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SAP's Q2 non-IFRS EPS rose 37% to 1.50 euros, with total revenue up 9% to 9.03B euros
Cloud revenue rose 24%, driven by strong ERP Suite growth and robust global client adoption.
Non-IFRS operating profit rose 32%, fueled by cost controls and a completed transformation program.
SAP SE ((SAP - Free Report) ) reported second-quarter 2025 non-IFRS earnings of €1.50 ($1.70) per share, climbing 37% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.63.
Driven by robust cloud growth, disciplined cost control and expanding AI capabilities, SAP reported total revenues on a non-IFRS basis of €9.03 billion ($10.24 billion), representing a 9% year-over-year increase (up 12% at constant currency or cc). The Zacks Consensus Estimate was pegged at $10.37 billion.
SAP’s strategic investment in AI and data platforms is yielding positive results. Joule, SAP’s AI assistant, is becoming integrated into various applications, enhancing process efficiency, decision-making and user productivity. Additionally, SAP Business Data Cloud is poised to be a central platform for AI-driven operations. However, the company recognizes potential currency volatility in the future due to fluctuations in exchange rates.
Following the mixed results, shares declined 5% in the pre-market trading today. In the past year, the stock has soared 46.3% compared with the Zacks Computer – Software industry’s gain of 21.5%.
Image Source: Zacks Investment Research
Cloud Emerges as a Key Business Driver
The current cloud backlog — a key indicator of go-to-market success in cloud business — surged 22% (up 28% at cc) to €18.1 billion.
On a non-IFRS basis, the Cloud and software segment (88.2% of total revenues) registered revenues of €7.97 billion, rising 11% year over year (up 14% at cc).
Cloud revenues were €5.13 billion, up 24% year over year (up 28% at cc) on a non-IFRS basis, powered by a solid 30% growth (up 34% at cc) in Cloud ERP Suite revenues, reaching €4.42 billion. Software licenses and support revenues totaled €2.84 billion, which decreased 6% (down 4% at cc) year over year. Non-IFRS software license revenues of €0.19 billion declined 15% (down 13% at cc) year over year.
Services business (11.8% of total revenues) posted revenues of €1.06 billion, down 6% year over year (down 2% at cc).
Expanding Clientele Bodes Well
In the second quarter, organizations worldwide continued to adopt the “RISE with SAP” program to support their comprehensive business transformations. Notable adopters included Acron Aviation, Alibaba Group, Balluff, BALMAIN, Bell Food Group, Cementos Argos, Eberspächer Group, Ernsting's family, GSK, J-POWER, Linfox, Mannington Mills, Mercedes-AMG PETRONAS Formula One, NS Reizigers, Proximus Group, Replay, Sumitomo Rubber Industries, Synapxe, University Medical Center of the Johannes Gutenberg University Mainz and Votorantim.
In the reported quarter, Alivus Life Sciences, Biel City Administration, Iochpe-Maxion, Rico Auto Industries and Sinar Mas Mining went live on SAP S/4HANA Cloud.
“GROW with SAP” was implemented by Daoudata, EGYM, Gardner White Furniture, MCH Group, NEBCO and PwC to power their respective cloud ERP with innovations.
SAP secured significant customer wins across its solution portfolio, with new or expanded engagements from leading organizations such as Accenture, Adobe, BAE Systems, BMW Group, Brown-Forman, Delta, Deutsche Börse, Döhler, the German Armed Forces, German Federal Pension Insurance, Helaba, HENSOLDT, IBM, Infosys, Interroll, L'Oréal, LTIMindtree, MANN+HUMMEL, Metcash, SPIE, Standard Chartered and Zurich Cantonal Bank.
Major global brands across various industries, including Ahlstrom, BRF, Covestro, NTN, Techcombank and Zespri International chose SAP’s solutions.
SAP’s cloud revenue growth was especially strong in the APJ and EMEA regions and robust in the Americas, with standout performances from Brazil, Chile, France, India, Italy, South Korea and Spain.
Margin Details
Non-IFRS gross profit of €6.64 billion increased 10% from the year-ago quarter (up 13% at cc).
Non-IFRS Cloud gross profit increased 27% year over year to €3.86 billion (up 31% at cc). Non-IFRS cloud gross margin rose 1.9 percentage points to 75.2%.
SAP's non-IFRS operating profit rose 32% (up 35% at cc) to €2.57 billion, with a margin increase to 28.5%. The uptick was driven by improved operational efficiency from the effective implementation of the 2024 transformation program, along with reduced share-based compensation costs.
Balance Sheet & Cash Flow
As of June 30, 2025, SAP had cash and cash equivalents of €7.94 billion compared with €11.35 billion as of March 31, 2025.
In the second quarter, the company generated operating cash of €2.58 million, up 71% year over year. Free cash flow, a key metric of operational strength, rose 83% to €2.36 billion during the quarter.
In May 2023, SAP announced a repurchase program with an aggregate volume of up to €5 billion with expiry until Dec. 31, 2025. As of June 30, 2025, SAP repurchased 24,743,442 shares at an average price of €185.51, resulting in payouts of €4.6 billion under the program.
Additionally, SAP initiated a company-wide transformation program in January 2024 to enhance operational scalability and focus on key strategic growth areas. The program concluded in the first quarter of 2025, with total expenses of about €3.2 billion. Restructuring payouts included €2.5 billion in 2024, €0.6 billion in the first six months of 2025 and a remaining €0.2 billion expected to be paid during the rest of 2025.
2025 Outlook Reiterated
Despite a dynamic macroeconomic environment with geopolitical tensions and shifting public sector dynamics, SAP remains confident in its trajectory. It reaffirmed its 2025 financial outlook. For the year, management continues to anticipate cloud revenues in the range of €21.6-€21.9 billion, suggesting an increase of 26-28% at cc on a year-over-year basis from €17.14 billion at cc in 2024.
Cloud and software revenues are expected in the range of €33.1-€33.6 billion, with an increase of 11-13% at cc on a year-over-year basis from €29.83 billion at cc in 2024. Non-IFRS operating profit is projected in the range of €10.3-€10.6 billion, indicating a rise of 26-30% at cc on a year-over-year basis from €8.15 billion at cc in 2024.
Free cash flow is estimated to be around €8 billion in actual currencies, a sharp rise from €4.22 billion in 2024.
While current cloud backlog growth is expected to decelerate slightly in 2025, the scale and momentum in SAP’s cloud business provide strong fundamentals for sustainable expansion.
BlackBerry Limited ((BB - Free Report) ) reported first-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 2 cents. The figure beat the company’s estimate of a loss of 1 cent to breakeven. In the year-ago quarter, it reported a non-GAAP loss of 2 cents. The Zacks Consensus Estimate was pegged at breakeven.
BB’s shares gained 65% in the past year.
Simulations Plus, Inc. ((SLP - Free Report) ) reported third-quarter fiscal 2025 adjusted earnings of 45 cents per share, which expanded 66.7% year over year. The figure also surpassed the Zacks Consensus Estimate of 26 cents per share.
Shares of SAP have lost 61.5% in the past six months.
MSCI’s ((MSCI - Free Report) ) second-quarter 2025 adjusted earnings of $4.17 per share beat the Zacks Consensus Estimate by 0.24% and increased 14.6% year over year. MSCI's revenues rose 9.1% year over year to $772.68 million, missing the consensus estimate by 0.12%.
Shares of MSCI declined 1.4% in the past year.
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SAP's Q2 Earnings Beat Estimates, Revenues Miss, Stock Falls
Key Takeaways
SAP SE ((SAP - Free Report) ) reported second-quarter 2025 non-IFRS earnings of €1.50 ($1.70) per share, climbing 37% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.63.
Driven by robust cloud growth, disciplined cost control and expanding AI capabilities, SAP reported total revenues on a non-IFRS basis of €9.03 billion ($10.24 billion), representing a 9% year-over-year increase (up 12% at constant currency or cc). The Zacks Consensus Estimate was pegged at $10.37 billion.
SAP’s strategic investment in AI and data platforms is yielding positive results. Joule, SAP’s AI assistant, is becoming integrated into various applications, enhancing process efficiency, decision-making and user productivity. Additionally, SAP Business Data Cloud is poised to be a central platform for AI-driven operations. However, the company recognizes potential currency volatility in the future due to fluctuations in exchange rates.
Following the mixed results, shares declined 5% in the pre-market trading today. In the past year, the stock has soared 46.3% compared with the Zacks Computer – Software industry’s gain of 21.5%.
Image Source: Zacks Investment Research
Cloud Emerges as a Key Business Driver
The current cloud backlog — a key indicator of go-to-market success in cloud business — surged 22% (up 28% at cc) to €18.1 billion.
On a non-IFRS basis, the Cloud and software segment (88.2% of total revenues) registered revenues of €7.97 billion, rising 11% year over year (up 14% at cc).
Cloud revenues were €5.13 billion, up 24% year over year (up 28% at cc) on a non-IFRS basis, powered by a solid 30% growth (up 34% at cc) in Cloud ERP Suite revenues, reaching €4.42 billion. Software licenses and support revenues totaled €2.84 billion, which decreased 6% (down 4% at cc) year over year. Non-IFRS software license revenues of €0.19 billion declined 15% (down 13% at cc) year over year.
Services business (11.8% of total revenues) posted revenues of €1.06 billion, down 6% year over year (down 2% at cc).
Expanding Clientele Bodes Well
In the second quarter, organizations worldwide continued to adopt the “RISE with SAP” program to support their comprehensive business transformations. Notable adopters included Acron Aviation, Alibaba Group, Balluff, BALMAIN, Bell Food Group, Cementos Argos, Eberspächer Group, Ernsting's family, GSK, J-POWER, Linfox, Mannington Mills, Mercedes-AMG PETRONAS Formula One, NS Reizigers, Proximus Group, Replay, Sumitomo Rubber Industries, Synapxe, University Medical Center of the Johannes Gutenberg University Mainz and Votorantim.
In the reported quarter, Alivus Life Sciences, Biel City Administration, Iochpe-Maxion, Rico Auto Industries and Sinar Mas Mining went live on SAP S/4HANA Cloud.
“GROW with SAP” was implemented by Daoudata, EGYM, Gardner White Furniture, MCH Group, NEBCO and PwC to power their respective cloud ERP with innovations.
SAP SE Price, Consensus and EPS Surprise
SAP SE price-consensus-eps-surprise-chart | SAP SE Quote
SAP secured significant customer wins across its solution portfolio, with new or expanded engagements from leading organizations such as Accenture, Adobe, BAE Systems, BMW Group, Brown-Forman, Delta, Deutsche Börse, Döhler, the German Armed Forces, German Federal Pension Insurance, Helaba, HENSOLDT, IBM, Infosys, Interroll, L'Oréal, LTIMindtree, MANN+HUMMEL, Metcash, SPIE, Standard Chartered and Zurich Cantonal Bank.
Major global brands across various industries, including Ahlstrom, BRF, Covestro, NTN, Techcombank and Zespri International chose SAP’s solutions.
SAP’s cloud revenue growth was especially strong in the APJ and EMEA regions and robust in the Americas, with standout performances from Brazil, Chile, France, India, Italy, South Korea and Spain.
Margin Details
Non-IFRS gross profit of €6.64 billion increased 10% from the year-ago quarter (up 13% at cc).
Non-IFRS Cloud gross profit increased 27% year over year to €3.86 billion (up 31% at cc). Non-IFRS cloud gross margin rose 1.9 percentage points to 75.2%.
SAP's non-IFRS operating profit rose 32% (up 35% at cc) to €2.57 billion, with a margin increase to 28.5%. The uptick was driven by improved operational efficiency from the effective implementation of the 2024 transformation program, along with reduced share-based compensation costs.
Balance Sheet & Cash Flow
As of June 30, 2025, SAP had cash and cash equivalents of €7.94 billion compared with €11.35 billion as of March 31, 2025.
In the second quarter, the company generated operating cash of €2.58 million, up 71% year over year. Free cash flow, a key metric of operational strength, rose 83% to €2.36 billion during the quarter.
In May 2023, SAP announced a repurchase program with an aggregate volume of up to €5 billion with expiry until Dec. 31, 2025. As of June 30, 2025, SAP repurchased 24,743,442 shares at an average price of €185.51, resulting in payouts of €4.6 billion under the program.
Additionally, SAP initiated a company-wide transformation program in January 2024 to enhance operational scalability and focus on key strategic growth areas. The program concluded in the first quarter of 2025, with total expenses of about €3.2 billion. Restructuring payouts included €2.5 billion in 2024, €0.6 billion in the first six months of 2025 and a remaining €0.2 billion expected to be paid during the rest of 2025.
2025 Outlook Reiterated
Despite a dynamic macroeconomic environment with geopolitical tensions and shifting public sector dynamics, SAP remains confident in its trajectory. It reaffirmed its 2025 financial outlook. For the year, management continues to anticipate cloud revenues in the range of €21.6-€21.9 billion, suggesting an increase of 26-28% at cc on a year-over-year basis from €17.14 billion at cc in 2024.
Cloud and software revenues are expected in the range of €33.1-€33.6 billion, with an increase of 11-13% at cc on a year-over-year basis from €29.83 billion at cc in 2024. Non-IFRS operating profit is projected in the range of €10.3-€10.6 billion, indicating a rise of 26-30% at cc on a year-over-year basis from €8.15 billion at cc in 2024.
Free cash flow is estimated to be around €8 billion in actual currencies, a sharp rise from €4.22 billion in 2024.
While current cloud backlog growth is expected to decelerate slightly in 2025, the scale and momentum in SAP’s cloud business provide strong fundamentals for sustainable expansion.
SAP’s Zacks Rank
SAP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performances of Other Firms
BlackBerry Limited ((BB - Free Report) ) reported first-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 2 cents. The figure beat the company’s estimate of a loss of 1 cent to breakeven. In the year-ago quarter, it reported a non-GAAP loss of 2 cents. The Zacks Consensus Estimate was pegged at breakeven.
BB’s shares gained 65% in the past year.
Simulations Plus, Inc. ((SLP - Free Report) ) reported third-quarter fiscal 2025 adjusted earnings of 45 cents per share, which expanded 66.7% year over year. The figure also surpassed the Zacks Consensus Estimate of 26 cents per share.
Shares of SAP have lost 61.5% in the past six months.
MSCI’s ((MSCI - Free Report) ) second-quarter 2025 adjusted earnings of $4.17 per share beat the Zacks Consensus Estimate by 0.24% and increased 14.6% year over year. MSCI's revenues rose 9.1% year over year to $772.68 million, missing the consensus estimate by 0.12%.
Shares of MSCI declined 1.4% in the past year.