SAP reported strong revenue growth in its HANA in-memory database and cloud businesses, but also saw revenue from software decline in the third quarter.
The company said Monday that its revenue in the quarter was up 2 percent year-on-year to €4 billion ($5.4 billion), according to IFRS (international financial reporting standards). Profit soared 23 percent to €762 million.
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Software revenue, however, fell 5 percent from the same quarter last year to €975 million, even as cloud subscriptions and support grew by a whopping 203 percent to €191 million. Support revenue grew by 4 percent to a little over €2 billion, while overall software and software-related service revenue grew 5 percent year-on-year to about €3.4 billion.
SAP said it is well on its way to reach €1 billion in HANA software revenue since market launch about two years ago. In the quarter, HANA software revenue was up 79 percent at actual currencies to €149 million, and over 2,100 customers. Competitor Oracle announced in September an upcoming in-memory option for its recently released 12c database.
IBM and Microsoft are also working on in-memory database products.
Those competitors' efforts are "too little, and a little bit late" to market, said SAP executive board member Vishal Sikka, who heads all product development, during a conference call Monday.
The business software company also said it had reached a run-rate of over €1 billion in annual cloud revenue, with about 33 million cloud users. Non-IFRS "deferred cloud subscription and support revenue" was €382 million at the end of the quarter, a year-over-year increase of 79 percent, the company said. Deferred cloud subscription and support revenue includes committed future cloud subscription and support revenue already paid by the customer for subsequent quarters of the year.
The business from cloud-based e-commerce vendor Ariba that SAP acquired last October is also doing well with the Web-based business trading community now connecting 1.2 million companies, SAP said.
In the Americas region, the company saw third quarter non-IFRS software and cloud subscription revenue grow 17 percent year-over-year at constant currencies, helped by software revenue growth in Latin America and strong non-IFRS cloud subscription and support revenue growth in North America.
The company's non-IFRS software and cloud subscription revenue in the Asia Pacific Japan region returned to growth with "solid single-digit growth" at constant currencies, backed by a strong performance in China. SAP's non-IFRS software and cloud subscription revenue in the region declined 7 percent in the second quarter.
The 2013 revenue and profit figures include the revenue and profits from Ariba, SuccessFactors and Hybris, a commerce technology company SAP acquired in August. The comparative numbers for 2012 do not include SuccessFactors, Ariba and Hybris for varying periods.
However, SAP is apparently giving up on Business ByDesign, its cloud-based ERP (enterprise resource planning) suite, as a major pillar of its cloud strategy.
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