Analyst(s): Keith Kirkpatrick
Publication Date: July 23, 2025
SAP’s Q2 FY 2025 earnings report highlights strong cloud and ERP suite momentum, driven by rising adoption of AI-powered offerings and disciplined cost execution. The company maintained its full-year outlook despite macro headwinds, pointing to a resilient backlog and expanding profit margins.
What is Covered in this Article:
- SAP’s Q2 FY 2025 financial results
- Continued momentum in Cloud ERP Suite and strategic customer wins
- Expansion of AI agent portfolio and Business Data Cloud integration
- Margin improvement driven by restructuring and internal AI productivity gains
- Management’s FY 2025 guidance reaffirmation and key H2 watchpoints
The News: SAP SE (NYSE: SAP) reported its Q2 FY 2025 results, with total revenue rising 9% year-on-year (YoY; 12% in constant currency or cc) to €9.03 billion, which was 0.6% below consensus estimates. Cloud revenue grew 24% YoY (28% cc) to €5.13 billion, supported by a 30% YoY (34% cc) rise in Cloud ERP Suite revenue. The current cloud backlog reached €18.1 billion, up 22% YoY (28% cc). Non-IFRS operating profit rose 32% YoY (35% cc) to €2.57 billion, beating consensus by 6.0%, while non-IFRS operating margin expanded 500 basis points (bps) YoY to 28.5%. Non-IFRS earnings per share (EPS) came in at €1.50 (2.6% above consensus), up from €1.10 in Q2 FY 2024.
“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 ever stronger,” said Christian Klein, CEO of SAP SE. “Enterprise operations are about to enter a new era, and SAP is best positioned to benefit from that evolution.”
SAP Delivers 28% Cloud Growth, Reaffirms FY 2025 Outlook in Q2 FY 2025
Analyst Take: SAP turned in a solid Q2 for FY 2025, with strong growth in cloud revenue, faster ERP adoption, and solid margin control. Even with growing macroeconomic uncertainty, especially around tariffs, which are slowing down sales cycles in areas like the US public sector and industrial manufacturing, the company stuck to its full-year outlook. That shows confidence in its backlog, AI product lineup, and regional reach. SAP’s shift to the cloud is still on track, and the benefits from using its own AI and a leaner team are starting to show up in the numbers. Looking ahead to H2 FY 2025, SAP has good visibility, a strong backlog, and growing AI momentum, though it still has to navigate regional bumps and keep closing deals to meet full-year goals.
ERP Momentum and Strategic Wins Reinforce Cloud Transition Trajectory
Cloud ERP remains SAP’s main growth engine, jumping 34% YoY in constant currency, and making up 86% of total cloud revenue. This was the 14th straight quarter with over 30% growth, showing solid demand from both new customers and those already in the system. The RISE with SAP and GROW with SAP programs, which are specifically designed to help organizations migrate to SAP’s cloud-based offerings, continued to gain traction, bringing in names like Gardner White, EGYM, and NEBCO.
In China, SAP deepened its relationship with Alibaba, not just signing them as an ERP customer but also teaming up to co-sell in the region. Adoption is broad, with companies like L’Oréal, BMW, the German Armed Forces, and BAE Systems jumping on board. These wins help grow recurring revenue and push the cloud backlog to €18.1 billion, up 28% in cc. With still less than one-third of its on-premise installed base of approximately 30,000 clients migrated to cloud, SAP has ample runway to maintain this cloud-driven ERP expansion through FY 2026.
AI Agent Expansion and Business Data Cloud Cement Product-Led Growth Strategy
SAP is quickly building out its Business AI offerings, with more than half of Q2’s cloud orders linked to AI. So far, the company has launched 14 industry-specific AI agents to help with quoting, customer service, dispute handling, and more. By year-end, SAP expects to release 40 agents covering finance, supply chain, and HR, including capabilities like predictive planning and intelligent cash flow management. SAP Joule – its embedded AI copilot – will become universally available in Q3 FY 2025, integrated across SAP and non-SAP systems through WalkMe, and will be enhanced further via a partnership with Perplexity in Q4 FY 2025.
SAP’s Business Data Cloud (BDC) is also gaining ground and is already part of big deals with Adobe, Replay, and GSK. The company has released 100 pre-built data products and plans to double that by year-end. The speed of the BDC and AI rollout shows SAP’s push toward a smarter, more platform-based offering that sticks with customers longer and drives up contract value.
Operating Efficiency Gains and Internal AI Use Unlock Margin Upside
SAP’s non-IFRS operating margin rose by 500 basis points to 28.5% year over year, helped by both stronger revenue and lower share-based pay. The restructuring earlier this year – cutting 10,000 jobs – is starting to pay off. Using AI internally is also driving up efficiency. Joule, for example, has boosted output for some sales roles by up to 50%, reduced HR ticket times by 20%, and improved developer productivity by 30%. These internal results not only help the bottom line but also give SAP solid examples to show customers considering their AI offerings.
Guidance and Final Thoughts
SAP stuck with its full-year FY 2025 forecast, aiming for €21.6–21.9 billion in cloud revenue and €10.3–10.6 billion in non-IFRS operating profit, even with the uncertain global environment. Performance in H2 FY 2025 will be key, since about two-thirds of SAP’s yearly cloud revenue typically comes in then.
Management did call out longer sales cycles in sectors like US public and industrial manufacturing due to tariff uncertainty, which slowed backlog growth and could affect bookings in H2 FY 2025.
Currency swings are another concern – a 1% drop in the US dollar hits revenue and profit growth by 50 basis points. Still, sticking with guidance after a strong Q2 FY 2025 and with a clear backlog shows SAP’s stability in a tough enterprise IT market. Keeping up momentum into FY 2026 will depend heavily on how well it can monetize AI agents and grow BDC adoption.
SAP’s success is ultimately going to be tied to being able to sustain momentum around its migration of existing customers to its cloud-based offerings from its on-premise software. The company is extending carrots (enhanced AI functionality) and using sticks (deadlines for providing upgrades, maintenance, and support to on-premises customers) to drive migrations.
While SAP has not announced exact figures around the percentage of its customers that have migrated, industry consensus is that there are still a sizable number of customers that remain on-prem, representing an opportunity for SAP to continue to drive more cloud revenue in the future.
See the complete press release on SAP’s Q2 FY 2025 financial results on the SAP website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
Other insights from Futurum:
SAP Q1 FY 2025 Results Exceed Profit Forecasts as Cloud ERP Drives Growth
SAP Polishes and Reinforces Its AI Strategy at Sapphire
SAP and Databricks Launch SAP Business Data Cloud
Author Information
Keith Kirkpatrick is VP & Research Director, Enterprise Software & Digital Workflows for The Futurum Group. Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
