By Mauro Orru

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

REVENUE FORECAST: The German business-software group should post total revenue of 9.05 billion euros ($10.49 billion), according to a non-IFRS consensus provided by the company. The forecast represents 9% growth year on year.

Analysts expect cloud and software revenue to have climbed 11% to nearly 7.96 billion euros, with cloud revenue up 24% to 5.16 billion euros, according to the consensus.

SAP analysts and investors tend to follow non-IFRS numbers, which exclude restructuring expenses as well as acquisition-related charges and aren't based on International Financial Reporting Standards.

OPERATING PROFIT FORECAST: The company behind the Concur travel and expense-management platform is expected to report 25% growth in operating profit to 2.43 billion euros, generating a 26.8% operating margin.

SAP shares have climbed nearly 50% 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.

WHAT TO WATCH:

-- GUIDANCE: Earlier this year, the company lifted its 2025 operating profit and sales guidance as it expects strong growth at its core cloud business to accelerate, aided by artificial intelligence. The company is forecasting non-IFRS operating profit between 10.3 billion euros and 10.6 billion euros, cloud revenue ranging from 21.6 billion euros to 21.9 billion euros and free cash flow of roughly 8 billion euros.

Citi analysts wrote in a note to clients that while SAP's revenue forecast has limited potential for another raise, the company could still upgrade its projections for operating profit. Baader Helvea's Knut Woller wrote in a separate research that he expects SAP to confirm its targets, though the operating profit forecast has room for an upgrade.

-- TARIFFS: Investors will be on the lookout for any remarks about macroeconomic and geopolitical uncertainty stemming from President Trump's tariffs as trade talks between the U.S. and the European Union continue.

Unlike tech companies that rely on hardware sales, SAP is relatively insulated from 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.

Finance chief Dominik Asam said in an interview in April that a trade war risked leading to a global recession that no company could go through unscathed. "It would be naive to believe that this would not affect us at all," he said at the time.

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

(END) Dow Jones Newswires

July 18, 2025 06:10 ET (10:10 GMT)

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