SAP Q2 Earnings Preview: Analysts Expect Strong Growth

SAP is set to announce Q2 earnings with expected 50.9% EPS growth to $1.66 and 27.6% revenue growth to $10.58 billion. Analysts predict a potential 7.93% upside based on average one-year price targets, while GuruFocus estimates a 31.61% downside based on GF Value. Historically, SAP has surpassed EPS and revenue estimates, raising investor expectations.

SAP SE (SAP) is scheduled to announce its Q2 2025 earnings results on Tuesday, July 22nd, after market close. Analysts are anticipating a significant 50.9% year-over-year (YoY) growth in earnings per share (EPS) to $1.66, with revenue expected to increase by 27.6% to $10.58 billion. This sets the stage for potentially high investor expectations, with analysts predicting a 7.93% upside based on average one-year price targets, while GuruFocus estimates a 31.61% downside based on GF Value [2].

Historically, SAP has consistently exceeded EPS and revenue estimates. Over the past two years, the company has beaten EPS estimates 88% of the time and revenue estimates 100% of the time. In the last three months, EPS estimates have seen six upward revisions and one downward revision, with revenue estimates experiencing one upward revision and ten downward revisions [3].

The company's ongoing cloud transformation, AI-driven growth strategy, and enterprise software performance are likely to have influenced its second-quarter performance. SAP's shift to the cloud, led by its flagship RISE with SAP and Grow with SAP solutions, has been a major catalyst. Cloud revenues rose 27% year-over-year to €4.99 billion in the first quarter, supported by a robust 34% growth in Cloud ERP Suite revenues [2].

SAP's increasing emphasis on Business AI is expected to be a key growth driver through 2027. The company will introduce flexible licensing models that allow customers to easily move to the latest cloud-based versions of its complete business suite without needing separate negotiations. Looking ahead, SAP intends to broaden its "RISE with SAP" offering by incorporating a full set of business transformation tools, including LeanIX, Signavio, and WalkMe [2].

The company's strong performance in the first quarter suggests that it is well-positioned to continue its growth trajectory. However, SAP may face revenue fluctuation due to long sales cycles, complex licensing, and changes in customer budgets. Additionally, the U.S.-China trade war and tariffs could adversely impact software license sales. SAP's reliance on cyberspace also makes it vulnerable to cybersecurity breaches, which could harm its reputation and lead to costly legal issues [2].

SAP's proven model predicts an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. SAP currently has an Earnings ESP of +0.05% and a Zacks Rank #3 [2].

Overall, investors are anticipating strong earnings growth from SAP, with a potential upside based on historical performance and analyst estimates. However, the company faces several challenges that could impact its financial results.

References:
[1] https://www.ainvest.com/news/autoliv-2025-q2-earnings-strong-performance-26-9-eps-growth-2507/
[2] https://finance.yahoo.com/news/saps-q2-earnings-horizon-investors-135500362.html
[3] https://seekingalpha.com/news/4469418-sap-se-q2-2025-earnings-preview