By Angela Palumbo
SAP shares were sliding on Tuesday after the enterprise software company reported mixed second-quarter financials.
SAP posted second-quarter earnings of 1.50 euros a share, which beat Wall Street estimates of EUR1.43 a share, according to FactSet, and increased from the EUR1.10 a share in the same period last year. Revenue of EUR9.03 billion just missed analyst expectations of EUR9.09 billion.
Cloud revenue in the quarter was EUR5.13 billion, rising 24% from the prior year but missing estimates of EUR5.18 billion. This is an important number for the German software company, which remains focused on artificial intelligence and transitioning clients to the cloud.
SAP also reiterated its 2025 financial outlook. The company continues to expect 2025 cloud revenue to be between EUR21.6 billion to EUR21.9 billion at constant currencies, which is above the EUR17.1 billion from the prior year.
"As we move into the second half, we remain cautiously optimistic, keeping a close eye on geopolitical developments and public sector trends," Chief Financial Officer Dominik Asam wrote in the earnings release.
There is concern that President Donald Trump's tariffs will cause enterprises to cut back on IT spending as costs rise. That would hurt software companies like SAP.
SAP's American depositary receipts were down 3.2% in premarket trading following the results. The ADRs have jumped 24% this year, outperforming the S&P 500's 7.3% gain. Investors have had confidence in the company's ability to grow revenue as it uses its AI and cloud offerings to improve efficiency and productivity in a time of economic uncertainty.
Alphabet and ServiceNow second-quarter earnings are on deck for July 23, while Microsoft is scheduled to report fourth-quarter financials on July 30.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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July 23, 2025 05:03 ET (09:03 GMT)
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