Shares of the German software company SAP climbed nearly 7% on Friday after the company reported strong performance in its cloud business and revenue slightly above expectations for the quarter ended June 30.
Key figures and performance
- The cloud backlog — a key forward indicator for management’s expected revenue — rose 26% year-over-year on a constant currency basis to €22.93 billion in the second quarter, beating analysts’ 24% growth forecast.
- Total revenue increased 11% year-over-year to €9.88 billion, marginally above the €9.85 billion analyst consensus.
- Following the report, SAP’s stock jumped about 7%, partially reversing a roughly 40% decline experienced since the start of the year.
Management comments and strategy
Chief Executive Officer Christian Klein said customers choose SAP systems to build precise, compliance-aware AI solutions on top of the company’s core business processes and data. At the same time, management revised its full-year operating profit guidance downward.
Guidance change and acquisition impact
SAP said the acquisitions of Prior Labs and the Dremio data platform will cause an approximately €100 million one-off negative effect. As a result, it trimmed its operating profit guidance from the prior range of €11.9–12.3 billion to €11.8–12.2 billion.
Analysts’ warnings and risks
Oppenheimer analysts noted that while the growth rate of the cloud backlog is convincing, uncertainty around the outlook is increasing. They pointed out that SAP is currently assuming a de-escalation of tensions with Iran, and expressed concern that larger deals could be delayed in the second half as companies ramp up AI spending.
Why it matters
An expanding cloud backlog is a positive signal for future revenue, but the identified risks — geopolitical uncertainty and the timing of corporate AI investments — could affect actual deal closures and second-half results. The stock’s immediate rise reflects investor optimism about the quarter, while the narrower guidance and analysts’ cautions underscore potential headwinds ahead.
