SAP SE (NYSE:SAP) stock fell 5.45% (As on July 23, 11:16:15 AM UTC-4, Source: Google Finance) after the company posted mixed second-quarter financial results, beating estimates on revenue but falling short on earnings. 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. In the second quarter, current cloud backlog grew by 22% to €18.05 billion and was up 28% at constant currencies. Cloud revenue was up 24% to €5.13 billion and up 28% at constant currencies. Cloud ERP Suite revenue was up 30% to €4.42 billion and up 34% at constant currencies. Software licenses revenue decreased by 15% to €0.19 billion and was down 13% at constant currencies. Cloud and software revenue was up 11% to €7.97 billion and up 14% at constant currencies. Services revenue was down 5% to €1.06 billion and down 2% at constant currencies. Operating cash flow in the second quarter was up 71% to €2.58 billion and free cash flow increased by 83% to €2.36 billion. The increase was mainly attributable to the higher profitability and the positive development of working capital (outside of restructuring related impacts), lower payouts for share-based compensation, lower restructuring payments, and lower income-tax payments.
SAP in the second quarter of FY25 has reported the adjusted earnings per share of €1.50, beating the analysts’ estimates for the adjusted earnings per share of €1.43. The company had reported the adjusted revenue growth of 12 percent to €9.03 billion ($10.61 billion) in the second quarter of FY25, missing the analysts’ estimates for revenue of €9.09 billion.
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. The company said it expects 2025 outlook adjusted operating profit to between €10.3B and €10.6B, unchanged from the prior guidance.
On the other hand, SAP announced that it had further extended the contract of CEO and chairman of the Executive Board Christian Klein to five years, until April 2030. In addition, the contract of Dominik Asam, CFO and member of the Executive Board, has been further extended for two years to March 2028.