SAP reported second-quarter profits that topped analysts’ estimates, though cloud revenue came in lower than expected as growth slowed. https://t.co/iJqWbpFPp1 ...

Core Viewpoint - SAP is experiencing a slowdown in customer decision-making due to U.S. tariff tensions, but the recent trade deal with Japan offers cautious optimism for future growth [1][4]. Group 1: Financial Performance - SAP reported a 9% year-on-year revenue increase to €9.03 billion ($10.6 billion) in Q2, slightly below the consensus forecast of €9.08 billion [9]. - Operating profit was €2.57 billion, just ahead of estimates [9]. - The company's cloud backlog increased by 28% on a constant currency basis to €18.05 billion, indicating strong demand for its cloud services [10]. Group 2: Market Environment - The uncertainty in the market has led to delays in large transactions, particularly in the public sector and among large manufacturing companies with complex supply chains [2][4]. - The recent trade agreement with Japan, which sets tariffs on its exports to the U.S. at 15%, has provided some hope for improved market conditions [7]. Group 3: Strategic Focus - SAP has shifted its business focus towards cloud computing and artificial intelligence, which has contributed to its status as Europe's largest listed company by market capitalization [5][6]. - The company is leveraging AI to enhance efficiencies in finance, sales, and supply chain data for its clients [6]. Group 4: Analyst Reactions - Deutsche Bank analysts view SAP's performance positively, citing strong product offerings and a solid AI roadmap, while also noting new customer acquisitions like Alibaba [10]. - Conversely, analysts from TD Cowen and Piper Sandler have lowered their target prices for SAP's stock, reflecting mixed sentiments in the market [11]. Group 5: Currency Impact - Fluctuations in foreign exchange rates, particularly the weakness of the U.S. dollar against the euro, are expected to negatively impact cloud revenue growth by 5 percentage points in Q3 [12].

SAP SE Chief Executive Officer Christian Klein discusses the company's performance as cloud and software revenue increased 11% to €7.97 billion ($9.4 billion) in the period ended June 30. He also discusses tariff uncertainty and demand for artificial intelligence. Klein speaks on Bloomberg Television. 00:00 - SAP CEO Christian Klein on earnings 01:13 - Tariff, trade uncertainty 03:51 - Weaker USD impact on SAP, business, pipeline 05:20 - AI demand, deals, business AI surge in 2026 -------- More on Bloomberg ...

Core Viewpoint - SAP SE reported strong financial results with significant growth in operating profit and free cash flow, despite facing challenges from currency fluctuations and slightly lower-than-expected cloud and software revenue growth [1][2]. Financial Performance - Operating profit (non-IFRS) increased to €2.568 billion, and free cash flow improved significantly to €2.357 billion, representing an 83% year-over-year growth [1]. - Basic earnings per share (IFRS) grew by 91% to €1.45, while diluted earnings per share increased by 92% to €1.44 [1]. Revenue Insights - Cloud and software revenue grew by 11% year-over-year to €7.97 billion (approximately $9.4 billion), slightly below analyst expectations of €7.99 billion [1]. - On a constant currency basis, cloud revenue increased by 24% to €5.13 billion, still falling short of market expectations [2]. Market Position and Challenges - SAP's stock price has risen by 40% over the past year, surpassing ASML to become the highest-valued company in Europe [2]. - The company generates over 30% of its sales from the U.S. market, making it vulnerable to the impacts of a weaker dollar [2]. Future Outlook - The backlog of cloud business orders increased to €18.1 billion, but fell short of the €18.5 billion forecasted by analysts [2]. - Management warned of a potential slowdown in the growth of cloud business backlog in 2025 [2]. - CFO emphasized the need to monitor geopolitical conditions and public sector demand trends closely [1].

Financial Data and Key Metrics Changes - In Q2, cloud revenue rose by 28%, marking an increase of two percentage points compared to Q1 [7][28] - Total revenue growth accelerated to 12% [8][34] - Current cloud backlog grew by 28% in Q2, reaching €18.1 billion [28][34] - Operating profit surged by 35%, reflecting improvements in the cost base due to the transformation program [9][33] - Non-IFRS operating profit increased to €2.6 billion [34] Business Line Data and Key Metrics Changes - The Cloud ERP suite continued to drive growth, achieving 34% growth in Q2, representing 86% of total cloud revenue [29][34] - Software licenses revenue decreased by 13% in Q2, aligning with the company's strategy to transition to cloud-based models [31][34] Market Data and Key Metrics Changes - Cloud revenue performance was particularly strong in the APJ and EMEA regions, with notable performances in Brazil, Chile, France, India, Italy, South Korea, and Spain [32][34] - The Americas showed solid performance, although specific figures were not disclosed [32] Company Strategy and Development Direction - The company is focusing on product innovation and increasing productivity through business AI [6][25] - SAP aims to strengthen its portfolio with data and AI innovations while maintaining cost discipline [26][35] - The partnership with Alibaba is expected to enhance market potential in China, targeting both existing and new customers [10][61] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing uncertainty in global markets but expressed confidence in the company's pipeline for the second half of the year [6][30] - The company is preparing for less favorable outcomes by focusing on elements within its control to protect its bottom line and free cash flow [31][35] - Management remains optimistic about sustaining momentum and closing the year strongly despite macroeconomic volatility [35] Other Important Information - The company released its first 14 AI agents in the first half of the year, with plans to increase this number to 40 by year-end [19][20] - The non-IFRS cloud gross margin expanded by 1.8 percentage points to 75.2% [33] Q&A Session Summary Question: Insights on operating margin and EBIT growth for the second half - Management highlighted that the strong performance in operating profit was partly due to a €331 million improvement in stock-based compensation, which is expected to have easier comparisons in the first half [42][44] Question: Long-term sustainability of margin improvements - Management expressed confidence in maintaining operating leverage ratios of 80-90% for the coming years, despite some continuous adjustments in workforce [54][56] Question: Details on the Alibaba partnership and its impact - The partnership aims to enhance SAP's presence in China, focusing on both large enterprises and the upper mid-market [61][62] Question: Impact of transformation credits on cash flow - Transformation credits are amortized over the term of the deal, and while they may create initial cash conversion challenges, they are neutral over the life of the transaction [68][70] Question: Demand impact on CCB and cloud revenue - Management noted that while there is a slight deceleration expected, the pipeline coverage remains strong, and customers are responding positively to business cases [80][100]

Financial Data and Key Metrics Changes - In Q2 2025, cloud revenue rose by 28%, an increase of two percentage points compared to Q1 2025 [8][27] - Total revenue growth accelerated to 12%, reaching €9 billion [9][33] - Operating profit surged by 35%, reflecting improvements in the cost base due to transformation programs [9][32] - Current cloud backlog grew by 28% to €18.1 billion [27][33] - Non-IFRS cloud gross margin expanded by 1.8 percentage points to 75.2% [32] Business Line Data and Key Metrics Changes - The Cloud ERP suite continued to drive growth, achieving 34% growth in Q2, representing 86% of total cloud revenue [27][32] - Software licenses revenue decreased by 13% in Q2, aligning with the company's strategy to transition customers to cloud solutions [30] Market Data and Key Metrics Changes - Cloud revenue performance was particularly strong in the APJ and EMEA regions, with notable performances in Brazil, Chile, France, India, Italy, South Korea, and Spain [31] - The US public sector and manufacturing sectors experienced elongated sales cycles due to geopolitical uncertainties [28][30] Company Strategy and Development Direction - The company is focusing on product innovation and increasing productivity through business AI [7][25] - SAP aims to strengthen its portfolio with data and AI innovations while maintaining cost discipline [25][34] - The partnership with Alibaba is expected to enhance market penetration in China, targeting both large enterprises and the upper mid-market [10][60] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing uncertainty in global markets but expressed confidence in the company's pipeline for the second half of the year [7][34] - The company is preparing for potential less favorable outcomes by focusing on elements within its control to protect its bottom line [30] - Management remains optimistic about sustaining momentum and closing the year strongly despite macroeconomic volatility [34] Other Important Information - The company has released over 100 pre-built SAP managed data products, with plans to double that by year-end [21] - The internal adoption of business AI is expected to further enhance productivity and operational efficiency [22][24] Q&A Session Summary Question: Insights on operating margin and EBIT growth for the second half of the year - Management highlighted that the strong performance in the first half was significantly influenced by a €331 million improvement in stock-based compensation, which is expected to normalize in the second half [41][42] Question: Long-term sustainability of margin improvements - Management expressed confidence in maintaining operating leverage ratios between 80% to 90% for the coming years, despite potential fluctuations in expenses [52][53] Question: Details on the Alibaba partnership and its impact - The partnership aims to leverage Alibaba's presence in China to enhance SAP's cloud offerings, targeting both multinational companies and local tech firms [60][63] Question: Impact of macroeconomic factors on demand - Management noted that elongated deal cycles are primarily due to stricter cost controls in certain industries, but emphasized that the pipeline remains strong [97][100] Question: Cash flow and transformation credits - Management explained that transformation credits are amortized over the term of deals and do not significantly impact cash conversion in the long term [66][67]

Financial Performance - Cloud revenue reached €5130 million, a 24% increase, or 28% at constant currency (cc)[6] - Cloud ERP Suite revenue was €4422 million, up 30%, or 34% at constant currency (cc)[6] - Current cloud backlog increased to €18052 million, a 22% increase, or 28% at constant currency (cc)[6] - Total revenue increased by 9% to €9027 million, or 12% at constant currency (cc)[24] - Cloud and software revenue increased by 11% to €7966 million, or 14% at constant currency (cc)[24] - Non-IFRS operating profit increased by 32% to €2568 million, or 35% at constant currency (cc)[24] - IFRS earnings per share increased by 91% to €145, while Non-IFRS earnings per share increased by 37% to €150[29] - Operating cash flow increased by 71% to €2577 million, and free cash flow increased by 83% to €2357 million[29] Regional Performance - APJ cloud revenue increased by 33%, or 37% at constant currency (cc)[26] - Americas cloud revenue increased by 16%, or 22% at constant currency (cc)[26] - EMEA cloud revenue increased by 29%, or 30% at constant currency (cc)[26] Outlook - The company expects cloud revenue of €216 - €219 billion at constant currency (cc), a 26%-28% increase[31] - The company expects cloud and software revenue of €331 - €336 billion at constant currency (cc), an 11%-13% increase[31] - The company expects Non-IFRS operating profit of €103 - €106 billion at constant currency (cc), a 26%-30% increase[31]

SAP reported quarterly cloud and software sales that fell just short of estimates as tariff insecurities weighed on Europe’s most valuable company https://t.co/3O0fjlm00u ...

Core Insights - SAP reported strong second-quarter results with adjusted earnings of $1.70, surpassing the consensus estimate of $1.47 [1] - Quarterly revenue reached $10.23 billion, exceeding the Street estimate of $9.11 billion [1] Financial Performance - Current cloud backlog stands at $21.26 billion, reflecting a 22% increase, and a 28% increase at constant currencies [4] - Cloud revenue grew by 24%, with a 28% increase at constant currencies [4] - Revenue from the Cloud ERP Suite increased by 30%, and by 34% at constant currencies [4] - Total revenue rose by 9%, with a 12% increase at constant currencies [4] - IFRS operating profit was reported at $2.93 billion, while non-IFRS operating profit was $3.05 billion, marking a 32% increase and a 35% increase at constant currencies [4] Strategic Initiatives - CEO Christian Klein highlighted the impact of AI innovations, such as Joule and SAP Business Data Cloud, in strengthening the company's portfolio [3]

二季度非IFRS云/软件营收79.7亿欧元，分析师预期79.9亿欧元。 预计全年非IFRS云营收216亿-219亿欧元，非IFRS运营利润103亿-106亿欧元。 二季度非IFRS云营收51.3亿欧元，分析师预期51.7亿欧元。 德国思爱普Sap二季度非IFRS营收90.3亿欧元，分析师预期90.7亿欧元。 ...