SAP warns of ‘extended approvals’ for customer spending • The Register

SAP is warning of uncertainty in global markets after reporting revenue of €9 billion ($10.55 billion) for caledar Q2, up 9 percent year-on-year.

Announcing its latest results for the three months ended June 30, the European application powerhouse said operating profit had risen to €2.5 billion, up 32 percent on the same quarter in 2024.

However, it said global economic uncertainty is affecting the business, particularly in the growth of its current cloud backload, a performance measure reflecting contractually committed future revenue to be recognized over the next 12 months, first introduced in 2020.

Speaking to investors, CEO Christian Klein said: “In a few individual industries impacted by uncertainty, we are seeing extended approval workflows on the customer side, for example, in the US public sector and among manufacturers affected by tariffs.”

A new tariff regime was introduced by US president Donald Trump in April. Although a number of deals to reduce declared tariffs are on the cards — including one with Japan — a number are outstanding, including a deal with the world’s richest trading bloc, the EU.

“We clearly said already at the beginning of the year that we always expected a slight deceleration of current cloud backlog. What we said at beginning of the year is now actually also becoming a reality and was planned in,” added Klein, pointing out that SAP’s fourth quarter successes meant it was starting from a high base.

He said there was some uncertainty in the forecasts, which while they contained “some megadeals” there were a few sectors “especially like US public sector [and] manufacturing industries where customers are impacted by tariffs.”

Klein also pointed out that selling to the US public sector had become “a bit more difficult with DOGE,” the Department of Government Efficiency charged with making cuts to US public spending.

Craig Wentworth, research director at TechMarketView, said SAP had done well over the last year owing to its sustained cloud acceleration and margin expansion. However, he noted caution around geopolitical developments and public sector trends, which could temper good fortune as the second half of the company’s fiscal year plays out. ®