SAP Targets 1 Billion Users And €20 Billion In Sales By 2015
April 30, 2012 Timothy Prickett Morgan
The top brass at German application software giant SAP are just as competitive in the sport of sailing with rival Oracle as they are in the application software business–and are picking up steam in the cloud and databases businesses, too.
SAP does not have as large a business on the IBM i platform as Oracle or Infor, but it does nonetheless have a few thousand key customers who are running its various ERP stacks on the progeny of the AS/400.
Last week, SAP reported its financial results for the first quarter of 2012 ended in March, and overall sales at the German giant rose 11 percent, to €3.35 billion. Software license sales were up a modest 4 percent to €637 million, while support revenues were up 14 percent to €1.95 billion. In the wake of its $3.4 billion acquisition of cloudy human capital management software peddler SuccessFactors last December, SAP has reorganized the way it reports its sales and now break out SuccessFactors and prior SAP hosted systems (such as Business ByDesign) as a separate category.
It might interest you to know that despite all that cashish that SAP shelled out for SuccessFactors, the cloud-related business at SAP only came to €29 million in the first quarter. But that is a lot more than the €4 million it had in the year-ago period–a factor of 7.25 times more, to be precise–and this cloud business is growing at a pace of 69 percent for just the SuccessFactors portion. If the growth holds for five years or so, that will make it a €1 billion business for SAP for just cloudy HCM wares. And if it expands into other areas, it might take a lot less time to break through €1 billion.
SAP took in €597 million in consulting revenues and another €134 million in other professional services sales in the quarter, with these two services areas combining for €731 million, up 5 percent.
When the bills were all paid at the end of the quarter, including taxes, SAP was able to bring €444 million to the bottom line, up 10 percent from a year ago. So growth in sales and profits are almost in synch. SAP ended the quarter with €5.3 billion in cash, €3.39 billion in deferred income, and a desire to build out its cloud software business and to start putting more pressure on Oracle by peddling its HANA in-memory database across more SAP modules and by supporting its acquired Sybase ASE database as an alternative to Oracle’s 10g and 11g databases underneath its code.
The company did say that the HANA in-memory database biz accounted for €28 million and is on target to reach at least €320 million for the year, double from last year; the HANA pipeline has grown by 50 percent in this quarter alone. Mobile software sales (mostly from the Sybase acquisition) had €21 million in revenues and has a target of €220 million. SAP did not provide sales targets for its Sybase database and cloud businesses as separate items.
Bill McDermott, co-president at SAP, said in a conference call with Wall Street analysts that SAP expected to be able to grow its software sales by between 15 and 20 percent at constant currency for the full 2012 year, with software support and related services rising 14 to 16 percent. That’s all the guidance SAP is giving, and it is not talking about how the second quarter is going. Well aside from co-president Jim Hagemann Snabe saying that SAP was confident that by 2015 it would have 1 billion people using its software and would be a €20 billion company with 35 percent margins.