SAP cloud revenue misses estimates in ‘uncertain’ economy

SAP expects adjusted profit to be at the upper end of its forecast, which ranged from 10.3 billion euros to 10.6 billion euros

SAP, Europe’s most valuable software company, reported third-quarter cloud revenue that missed analysts’ estimates in a sign that trade disputes and a weaker economy are weighing on sales.

The measure amounted to 5.29 billion euros (S$6.1 billion) in the period on an adjusted basis, the Walldorf, Germany-based company said on Wednesday (Oct 22). Analysts projected 5.33 billion euros.

Investors have been focusing on SAP’s progress with cloud sales since chief executive officer Christian Klein pivoted the company away from selling traditional software licenses installed on local servers to subscription services.

Last quarter, SAP’s management warned that the global trade war and the US dollar’s weakness might affect clients’ decisions to invest.

On Wednesday, chief financial officer Dominik Asam said that the company has maintained momentum despite “an uncertain macroeconomic backdrop”.

SAP’s American depositary receipts slid about 4 per cent in late trading after the results were released. The company’s stock was little changed this year in Frankfort trading.

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SAP also updated its outlook for cloud revenue in 2025. It now expects the figure to be closer to the low end of a previously stated range of 21.6 billion euros to 21.9 billion euros when holding currency rates constant. At the bottom end, the sales would be up 26 per cent.

However, SAP expects adjusted profit to be at the upper end of its forecast, which ranged from 10.3 billion euros to 10.6 billion euros.

In the third quarter, SAP faced some delayed deals that were “impacted by tariff disruptions, with particular pressure coming from SAP’s manufacturing customer base”, TD Cowen analysts, including Derrick Wood, said in note before the results were published.

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An analysis of US government activities also showed weaker bookings for SAP in the third quarter, with US government cuts taking a toll, Wood said. BLOOMBERG