SAP SE failed to provide much reassurance to investors today as it posted mixed second-quarter financial results, beating estimates on revenue but falling short on earnings, sending its stock lower after-hours.

The company reported revenue of €9.03 billion ($10.61 billion), up 12% from a year ago but short of the analyst target of €9.09 billion. On the other hand, its earnings before certain costs such as stock compensation of €1.50 per share surpassed the Street’s target of €1.43 pretty comfortably.

Cloud revenue for the period came to €5.13 billion, up 24% from a year ago but just shy of the analyst’s estimate of €5.18 billion. That’s an important number for the German software giant, as it remains laser-focused on transitioning customers to the cloud, so investors were likely disappointed by the miss.

Investors may have been more pleased with a special metric reported by SAP called Current Cloud Backlog, or CCB, which came in just above expectations. CCB refers to the amount of software revenue it expects to recognize in future from current contracts with customers. It rose 28% in the quarter, to €18.05 billion, just ahead of the Street’s target of €18.01.

All told, SAP delivered net income of €1.75 billion, up from €1.3 billion a year earlier. Operating profit, which is another key number for software companies, hit €2.57 billion, up from €1.94 billion a year ago.

SAP is one of Europe’s biggest multinational companies, specializing in enterprise application software. It’s widely known for its enterprise resource planning tools, and is regarded as the world’s biggest ERP vendor, though it also sells other systems, such as the S/4Hana database.

Chief Executive Christian Klein (pictured) hailed the company’s “outstanding results” in the quarter. “AI innovations such as Joule becoming available everywhere and for everything, and SAP Business Data Cloud as a powerful accelerator of AI, make our portfolio much stronger,” he insisted.

The company did not provide guidance for the third quarter, but it did reiterate its previous outlook for fiscal 2025, saying it’s still expecting total cloud revenue for the year of between €21.6 billion and €21.9 billion at constant currencies. That’s a significant gain from the previous year, when it delivered cloud revenue of €17.1 billion.

Like many other tech vendors, SAP has been concerned that U.S. President Donald Trump’s tariff policies may cause enterprises to cut back on information technology and software spending. However, SAP Chief Financial Officer Dominik Asam said today he was “cautiously optimistic” that the company might make it through the year relatively unscathed, though he said it will continue to keep a close eye on geopolitical developments and trends.

Constellation Research analyst Holger Mueller said: “SAP had a good quarter, and manages to grow – albeit nominally. The expected reductions in cloud backlog means SAP is seeing customers go live on the cloud and expanding capacity. The cloud revenue slowdown maybe part of the seasonality where first quarters are strong and the second and third quarters are affected by vacations in Europe. Interesting to see Spain having an outstanding quarter.”

Investors initially reacted badly to the results, and SAP’s American depository receipts were down more than 4% after-hours at one point, though they have since clawed back some of those losses. At the time of writing, the ADRs were down just over 2%.

Despite today’s blip, SAP’s ADRs have been a solid performer in the year to date, rising 24% and outperforming the broader S&P 500 Index, which has gained just over 7% in the same period.

Photo: SAP