German enterprise software giant SAP’s revenues were boosted by its key innovation areas: SAP Hana, mobile and cloud computing. When SAP released its full year and fourth quarter results, the company noted that its mobile business contributed more than €220 million (about U.S$293.5 million) to its software revenue, helping achieve its full year revenue target.
SAP stated that its in-memory solution Hana “had an outstanding quarter reaching nearly €200 million[U.S.$266.2 million] in software revenue in the fourth quarter and achieving almost €400 million [U.S.$532.5 million] for the full year.” The annual cloud revenue run rate is nearly €850 million (U.S.$1.13 billion).
SAP showed confidence that Hana, cloud and mobile will help the company reach its 2015 revenue goal of more than €20 billion (U.S.$26.6 billion). In fact, over the last few months, SAP has worked to power these solutions. In October, SAP unveiled its plans for SAP Hana Cloud, a next-generation cloud platform based on in-memory technology, and earlier in January, it announced the availability of SAP Business Suite powered by Hana. This recent launch could represent a milestone in SAP’s strategy, since the company aims to provide an integrated family of business applications that captures and analyzes transactional data in real time on a single in-memory platform.
“Hana is our fastest growing product, growing at a rate we’ve never seen before,” said Diego Dzodan, president of SAP Brazil in a meeting with journalists in São Paulo. He made it clear that Hana is as important for SAP as the launch of enterprise resource planning (ERP) software SAP R3—which made SAP synonymous with ERP.
SAP’s CFO, Werner Brandt, noted in the results report that SAP has achieved €5 billion (U.S.$6.7 billion) in full year, non-IFRS software and cloud subscription revenue, an increase of 21%. Brandt added that the company is confident that it will continue its double-digit growth momentum in 2013 and further improve its profitability.
According to the report, SAP posted 12 consecutive quarters of double-digit growth in non-IFRS software and software-related service revenue. Check out the numbers:
Some analysts raised concerns about operating profit and margins. SAP officials said that both were impacted by SAP’s continued investments in its global go-to-market activities and cloud business.
For 2013, the company said it expects its full year, non-IFRS software and cloud subscriptions revenue to increase in a range of 14% to 20% at constant currencies. In 2012, it was €5.00 billion (U.S.$6.7 billion). The 2013 full year, non-IFRS cloud subscription and support revenue contributing to this growth is expected to be around €750 million (U.S.$1 billion) at constant currencies, more than the €342 million(U.S.$456.3 million) of 2012.
Another highlight of SAP’s results was the revenue increase in growth markets. The report states that EMEA region delivered “impressive results” in light of the continued uncertain market environment and the Americas region had a solid software revenue performance, when considering a tough year-over-year comparison.
In the Brazilian market, SAP posted a 21% growth in software revenue, while the total revenue of the subsidiary grew 20%. The company does not release the total numbers separated out by countries or regions. Diego Dzodan noted that following the global trend, sales of solutions related to innovation areas grew 77% in Brazil last year.
Among the highlights from Brazil, SAP posted a 122% increase in indirect sales, and the company expects that by 2015, 40% of total subsidiary revenue will come from channel sales. Currently, the rate is 28%.
When asked about potential partnerships with telecom companies, such as SAP has with Chile with Entel and in Colombia with UNE, Sandra Vaz, SAP vice president of sales, ecosystem and channels, explained that such partnerships are indeed in SAP’s pipeline. “Telecoms have a huge ecosystem of clients, and we are working with them, so they can include Business One [SAP ERP for SME] in their portfolios.”
In Brazil, SAP is focusing on five key areas for 2013: innovation, Hana, SAP design thinking, small and medium enterprises, and geographic expansion. Dzodan said that SAP may either open new offices or expand existing ones. The goal is to attend to customers with local offices and meet the demand for SAP solutions, which according to Dzodan, has increased.