The MarTech space is getting bigger and bigger. About 5,000 companies are a part of the MarTech landscape from just 150 in 2011. With its latest acquisition of Gigya, SAP is getting deeper into the space.
SAP’s third quarter revenues grew 8% over the year to €5.59 billion ($6.6 billion) compared with the market’s forecast of €5.71 billion. Core profit grew by 4% to €1.64 billion ($1.94 billion), missing analyst estimates of €1.69 billion.
During the quarter, Cloud subscriptions and support revenue increased 27% to €938 million ($1.1 billion), but fell short of the market’s forecast increase of 29%. Revenues from the Cloud and Software business increased 8% to €4.7 billion ($5.5 billion). New cloud bookings increased 19% to €302 million (~$357 million).
Based on the strong momentum in SAP’s cloud business, the company continues to expect full year 2017 non-IFRS cloud subscriptions and support revenue to be in a range of €3.8 to €4.0 billion compared to €2.99 billion in 2016. Due to increasing adoption of S/4HANA and its Digital Business Platform the Company now expects full year 2017 non-IFRS cloud & software revenue to increase by 7% to 8.5%.
It now expects full year 2017 non-IFRS total revenue in a range of €23.4 to €23.8 billion ($27.6 to $28.1 billion). It expects full-year 2017 non-IFRS operating profit to be in a range of €6.85 to €7.0 billion ($8.1 to $8.25 billion).
S/4HANA adoption grew to over 6900 customers, up over 70% and it added clients like Shell and China International Marine Containers.
Hanon Systems (Korea) and Citco Technology Management (USA) among many others adopted SAP Leonardo solutions, which bring together cutting edge software capabilities such as IoT, Big Data, Machine Learning, Analytics, and Blockchain.
Its core HCM offering SuccessFactors Employee Central had more than 2,000 customers at the end of the third quarter. With SuccessFactors and Fieldglass, SAP delivers total workforce management across both permanent and contingent labor, localized for 84 countries and 42 languages.
Total revenue in the SAP Business Network segment was up 19% in the third quarter to €578 million ($682 million). On the Ariba Network, approximately 3 million companies in over 180 countries collaborate and trade around $1 trillion in goods and services annually. Concur helps about 50 million end users process travel and expenses. With SAP Fieldglass customers manage over 3.9 million contingent workers in more than 180 countries.
SAP’s Customer Engagement and Commerce (CEC) solutions achieved double-digit growth in new cloud bookings and software revenue. They provide a single view of their customer across social, retail, or e-commerce channels. In September, it announced its plans to acquire Gigya to enhance these solutions. SAP plans to use Gigya’s customer identity and access management platform to strengthen its Hybris e-commerce division. It expects that combining the data matching and enrichment capabilities of SAP Hybris Profile with Gigya’s consent-based identity data and access management platform will allow them to identify consumers across multiple channels and offer a robust single consumer profile.
California-based Gigya managed 1.3 billion customer identities to build identity-driven relationships for its enterprise clients. Terms of the deal were not disclosed but analysts estimate it to be worth $350 million. Gigya had 300 employees all of whom are expected to join SAP.
Analysts say that a fuller integration by Gigya could propel SAP toward a more people-based marketing approach, with a more complete identity for its customers across devices and channels. Against the backdrop of the new Government Data Protection Regulation (GDPR) coming into effect in May, SAP could become the largest GDPR-oriented vendor. Janrain and Evidon are other vendors with GDPR-ready solutions.
SAP’s stock is trading at $112 with a market capitalization of $134.28 billion. It hit a 52-week high of $113.64 last week just before its earnings. It had fallen to a 52-week low of $80.93 in November last year. The stock is having quite a run!
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