SAP Cloud Revenue Beats Estimates as Legacy Support Nears Cutoff

Visitors at the SAP SE booth at the Hannover Messe 2025 trade fair in Hannover, Germany.

SAP SE’s cloud revenue grew at a faster pace than analysts expected as customers move away from on-premises licenses ahead of the company’s deadline to halt support for legacy software.

Cloud revenue grew 24% in constant currencies to €6.28 billion ($7.1 billion) in the second quarter, the Walldorf, Germany-based company said Thursday in a statement. That compares with the average analyst forecast of €6.26 billion, according to data compiled by Bloomberg.

Europe’s largest software company is facing threats to its business from artificial intelligence as it pushes clients to migrate their accounts from locally installed programs to new products in the cloud. That transition is often time-consuming and expensive, and has been further complicated by the war in the Middle East, which has upended supply chains of the oil and gas industry and others that are important to SAP.

Customers are running out of time to switch systems, with regular support for the old software to end in 2027 and extended maintenance only available for higher fees. Chief Executive Officer Christian Klein said in January that geopolitical uncertainty was slowing negotiations for cloud deals.

Klein is also working to push the adoption of SAP’s own AI tools while cutting costs. He announced two reorganizations this year and personally took on oversight of AI development in a bid to focus on the emerging technology, which investors worry will undermine software companies’ business. SAP shares have fallen 38% so far this year.

Read more: SAP Restricts Hiring, Travel to Fund ‘Significant’ AI Push

The added emphasis on AI has yet to lead to growth, according to TD Cowen analysts including Derrick Wood. One large customer told the analysts that SAP’s AI products remain “immaterial to bookings,” they wrote in a note before earnings.

SAP’s business is exposed to longer deal cycles due to the war, according to Bloomberg Intelligence analyst Josh Christensen. “The company’s sales are more exposed to EMEA (representing over 40% of revenue) than other large-cap enterprise software vendors, making it more vulnerable to disruption in the region,” Christensen wrote before the results.

SAP previously forecast 2026 cloud revenue of €25.8 billion to €26.2 billion.