SAP Expected to Reiterate Guidance in 2Q Results -- Earnings Preview

By Mauro Orru

SAP is scheduled to report results for the second quarter on Thursday. Here’s what you need to know:

REVENUE FORECAST: The German business-software company should post non-IFRS total revenue of 7.56 billion euros ($8.50 billion), according to a company-provided consensus. The forecast represents 5% growth on year. Cloud revenue should come in at EUR3.40 billion, up 22%.

OPERATING PROFIT FORECAST: SAP is expected to report 15% growth in non-IFRS operating profit to EUR1.93 billion on a 25.6% operating margin.

WHAT TO WATCH:

–GUIDANCE: SAP tweaked its guidance for the year in April to account for its Qualtrics stake divestment, and Citi and UBS analysts expect no changes to be made on Thursday. SAP is targeting non-IFRS operating profit at constant currencies between EUR8.6 billion and EUR8.9 billion, and cloud revenue at constant currencies between EUR14 billion and EUR14.4 billion.

–ARTIFICIAL INTELLIGENCE: As more and more companies pour money into artificial intelligence, Jefferies analysts say investors may question whether the technology warrants more investment from SAP. Citi’s Amit Harchandani expects AI will be a key topic during SAP’s earnings call.

Write to Mauro Orru at [email protected]; @MauroOrru94

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