By Mauro Orru

SAP shares climbed after the German business-software group logged strong revenue figures in the second quarter, reassuring investors that growth at its cloud business remains healthy despite fears of disruption from artificial intelligence.

The company behind the Concur travel and expense management platform said its current cloud backlog--a closely watched measure of sales that SAP expects over the coming year based on existing contracts--grew 26% at constant currencies, above expectations of around 24%.

"We were expecting CCB to beat the 24% consensus bar, but the 26% result is even stronger than our expectations," Jefferies analysts wrote in a note to clients. Meanwhile, Deutsche Bank's Johannes Schaller said a strong CCB was more evidence that growth should accelerate next year.

SAP shares in Frankfurt gained more than 6% in midmorning trading Friday. However, the stock is down about 35% since January, reflecting caution from some investors who started to question whether rapid advancements in AI could replace the services for which software-as-a-service, or SaaS, companies charge clients. Those fears triggered a major selloff in software stocks dubbed the "SaaSpocalypse" earlier this year.

SAP has been an early adopter of AI, with Chief Executive Christian Klein saying the technology could boost employee productivity and help clients with data analysis and automating processes across finance, human-capital management, procurement and other business functions.

The group recently unveiled a new software suite bringing its data, cloud, AI and automation features under one roof. Klein said Friday that its Autonomous Suite as well as Business AI Platform showed strong momentum.

Reporting on a non-IFRS basis, the German business-software company said late Thursday that total revenue increased 11% at constant currencies to 9.88 billion euros ($11.24 billion) from a year earlier. Sales from SAP's cloud business grew 24% to 6.28 billion euros. Analysts had forecast total revenue of 9.85 billion euros and cloud revenue of nearly 6.26 billion euros, according to a non-IFRS consensus provided by the company.

The group said its cloud business had an outstanding performance in Brazil, France, Germany, Italy, India, South Korea and Spain, while Australia, Singapore and the U.S. also fared well.

SAP's net profit increased to 1.83 billion euros from 1.75 billion euros. Operating profit--a closely watched metric for software companies--rose to 2.74 billion euros from 2.57 billion euros, generating a 27.8% operating margin. Analysts had forecast an operating profit of 2.88 billion euros and an operating margin of 29.3%, according to the non-IFRS consensus.

SAP, like other European software companies, presents its figures as two sets of numbers. One set is based on the International Financial Reporting Standards--an international accounting method that seeks to provide a global reporting standard--though analysts and investors tend to follow SAP's non-IFRS numbers, which exclude restructuring expenses and acquisition-related charges.

The company slightly lowered its non-IFRS operating profit guidance for the year to a range between 11.8 billion euros and 12.2 billion euros from 11.9 billion euros and 12.3 billion euros previously, citing the impact of the Dremio and Prior Labs acquisitions. It continues to expect cloud revenue of 25.8 billion euros to 26.2 billion euros and free cash flow of roughly 10 billion euros.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

July 24, 2026 04:21 ET (08:21 GMT)

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