German software giant SAP has reported a 20% jump in revenue and a 12% rise in profits as the company feels the benefits of its Sybase acquisition. The figures however failed to match analyst expectations and shares dropped just over 3% in early trading as a result.
Total revenue for Q3 2010 stood at €3.0bn, up from €2.51bn this time last year. Profit after tax was €501m, up from €447m for Q3 2009. However, analysts had been predicting net income of around €550m, so the figures were disappointing to many.
Software revenues were up 25% to €656m, compared to €525m for the year ago quarter and software and software-related service revenues increased 20% to €2.32bn, compared to €1.94bn a year ago.
The company was bullish about its performance which included figures from Sybase for the first time, taken over in a $5.8bn deal in May this year. "We are pleased to report double-digit growth in software and software related service revenue and the contribution of Sybase," said Werner Brandt, CFO of SAP AG.
"All of the regions reported growth in the third quarter, with particular strength in the U.S. and the emerging markets of Asia, Europe and Latin America. We saw a good mix of revenues among small, midsized and large enterprises, and we had an increase in deal volume. On the product side, Business Analytics remains a top priority among our customers and continues to be a principal growth driver," he continued.
During a conference call to discuss the financial results co-CEO Jim Hagemann Snabe couldn’t resist having a dig at enterprise software rival Oracle. "What we’re seeing from our customers is that they don’t want to be locked into one proprietary, closed vendor. They want openness and choice. We are now by far the market leader for on-premise enterprise applications." Fellow CEO Bill McDermott repeated Snabe’s Oracle jibe during the same call.
As demonstrated at the company’s recent TechEd event in Berlin, Business ByDesign remains a touchy subject for SAP, who would once again not be drawn on how many customers have actually signed up for its on-demand business software suite.
"We’re seeing significant growth in the six launch countries and have seen very competitive wins with companies that are already using on-demand software and want a full suite of enterprise apps. We still need to work on the pipeline to drive numbers up to what we want. But we’re not releasing customer figures," said Snabe.
SAP would also not be drawn on the upcoming court case with Oracle, which is set to determine how much compensation SAP should pay Oracle after it admitted employees of TomorrowNow stole software codes. Oracle is demanding up to $1bn, while SAP has set aside $160m to deal with the case.