, and changes in customer budgets. The U.S.-China trade war and tariffs also negatively impact software license sales. Additionally, SAP's reliance on cyberspace makes it vulnerable to cybersecurity breaches, which could harm its reputation and lead to costly legal issues [1].

Looking ahead, SAP plans to broaden its RISE with SAP offering by incorporating a full set of business transformation tools, including LeanIX, Signavio, and WalkMe. The company remains optimistic about the generative AI trend and expects it to positively impact revenues in the future. Management has highlighted that it will dedicate more than 30,000 developers to enhancing SAP’s AI capabilities and creating new applications to increase user productivity by 30% by year-end [1].

References:
[1] https://www.ainvest.com/news/sap-se-q2-2025-earnings-preview-eps-expected-rise-50-9-2507/
[2] https://www.gurufocus.com/news/2995440/sap-sap-reports-strong-q2-with-robust-cloud-revenue-growth
[3] https://www.investopedia.com/sap-earnings-q2-fy2025-11776634