By Mauro Orru

SAP shares slid Wednesday after the German business-software group said some clients were taking longer to sign up for its services amid uncertainty from President Trump's tariffs.

Chief Executive Christian Klein said in an earnings call that clients in the U.S. public administration and tariff-exposed industries in manufacturing were being cautious when it comes to spending on cloud services.

Unlike many tech companies that rely on hardware sales, SAP is relatively insulated from the direct impact of tariffs since it generates revenue from cloud and software services. However, the group is still vulnerable to economic uncertainty that could prompt some of its clients to cut spending, particularly those most exposed to tariffs like carmakers.

SAP shares in Frankfurt slid 4% Wednesday morning. However, the stock is up nearly 30% over the past 12 months. In March, SAP claimed the top spot as Europe's largest company by market value, dethroning Danish pharmaceutical giant Novo Nordisk.

SAP posted higher revenue and operating profit for the second quarter and backed its guidance for the year.

Reporting on a non-IFRS basis, the company behind the Concur travel and expense-management platform said total revenue rose 12% at constant currencies to 9.03 billion euros ($10.61 billion) from the prior-year period. Sales from SAP's core cloud business rose 28% to 5.13 billion euros.

Net profit climbed to 1.75 billion euros from 1.28 billion euros. Operating profit--a closely watched metric for software companies--rose 35% to 2.57 billion euros.

Analysts had forecast total revenue of 9.05 billion euros, cloud revenue of 5.15 billion euros and an operating profit of 2.43 billion euros, according to a non-IFRS consensus provided by the company.

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.

For the year, SAP continues to expect non-IFRS operating profit between 10.3 billion and 10.6 billion euros, cloud revenue ranging from 21.6 billion to 21.9 billion euros and free cash flow of roughly 8 billion euros.

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

(END) Dow Jones Newswires

July 23, 2025 04:00 ET (08:00 GMT)

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