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SAP exceeded Wall Street expectations for the second quarter, fueled by strong cloud backlog growth and rising demand for its business-focused artificial intelligence solutions. The German software company also slightly increased its full-year adjusted operating profit outlook following two recent acquisitions, sending its U.S.-listed shares up 3.3% in after-hours trading.
The Walldorf-based enterprise software giant reported second-quarter revenue of 9.88 billion euros ($11.24 billion), topping analysts’ estimate of 9.85 billion euros. Non-IFRS earnings per basic share came in at 1.59 euros, while non-IFRS operating profit, measured in constant currency, climbed 9% year over year to 2.81 billion euros ($3.20 billion).
SAP’s cloud business continued to expand, with its current cloud backlog reaching 22.90 billion euros ($26.05 billion) at the end of the quarter, representing a 26% increase in constant currency from a year earlier.
Chief Executive Christian Klein credited the company’s performance to its Autonomous Enterprise strategy and growing customer adoption of its Autonomous Suite and Business AI Platform. He said businesses are increasingly choosing SAP’s AI tools to deliver accurate, compliant results using enterprise data and core business processes.
SAP’s earnings arrive as software companies face growing pressure from rapid advances in artificial intelligence. Investors have questioned whether generative AI and autonomous AI agents could replace many traditional software functions, including coding, workflow automation, and data analysis. In response, SAP has expanded its AI offerings, including its Joule assistant and Business AI platform, to strengthen its competitive position.
The broader software sector has struggled this year, with the iShares Expanded Tech-Software Sector ETF down 17.5% year-to-date, while the Philadelphia Semiconductor Index has surged 74.3% as investors favor AI chipmakers. SAP’s U.S.-listed shares have fallen nearly 40% so far this year despite the company’s improving fundamentals.
Looking ahead, SAP raised its full-year non-IFRS operating profit forecast in constant currency to 11.9 billion euros to 12.3 billion euros, up from the previous range of 11.8 billion euros to 12.2 billion euros. The updated guidance reflects the impact of recent acquisitions, including data platform provider Dremio and AI startup Prior Labs, which develops Tabular Foundation Models designed to enhance enterprise AI capabilities.
