SAP's Growing Customer Base Will Act as a Long-Term Driver

SAP (SAP, Financial) recently announced a 5% increase in non-IFRS third quarter 2014 total revenue to $4.3 billion. However, Wall Street had expected €4.23 billion of revenue. Also, SAP reported an 8% increase in basic earnings per share (€) to 0.84 for the third quarter of 2014 compared to basic earnings per share (€) of 0.78 during the same period last year. Analysts had expected a profit of €808 million. Hence, SAP came up with a mixed performance, but the company's performance can improve in the future. Let's see why.

The way forward

During the third quarter, SAP delivered extremely solid growth in Cloud revenue of 41%. The order entry of innovative cloud business closed during the third quarter was recorded above one-third of license revenue.

Interbrand has recently ranked SAP to be the 25th most valuable brand in the world better than the consumer brands such as Ikea and Facebook.

The SAP Cloud powered by HANA is believed to be at the core of the major business network around the world.

SAP is at the top in engaging customers going forward and supporting the customers on various devices in varied channels having the hybris omni-channel ecommerce platform coupled with Cloud for Sales. This particular business segment showcased yet another excellent quarter with growth in triple-digits.

TUI Travel (TT., Financial) is a top global travel group that leverages SAP Cloud for customer solutions against Salesforce.com (CRM, Financial) for better engaging with its customers and expanding the customer service all through its channels.

TUI Travel is empowered to manage varied amounts of structured and unstructured customer data with the help of SAP HANA Enterprise Cloud and has gained an unparalleled view of each customer for the future.

Seeing good traction

Sony Computer Entertainment has decided to leverage hybris software in the same way as 7,000 video game developers administer content for the product catalog of Sony. Polo Ralph Lauren is a leading global fashion brand and has selected Ariba and hybris for enhancing the customer shopping experience by superior omni-channel capabilities and competitive cost and enhanced quality by procuring globally.

Through hybris, SAP is engaging the customers in a real-time environment and on new commerce platform, allowing increased sales and continued customer growth.

The SuccessFactors product of SAP is increasingly used in core HR management and the recent Forrester Wave overshadowing Oracle Fusion HR solutions. There’s solid growth of SuccessFactors in EMEA and APJ which further demonstrates the international strength of its SuccessFactors business.

The industry DNA of SAP is believed to be a key value proposition in its lasting growth performance. This is forecasted to become the company’s competitive advantage as some key clients increasingly looking for domain expertise in their specific industry in the cloud.

Singapore Telecommunications Limited is a telco company with more than 500 million subscribers and is an existing SAP customer chose SuccessFactors Human Capital Management suite that includes Employee Central coupled with SAP Cloud and SAP Jam for travel to enable them to simplify their IT infrastructure and allow their people transformation schedule.

SAP continues to witness solid growth and extensive adoption with greater than 1,450 suite on HANA customers, an increase from just 450 a year ago.

NTUC FairPrice which is a major supermarket chain in Singapore plans to ease its entire architecture by lowering TCO and accelerating their SAP system performance by replacing Oracle with HANA's in-memory database delivering superior innovation and growth, while reducing NTUC FairPrice cost.

Further, more than 1600 startups across the world are leveraging HANA and according to Google trends the interest for HANA has expanded 71%. Contrastingly, its competitor Oracle Exadata has only grown 3% on that scale.

Concur is also expected to provide huge network opportunity greater than just having the market dominating travel and expense solution. Concur will add to the ecosystem of 1.2 trillion corporate travel to the business network, intensifying the network effect.

Conclusion

Thus, SAP is seeing growth in a number of areas, and this should allow the company to report impressive growth in the long run. Hence, investors should definitely consider investing in this stock as it looks like a lucrative bet.