[EARNINGS PREVIEW] SAP (SAP GY) earnings due on 23 July; focus on cloud rev. growth and potential headwinds from geopolitics

SAP (SAP GY) is expected to report Q2 2026 results on 23 July 2026 @ 21:05 BST / 16:05 EDT. The analyst conference call will then begin at 22:00 BST / 17:00 EDT.

Overview:

SAP shares have moved lower YTD, currently posting losses in excess of 30%. Pressure which comes after a) very disappointing cloud forecasts, b) global software sell-off, amid recent AI advances, c) macro/geopolitical headwinds.
As a reminder, shares fell c. 15% after reporting Q1 results. Headline EPS marginally topped expectations, whilst Revenue was short. Perhaps more importantly was the very disappointing cloud revenue forecast; CFO Asam said it was “a bigger-than-anticipated slowdown”.
Headline metrics aside, focus will be on cloud revenue growth and cloud backlog growth. Any commentary on early signs of companies scaling back capex on software services, in favour of hardware (AI / memory) will also be key. On a macro level, SAP had previously been impacted by the war in the Middle East. The conflict has appeared to have intensified in recent weeks, which may further dampen outlook.
Earlier this month, Bloomberg reported that SAP had frozen most new hiring and attempted to reallocate funds towards AI development. Investors will be attentive to whether these recent cost measures have yielded any success, particularly on profit margins. JPMorgan questioned the effectiveness of such a move, noting that the Co. needs to make significant investments to remain competitive. Analysts write “the question is whether it will give the company enough room to make the necessary investments to remain competitive and deliver the level of margin expansion built into the consensus”.

Expectations (EUR):

Revenue: 9.695bln (prev. 9.03bln)
EPS: 1.77 (prev. 1.50)
Cloud Revenue Growth: 22%
Cloud Backlog Growth: 23-24%

Analyst Commentary:

Bank of America believes demand remains solid, but uncertainty is growing; the firm writes that customers have become more cautious in H1, with elongated decision cycles due to macro uncertainty. The firm also highlights that SAP customers are largely adopting AI, without the use of SAP Business AI.
Citi maintained its Buy rating on SAP heading into Q2 results. The firm writes that it expects cloud bookings to top expectations, albeit only modestly. Nonetheless, the firm warns that “longer sales cycles should keep management’s prudence in place for 2026”.
KeyBanc reiterated its Overweight rating on SAP, with a PT of EUR 235/shr (vs current 134/shr). However, the firm did not provide positive commentary heading into Q2 results; analysts suggest that SAP is likely to suffer from the uncertain macro backdrop and “stacking disruptions”. Analysts are more optimistic over the long term, given platform stickiness.

For large-cap software names carrying a sharp prior-quarter miss, the pattern into the next print is well established: the guide matters more than the quarter, and the stock trades on the forward cloud number and backlog rather than headline EPS. That was the mechanism behind the prior post-results drop here, where a revenue shortfall was amplified by a cut to cloud revenue expectations, and a repeat or stabilisation of that guide is the variable most likely to set the opening reaction. The split worth drawing is between demand commentary and cost commentary: elongated sales cycles and customer caution speak to the top line, while the reported hiring freeze and AI reallocation speak to margin delivery, and management framing on whether cost restraint is compatible with competitive AI investment is where sell-side scepticism has concentrated. Geopolitical exposure to the Middle East has already been flagged by the company itself as a headwind in a prior quarter, so any repeat reference carries more weight than fresh disclosure. Deeper YTD underperformance also lowers the bar asymmetry that has historically characterised crowded software de-ratings: modest beats can produce outsized relief moves when positioning is washed out. The follow-ons are the call's language on full-year cloud guidance, backlog conversion, and whether peers reporting in the same window corroborate the elongated-cycle narrative.