SAP leadership announced second-quarter financial results for 2025 that revealed accelerating total revenue growth as cloud revenue rose 24%, with CEO Christian Klein calling it “another quarter of outstanding results” while highlighting the recent strength of SAP’s AI innovations, from the expanding availability of generative-AI copilot Joule to the introduction of SAP Business Data Cloud.
Assessing the second-quarter performance, SAP leadership reported €9.03 billion in total revenue (up 9%, above analysts’ estimates), driven by robust cloud growth and disciplined cost control. In the second quarter, cloud revenue was up 24% to €5.13 billion, slightly shy of forecasts, while Cloud ERP Suite revenue grew 30% to €4.42 billion. Current cloud backlog, which refers to contractually committed cloud revenue SAP expects to recognize over the next 12 months, rose by 22% to €18.05 billion, down from 29% last quarter.
While reflecting SAP’s continued cloud momentum, the company’s Q2 financial results showed slowing growth compared to previous quarters, particularly in terms of current cloud backlog, which Klein attributed to uncertainty in global markets due to tariffs.
SAP cautiously reaffirmed its full-year outlook, citing “elevated levels of uncertainty and reduced visibility.” Overall, SAP’s operating profit rose 32% to €2.57 billion, with a margin increase to 28.5%.
Key takeaways from the July 22 earnings call, investor teleconference, and Wall Street’s reaction:
- SAP delivered a strong underlying performance in Q2, ended June 30, with total revenue growing 9% to €9.03 billion, cloud revenue growing 24% to €5.13 billion, and Cloud ERP Suite revenue surging 34% year-over-year to account for 86% of cloud revenue.
- Despite strong Cloud ERP Suite traction, signs of mild deceleration in SAP’s cloud business came in below Wall Street’s expectations, and SAP shares were down 2% in extended trading after Tuesday's disclosure. SAP had reiterated its full-year 2025 guidance with no upward revisions, contributing to investor concerns.
- On the earnings call, CEO Christian Klein focused on SAP’s leading role in enterprise-AI transformation, while CFO Dominik Asam highlighted strong profitability and resilience amid the uncertain macroeconomic climate.
- Asam pointed to geopolitical developments and public sector trends as potentially slowing SAP’s cloud momentum, though he remains “cautiously optimistic” for the second half of the year.
- Last quarter, SAP completed its internal transformation program, initiated last January, with expenses due to restructuring payouts totaling €3.2 billion (and an additional €0.2 billion expected to be paid through the rest of this year).
Inside SAP’s Q2 2025 Financial Results
SAP showed strength in its cloud revenue, particularly compared to primary competitors over the same period, though a slowdown in its cloud business this last quarter tempered Wall Street’s enthusiasm.
“SAP was performing very well across all key financial indicators,” Klein said, though he noted that “uncertainty in global markets from earlier this year remains,” amid economic fallout from U.S. tariffs. “In a few individual industries impacted by uncertainty, we are seeing extended-approval workflows on the customer side—for example, in the U.S. public sector and among manufacturers affected by tariffs,” Klein added.
Despite that, he cited SAP’s “excellent pipeline for the second half of the year in almost all markets and regions” as one cause for celebration. SAP’s operating profit also came in above analysts’ estimates, with Klein citing both internal and external factors in calling this result “a testament to the strength of SAP’s business model and the lasting improvements we achieved in our cost base with our transformation program, which includes the internal adoption of Business AI.”
Klein pointed to major announcements made during this year’s SAP Sapphire, such as AI assistant Joule becoming available “everywhere, and for everything,” and the debut of SAP Business Data Cloud (which he’d previously called “the new center of gravity for business data”). Most significant of all is SAP’s vision for a unified SAP Business Suite, leveraging mission-critical data within fully integrated applications that connect to Business AI, unlocking greater efficiency within business processes. This integrated enterprise foundation is the company’s answer to its customers’ overarching concerns about pre-existing business siloes that limit enterprise-wide access to data.
“For all our customers in all geographies, we have one goal,” Klein said. “We want to help them to take full advantage of the SAP Business Suite for their company.”
Klein assessed that continuing to invest in the enterprise-wide expansion of Joule and the development of new data products and AI agents will remain SAP’s strategy amid market uncertainty.
“Since it is difficult to predict how this market environment will exactly evolve, we continue to focus on what makes us successful in the mid- and the long-term,” he said. “With our data and AI innovations, we are strengthening our portfolio—and there’s more to come. Our AI-enabled go-to-market transformation is moving ahead with speed.”
Klein pointed to SAP’s internal business transformation as another factor readying the company to weather future headwinds. “We remain very diligent about simplification,” he said. “The AI-powered transformation of our workforce continues. Thanks to ongoing operating efficiencies, we are able to do more with a leaner headcount. All this means that SAP is very well-prepared.”
Customer Stories Reflect Enterprise-Wide SAP Innovations
In the second quarter, customer highlights included both installed-base and net-new customers selecting RISE with SAP to transition from on-premises software to Cloud ERP, as well as the announcement of strategic partnerships to accelerate cloud transformation.
Alibaba Group, a Chinese multinational technology company focused on e-commerce and cloud computing, selected RISE with SAP to drive its end-to-end business transformation, which will involve leveraging SAP Cloud ERP Private for its enterprise infrastructure as well as a greater collaboration aimed at accelerating cloud transformation for other customers.
While SAP Business Suite will be rolled out in full at Alibaba—encompassing SAP Business Technology Platform, SAP Business AI, SAP Integrated Business Planning, SAP Concur, SAP SuccessFactors, and SAP Emarsys solutions—the company will also become a key player in SAP’s efforts to popularize RISE and GROW journeys with installed-base and net-new customers in the Chinese market.
Other global customers selecting RISE in the second quarter included Acron Aviation, Balluff, BALMAIN, Bell Food Group, Cementos Argos, Eberspacher Group, Ernsting’s, GSK, J-Power, Linfox, Mannington Mills, Mercedes-AMG PETRONAS Formula One, NS Reizigers, Proximus Group, Replay, Sumitomo Rubber Industries, Synpaxe, University Medical Center of the Johannes Gutenberg University Mainz, and Votorantim. Daoudata, EGYM, Gardner White Furniture Group, NEBCO, and PwC were among customers choosing GROW with SAP.
In other solution areas, airline Delta selected SAP’s digital supply chain solutions, while automobile manufacturer BMW went live with them; L’Oreal, a global cosmetics leader, also deepened its investment in SAP SuccessFactors solutions. SAP Business Data Cloud was included within SAP’s deals with GSK, Replay, and NEBCO, as well as in deals with British defense and security leader BAE Systems and Adobe.
Analysts Respond to the SAP Q2 2025 Financial Results
SAP topped some analysts’ estimates and came in shy of others, leading SAP shares to fall Wednesday. “Cloud revenue growth was still strong at 24% to €5.13 billion, but that is a slowdown from over 25% growth in the same period last year—and a bit short of estimates,” said analyst Jon Reed of Diginomica. “What’s to blame for this lack of over-achievement, shall we say?”
Reed pointed particularly to the macroeconomic challenges SAP currently faces, as tariffs lead to longer buying cycles. Noting Klein’s acknowledgement of “extended approval workflows on the customer side” in industries particularly hard-hit by U.S. tariffs, Reed added, “Extended approvals are manageable, but extremely extended approvals and/or major project delay cycles are concerns to track.”
For Gartner analyst Fabio Di Capua, more modest first- and second-quarter earnings were commonplace in the on-premises software space, “and this is becoming the norm also in the cloud world,” though he attributed this slowdown not only to macroeconomic shifts but also “the resistance of on-prem clients” who’ve not yet initiated their cloud journeys.
“Software licenses rebounded 6%, compared to Q1, showing clients are still interested in on-prem solutions, despite SAP pressure to move to subscription,” Di Capua said. “In the same optic, cloud backlog in Q2 is slightly below Q1, and it seems the prediction of slowdown SAP made is materializing.”
While SAP leadership enthusiastically mentioned AI innovations throughout the earnings call, “Gartner has not seen a decisive impact of SAP’s AI-integrated offerings on the growth of adoption of S/4HANA,” Di Capua noted. “Only rarely have companies mentioned this as a major driver for a migration decision.”
SAP still stands to benefit tremendously through its AI innovations, “due to enterprise AI’s dependence on quality, specific, and secure enterprise data, as well as sophisticated agentic architectures companies will struggle to build and maintain on their own,” Reed added. Given SAP’s unique ability to embed data in customers’ operating systems, and the clear value of customer- and industry-specific data to enterprise AI, SAP will continue to be a major player in this space.
But to continue its momentum, SAP needs to focus on keeping customers moving through RISE with SAP to progress their cloud migrations, Reed said. The company is now tasked with “delivering real, differentiated value with SAP Business AI” — and with distilling that value for SAP users at organizations currently committed to wider enterprise transformation.