SAP (NYSE:SAP) reported its earnings for Q3 2011 last week, reporting very encouraging revenue growth for its core businesses. Revenue from new software licenses, which is the best indicator of SAP’s future growth potential, grew 28% year-over-year to €841 million. Its overall revenues, including new software license sales, support and consulting grew 14% year-over-year to €3,409 million, one of its best quarters yet, despite increased competition from other enterprise software giants like Microsoft (NASDAQ:MSFT) and Oracle (NASDAQ:ORCL). Its operating profit jumped around 145%, boosted by the reversal of a litigation provision related to the TomorrowNow lawsuit, which contributed €723 million to its profit.
SAP’s core products continue to show steady growth, while its new offerings like HANA and the Sybase Unwired mobile platform show increased adoption within enterprises. Following the earnings, we are revising our estimates slightly higher to $63, which stands slightly above the current market price and will be reflected on our site soon.
Check out our complete analysis for SAP
Going forward, here are a few trends which we believe will contribute to SAP’s topline growth.
New Offerings like HANA, Mobile Apps & Cloud Apps to Boost SAP’s Sales
SAP launched the new HANA high performance analytics appliance months ago, and it has been showing increased enterprise adoption in the following quarters. SAP recently also launched a cloud based on-demand business intelligence offering powered by HANA – SAP BI OnDemand. With these new offerings we expect SAP’s market share in business intelligence software to increase to 27.4% by the end of the forecast period.
SAP has also launched new mobile apps for human resource management in its ERP suite. It also partnered with HP to enable cloud based delivery of its applications via HP’s enterprise cloud platform. We expect to make its existing enterprise software available as cloud based apps in the coming future, driving enterprise software sales.
APAC’s Increased Contribution to SAP’s Revenue Growth
While SAP’s revenues from the EMEA region and America continue to grow at a steady pace, sales growth in the Asia Pacific region contributed to a major part of its revenue growth this quarter. Sales of new software in Asia grew 41% this quarter, while the overall sales growth was close to 22%.
With the macroeconomic outlook in the European region expected to be weak in the near future, we expect Asia’s contribution to SAP’s overall growth to increase in the coming years.
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