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In aggregate, revenue of the software companies in our sample was positive with 8.6% growth year over year and 15.1% sequentially. All the companies under study in the sector reported positive revenue growth both year on year and sequentially. Adobe led the way with 23% growth in revenue year over year, followed by Symantec with 11% . But the aggregate growth in revenue was not reflected in net income, which in aggregate decreased by 1.7% year on year. Intuit and Symantec reported the sharpest declines in net income year over year of 46% and 73%, respectively. Decreased margins were due to increases in other operating expenses for the sector.

On a positive note, global revenue in the business intelligence (BI) and analytics software market is forecast to reach US$18.3 billion in 2017, an increase of 7.3% from 2016. By the end of 2020, the market is forecast to grow to US$22.8 billion. Modern BI and analytics is expected to expand more rapidly than the overall market, which is offsetting declines in traditional BI spending. The modern BI and analytics platform emerged in the last few years to meet new organizational requirements for accessibility, agility and deeper analytical insight, shifting the market from an IT-led, system-of-record reporting to a business-led, agile analytics system including self-service. Though the modern BI and analytics market is expected to grow in terms of seat expansion, revenue will be dampened by pricing pressure and the growth rate is projected to decelerate from 63.6% growth in 2015 to 19% in 2020.1

Continuing its expansion, the worldwide public cloud services market is projected to grow 18% in 2017 to total US$246.8 billion, up from US$209.2 billion in 2016. The highest growth will come from cloud system infrastructure services (infrastructure as a service [IaaS]), which is projected to grow 36.8% in 2017 to reach US$34.6 billion. Cloud application services (software as a service [SaaS]) is expected to grow 20.1% to reach US$46.3 billion. The overall global public cloud market has entered a period of stabilization, with its growth rate expected to peak at 18% in 2017.

Though SaaS has experienced several years of strong growth, the SaaS market is expected to see slightly slower growth over the next few years with increasing maturity of SaaS offerings, namely human capital management (HCM) and customer relationship management (CRM). Nevertheless, SaaS will remain the second largest segment in the global cloud services market. As enterprise application buyers are moving toward a cloud-first mentality, it is expected that more than 50% of new 2017 large-enterprise North American application adoptions will be composed of SaaS or other forms of cloud-based solutions.2

In company news, Adobe’s 2016 revenue grew by 22% year over year reaching US$85 billion. In its fourth quarter Adobe achieved record quarterly revenue of US$1.61 billion, representing year-over-year growth of 23%. Its Digital Media segment revenue was US$1.08 billion, with Creative revenue growth at 33% year over year to US$886 million. Strong Creative Cloud and Document Cloud adoption drove Digital Media Annualized Recurring Revenue (CARR) to US$4.01 billion, a quarter-over-quarter increase of US$316 million. Adobe Marketing Cloud achieved record revenue of US$465 million, representing 32% year-over-year growth. Operating income grew 63% and net income grew 79%. 

VMware revenue for the fourth quarter was US$2.03 billion, an increase of 9% from the fourth quarter of 2015. License revenue for the fourth quarter was US$887 million, an increase of 8% year over year. Net income of US$441 million was an increase of 18% compared to US$373 million in the year ago quarter. In October, VMware and Amazon Web Services announced a partnership to provide a new Vmware vSphere®-based cloud service running on AWS. VMware Cloud™ on AWS will make it easier to run any application, using a common set of familiar software and tools, in a consistent hybrid cloud environment. This new service will be delivered, sold and supported by VMware and will be available later in 2017.  

 

1. Gartner.com, Jan 2017

2. Gartner, Jan 2017