SAP Stamps Its Mark On 2011

January 30, 2012 Dan Burger

When you’re the world’s largest business applications vendor, your financial report card stands as a bellwether for the IT industry. Of course, economic uncertainty adds to the drama and brings an even larger crowd to the stage. Last week, SAP delivered a powerful performance by announcing it beat all expectations for not only the final quarter of 2011, but for the entire year as well.

SAP may not be the largest IBM i software provider in terms of customer base or revenue stream, but there are several thousand customers, and some of the largest IBM i shops in the world, that run SAP applications natively on the platform.

Led by an 11 percent revenue gain in year-over-year fourth quarter revenue, a 16 percent boost in software revenue and a 13 percent lift in support revenue, SAP capped a year that began with much trepidation regarding the spending inclinations of the global business community.

For the year, SAP reported total revenue increased 14 percent, with software sales climbing 22 percent, and its combination of software and software-related services jumping 16 percent. A portion of the credit goes to the acquisition of Sybase in 2010 and the company’s strong (and getting stronger) position in the cloud and mobile applications markets.

It was just two years ago when the company was pale and suffering from a revenue decline. Just look at SAP now.

As summed up in a statement by Warner Brandt, CFO of SAP, the company is well positioned to exceed its revenue target of approximately $25 billion and reach a 35 percent operating margin in 2015.

“SAP performed exceptionally well in 2011 clearly exceeding its guidance for revenue and profit,” the Brandt said in a prepared statement. “This record performance was driven by strong top line results with double-digit software revenue growth in all regions, resulting in year-over-year total revenue growth of €1.7 billion and a record cash flow.”

Although clearly expressing a chirpy attitude about the company’s best year in its 40-year history, it was not left unsaid that it put more distance between itself and its chief competitor Oracle. SAP’s revenue from application sales are approximately double those of Oracle, where sales and earnings missed targets as reported in its most recent financials.

“We extended our leadership in enterprise applications, analytics, and mobile and are reinventing the database and cloud markets,” said co-CEO Bill McDermott.

Boding well for SAP in 2012 are its HANA in-memory data analytics software, with revenue topping $200 million in 2011, and the company’s latest acquisition, the cloud-based human resource management company SuccessFactors. That deal is expected to close in Q1 2012 and a positive impact is widely forecast for the upcoming year.

But for now it’s back to the big numbers in the SAP financial report. In Q4 2011, the company had €1.74 billion in software license sales. Including software-related services revenues, the SAP haul in Q4 was €3.72 billion. Total sales, including online applications, professional services, and other items came to €4.5 billion, and it brought €1.2 billion to the bottom line as profits after taxes.

For the full year, SAP booked €3.97 billion in software license sales, €11.32 billion in software and support fees. Total revenues came to €14.23 billion and the company brought €3.44 billion in as profits after taxes.