SAP doubles profits to ride high in third quarter

SAP has announced a bumper third quarter, doubling profits and hitting record software revenue growth of 28 per cent year on year to €841m as the company seeks to edge out competitors and push ahead with its cloud strategy.

Total revenue was up 14 per cent year on year, but a more modest three per cent from the previous quarter to €3.4bn, while net profits more than doubled quarter on quarter from €588m to €1.25bn.

The size of the profit gains were due in part to the reduction of a fine that SAP has to pay Oracle in the long-running TomorrowNow court case.

A judge ruled recently that the original amount of $1.3bn was too much and reduced it to $272m.

SAP's strong free cash flow generation over the first nine months of 2011, a rise of 42 per cent year on year to €2.64bn, has led the firm to consider buying back shares in the future, the company said.

However, despite speculation that this money would be better spent on acquisitions, SAP EMEA president Franck Cohen told V3 that the firm will not change its strategy regarding acquisitions.

"Our strategy is clear. We want to rely on our own capabilities to innovate. We believe innovation brings value and reduces cost without disruption," he said.

"We are still making a few acquisitions, though, such as Crossgate, which allows us to develop collaboration-as-a-service capabilities. We wouldn't rule out any [more acquisitions] in the future."

Cohen was also keen to point out the customer wins made by SAP in the region, beating rivals such as Oracle in the UAE and IBM Cognos in Turkey to major signings.

"Every single region has contributed to growth in Q3. When it comes to EMEA we have 26 per cent growth year on year in terms of software revenue which is a key indicator," he said.