SAP(US:SAP) Zhi Tong Cai Jing·2025-07-21 08:36Core Viewpoint - SAP is expected to report improved Q2 performance, driven by S/4HANA transformation, AI investments, and a long-term trend towards public cloud readiness, according to Morgan Stanley's channel survey [1][2]. Group 1: Q2 Performance Expectations - Morgan Stanley's survey of 30 SAP channel partners indicates a positive outlook for SAP's Q2 performance, with overall SAP business growth among surveyed partners at 1.1%, up from 0.7% in Q1 [2]. - European channel partners showed stronger performance with a growth rate of 2.0% in Q2, compared to 1.1% in Q1, while U.S. partners maintained a growth rate of 0.3% [2]. - Cloud subscription business growth rebounded to 2.6% in Q2, significantly higher than the 0.7% growth in Q1, indicating strong performance from both U.S. and European partners [2]. Group 2: Future Growth Projections - For Q3 2025, channel partners anticipate further acceleration in overall SAP business growth to 1.6%, with U.S. partners expecting a rebound to 1.8% and European partners slightly slowing to 1.5% [3]. - Despite the positive Q2 results, channel partners have lowered their full-year growth expectations for SAP from 5.4% to 3.2%, with specific reductions in license business growth from 3.7% to 1.1% and cloud subscription growth from 8.2% to 3.6% [3]. Group 3: Market Sentiment and Opportunities - Over 60% of channel partners' customers have yet to begin the S/4HANA transition, indicating significant conversion opportunities for SAP [4]. - Most channel partners remain optimistic about SAP's benefits from AI investments, highlighting the importance of continued investment in this area [4]. - Despite some mixed results in the Q2 survey, Morgan Stanley noted no substantial changes in customer behavior or transaction activity compared to Q1, suggesting stability in SAP's core business [3][4].