SAP (NYSE:SAP), one of the largest makers of enterprise software in the world, is expected to report its Q3 2011 earnings on October 26. However, it revealed some preliminary revenue and operating profit figures earlier than expected, helped lift sentiment heading into earnings. [1] Revenues from software and software-related services – SAP’s primary revenue stream – jumped 16% YOY while revenues from new software licenses jumped 28% YOY despite increased competition from the likes of Microsoft (NASDAQ:MSFT) and Oracle (NASDAQ:ORCL).
SAP’s new software offerings like HANA and the Sybase Unwired Platform continue to attract customers. SAP also reported a 145% increase in ts operating profit, which was helped by a one-time reduction in a litigation provision by €723 million. Adjusting for that, its actual operating profit was up 44% to €1032 million.
We currently have a $62 Trefis price estimate for SAP, which is almost 8% above its current market price.
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New Offerings like HANA and Mobile Apps Drive SAP’s Bottom-line Growth
SAP reiterated that its HANA offering, which provides high performance, in-memory computing capabilities for fast data storage, retrieval and analysis, continues to show steady growth in sales. Its mobility offerings powered by the Sybase Unwired platform have also displayed encouraging growth.
With HANA, we expect SAP to increase its market share in the Business Intelligence market to 24%.
SAP recently announced new mobile apps for HR management in its ERP suite. SAP’s cloud based ERP offering — Business ByDesign – is also gaining traction and should help it stem the decline in its ERP market share.
Despite the positive numbers, SAP is sticking to its original full year growth forecast that it announced during the Q2 earnings, considering the ongoing uncertain macroeconomic environment.
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