SAP (NYSE:SAP) announced its earnings for Q4 FY11, reporting strong revenue growth in its core businesses, as well as from its new initiatives.^[1] It managed to show double digit sales growth in software revenue from all major markets despite the global economic slowdown threatening enterprise software spending. Q4 2011 was its best quarter yet in terms of earnings with total revenue of around €4.5 billion. We expect strong revenue growth in the coming years. Following the earnings update, we have updated our model to reflect the latest numbers. Our $62 Trefis price estimate for SAP stands nearly 5% above its current market price. SAP competes primarily with Oracle (NASDAQ:ORCL), Microsoft (NASDAQ:MSFT) and Salesforce.com (NYSE:CRM).

Check out our complete analysis for SAP

SAP Focusing on Cloud in 2012

SAP recently announced the acquisition of SuccessFactors, a leading provider of cloud based HR (human resource management) solutions. It will be integrating SuccessFactors’ technology into its Business ByDesign ERP suite. It has also made a couple of small acquisitions with Datango, which will further bolster its ERP software portfolio. With SuccessFactors, SAP now has a firm footing in the cloud-based enterprise software market.

We expect it to continue to roll out new cloud-based offerings. The company also announced that it would be reporting revenue from cloud software separately 2012 onward. SAP plans to build a €2 billion cloud-based software business by 2015.

HANA and Mobile Offerings Gain Traction

SAP announced that its HANA offering, which provides high performance, in-memory computing capabilities for fast data storage, retrieval and analysis, exceeded sales targets for 2011. It generated €160 million in sales since launch in 2011, much higher than SAP’s estimates. We expect HANA sales to show strong growth going forward, leading to a steady increase in SAP’s market share in business intelligence software in the coming years.

It also generated €110 million in revenue from mobile solutions powered by the Sybase Unwired platform. With the increasing popularity of mobile software in enterprises, we expect SAP’s mobile software growth to continue going forward.

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes: