What To Expect From SAP’s Q2 Results

by Trefis Team
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Software giant SAP (NYSE: SAP) is scheduled to announce its second quarter earnings on Thursday, July 19. The market expects the company to deliver strong growth across business segments, particularly in its core businesses – Enterprise Resource Planning (ERP) and Supply Chain Management (SCM). Further, the company’s renewed focus on expanding its presence in the Internet of Things (IoT) domain is likely to boost its top line growth in the near term. Additionally, SAP recently announced its plans to double its Customer Relationship Management (CRM) software business, which could drive significant value in the long term.

We currently have a price estimate of $120 per share for SAP. You can view our interactive dashboard for SAP and modify the revenue and earnings to visualize the impact of any changes on the company’s valuation.

Key Trends To Watch For In Q2 Results

  • Continuing the momentum gained in the previous few quarters, SAP’s Cloud business is expected to be the key driver of its Q2 revenue growth. With more than 80% of its customers still using its older Cloud platform, it is likely to witness a strong jump in new bookings due to increased adoption of the S/4HANA platform. Additionally, other high-growth solutions such as SAP Cloud platform, SAP Analytics Cloud, SAP Leonardo and Digital Supply Chain Management solutions will further complement the company’s top-line growth for the quarter.
  • Similar to the last quarter, SAP’s cloud and software margins are likely to remain subdued due to the negative impact of a shift in the company’s revenue mix between cloud and on-premise business.
  • The company expects its fiscal 2018 revenue to be in the range of €24.8 billion − €25.3 billion in constant currency terms. This amounts to a growth of nearly 7% on a year-on-year basis.

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