SAP (SAP) Q2 2025 earnings summary

Executive summary

• Q2 2025 delivered strong results with total revenue of €9.03 billion, up 9% year-over-year, and cloud revenue up 28% year-over-year, driven by robust Cloud ERP Suite growth and major customer wins including Alibaba, GSK, and BMW.

• Operating profit more than doubled year-over-year to €2.46 billion (IFRS), reflecting cost discipline, productivity gains from AI adoption, and lower restructuring costs.

• Free cash flow surged 83% to €2.36 billion, supported by higher profitability and improved working capital.

• Cloud backlog reached €18.1 billion, up 28% year-over-year, with significant adoption of Business AI and Business Data Cloud solutions.

• The company maintains a solid pipeline for the second half, despite macroeconomic and geopolitical uncertainties impacting sectors like U.S. public sector and manufacturing.

Financial highlights

• Cloud revenue rose 28% year-over-year, with Cloud ERP Suite growing 34% and representing 86% of total cloud revenue.

• Current cloud backlog reached €18.1 billion, up 28% year-over-year.

• Total revenue was €9.03 billion, up 9% year-over-year, with predictable revenue share increasing to 86%.

• Non-IFRS cloud gross margin expanded by 1.8pp to 75.2%, driving cloud gross profit up 31%.

• IFRS operating profit increased to €2.46 billion, aided by a €0.6 billion reduction in restructuring expenses; non-IFRS operating profit rose 35% to €2.6 billion.

• Operating cash flow grew 71% to €2.58 billion, and free cash flow increased 83% to €2.36 billion.

• Basic IFRS EPS was €1.45, and non-IFRS EPS was €1.50.

Outlook and guidance

• 2025 outlook remains unchanged: cloud revenue expected at €21.6–21.9 billion (+26–28% at constant currencies), with focus on disciplined execution, cost control, and protecting bottom line and free cash flow.

• Pipeline coverage for H2 matches last year’s strong performance, but conversion rates depend on macro factors and deal closures.

• Management expects continued margin optimization through AI-driven productivity and ongoing workforce transformation.

• Currency headwinds expected to impact reported growth rates by 3–5pp for the remainder of 2025.