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According to a report published last year, the worldwide Enterprise Resource Planning (ERP) market continues to be dominated by SAP which holds a 24.6% market share. Overall, in 2012, the ERP market grew 2.2% over the year and SaaS-based ERP offerings accounted for 13% of the global ERP market. Gartner projects that the contribution of SaaS-based ERP solutions will continue to increase and expects it to account for 20% of the global ERP market by the year 2016.

SAP's Financials

For the recently ended quarter, SAP (NYSE: SAP) saw Q4 revenues grow 7% over the year to € 5.1 billion (~$6.9 billion), in line with market estimates. EPS of €1.11 (~$1.62) was ahead of the Street's projections of $1.59 for the quarter. By segment, support revenues grew 10% to €2.3 billion (~$3.1 billion) and revenues from software and cloud subscriptions grew 6% to €2.1 billion (~$2.8 billion).

Revenues for the year grew 8% over the year to €16.9 billion (~$22.7 billion) with earnings improving 11% to €3.03 (~$4.08) per share.

SAP expects to end the current year with cloud subscription and support revenues at €0.95-€1.00 billion (~$1.28-$1.34 billion). They expect the other software-related service revenues to grow by 6%-8% during the year.

SAP's Ambitious Outlook

Keeping with the current trend, SAP is also driving their cloud-based revenues and is projecting growth in that segment to help drive their total revenues to at least €22 billion (~$30 billion) by the year 2017. That is an ambitious target for SAP considering that they ended the current year with revenues of $22.7 billion.

But considering the growth they are seeing within their cloud initiatives, it does look achievable. Not only their acquisitions, but their home-grown products are also delivering strong results. Their annual cloud revenue run rate is now more than €1.06 billion (~$1.5 billion) and they now have more than 35 million total cloud portfolio applications subscribers. Ariba, their Web-based business trading community, has also seen strong adoption and is operating at spend volumes of more than $0.5 trillion with 1.4 million connected companies. During the last year, their biggest growth driver was SAP HANA, which now has more than 3,000 customers with annual revenues of €664 million (~$898 million). HANA is their fastest selling product ever.

Additionally, they are also growing their geographic footprint. They have increased their market presence within the financial services sector in the APAC markets and have delivered their products to more than 20 banks and 10 insurance companies in the region last quarter.

Besides continuing to grow these offerings, I expect SAP to keep acquiring as well. They could look at adding companies like online marketing services provider Marketo to their portfolio to build their cloud based offerings as well as to compete with Oracle's recent Responsys and Eloqua acquisitions. Another interesting company to acquire would be sales compensation vendor Xactly.

SAP's stock is trading at $78.87 with a market capitalization of $94.2 billion. It touched a 52-week high of $87.42 in December last year.

Disclosure: No positions

Source: SAP Targets Revenue Of $30 Billion By 2017