SAP confident of crossing $26 billion in revenue by 2015
- 24 January, 2012 22:00
SAP said Wednesday that it had exceeded its guidance for revenue and profit in 2011, its best year in its 40-year history, and was positioned to exceed its revenue target of €20 billion (US$26 billion) in 2015.
The company said it expects full-year 2012 non-IFRS (International Financial Reporting Standards) software and software-related service revenue to grow in the range of 10 to 12 percent at constant currencies, with its proposed acquisition of SuccessFactors contributing up to two percentage points.
SAP said it had significant momentum going into 2012.
The $3.4 billion acquisition of SuccessFactors, announced in December, will bring to SAP a range of cloud-based human resources software as well as expertise in the cloud market. The company expects to close the transaction in the first quarter.
The business software company reported that revenue for the fourth quarter ended Dec. 31 was €4.5 billion, up by 11 percent from the same quarter in the previous year, according to IFRS.
Net profit in the quarter was up a whopping 176 percent to €1.2 billion, as in the same quarter of 2010 it had included a provision for the lawsuit Oracle filed against it and its former subsidiary TomorrowNow.
The provision was reduced after the judge in the case overturned the $1.3 billion jury award Oracle won, and gave Oracle the choice of accepting $272 million or seeking a new trial. Oracle has not yet communicated its decision.
Software and software-related revenue in the quarter was €3.7 billion, up 14 percent from a year earlier. All figures are preliminary and unaudited, the company said.
The company's profits in the quarter were affected by SAP's investments in "go-to-market activities", including adding some 500 sales and marketing staff over the previous quarter.
SAP saw double-digit software revenue growth in all regions during 2011. The company said that revenue for the full year was €14.2 billion, up by 14 percent from the previous year. Net profit was also up 90 percent to €3.4 billion, again benefiting from the adjustments relating to the provision for the TomorrowNow litigation.
The revenue and profit figures for the fourth quarter and full year 2011 include revenue and profits from SAP's July, 2010 acquisition of Sybase.
HANA, an in-memory database platform the company is placing its long-term bets on, and its mobile initiatives contributed €270 million in the year. The company had earlier forecast revenue of €100 million from HANA for the year.
HANA is "a category killer," co-CEO Bill McDermott said during a conference call. While initially aimed at analytic workloads, HANA will eventually be ported to transactional applications such as SAP's Business Suite, which many customers now run on top of Oracle's database.
McDermott alluded to Oracle CEO Larry Ellison's recent claim that Oracle's Exadata machine was shown to be faster than HANA. "When we go hunting for these mysterious accounts, we can't find them," he said. McDermott then showed a slide depicting a variety of customers who have adopted HANA.
Moving forward, SAP plans to compete in five areas, namely applications, analytics, mobility, databases and the cloud, co-CEO Jim Hagemann Snabe said during the call. All five "will be powered by HANA," he added.
Right now, it takes a couple of weeks to get a HANA system up and running, Snabe said. "We think that can get down to two days."
Other talk during the call centered on the SuccessFactors deal, which has yet to close.
SAP is planning to devote a "high-octane" sales force to SuccessFactors in order to sell the software to its existing customer base, McDermott said.
SAP will hold a special event to explain its overall cloud plans after the SuccessFactors deal is completed, Snabe said. "We think we can offer collaboration as a service, content as a service."
Along with its Business ByDesign ERP (enterprise resource planning) suite and various on-demand applications aimed at specific lines of business, SAP intends to rack up $2 billion in cloud-based software revenues by 2015, according to Snabe.
Some 90 percent of ByDesign customers are new to SAP, Snabe said. SAP has also managed to land ByDesign deals involving hundreds of users, which are more profitable, he said.