Software companies reported mixed Q3’13 results. Intuit and Adobe reported profit declines while Microsoft, Symantec, Oracle, SAP and VMware registered growth. Intuit recorded a net loss of US$11mn in Q3’13 versus Q3’12 owing to reorganisation and divestiture expenses. Adobe’s decline in net profit was attributable to lower revenue as they continue the transition to SaaS. Symantec recorded 25% YoY growth in net income despite lower revenue owing to reorganisation and restructuring of their sales team, while VMware’s profits grew 66% versus Q3’12 as a result of higher revenue from private and public clouds boosting demand for the company's virtualisation and IT management software.
Almost half of large enterprises will be engaged in combined public/private clouds, often described as ‘hybrid’ cloud computing, by 2017. This is fueling growth in software security products. The cloud-based securities services market is expected to reach US$2.1bn in 2013 and grow to US$3.1bn by 2015. In the 2013-2014 timeframe the highest growth is forecast to occur in cloud-based tokenisation and encryption, security information and event management (SIEM), vulnerability assessment and web application firewalls. In the longer term, email security, web security services and identity and access management (IAM) will be the top three most sought-after cloud services.1
Cloud application businesses led initial public offerings (IPOs) in Q3’13, with collectively seven companies raising US$806mn down slightly from US$812mn in Q2’13.
For the first time in 12 years the US software industry exceeded the US$3bn mark in venture capital funding, exceeding all other industries. A total of US$3.6bn was infused by venture capitalists, with nine of the 11 largest Q3 investments going to software companies. Software also captured nearly half of first-time investments in the third quarter, accounting for 49% of the value and 47% of the companies receiving funding (US$627mn and 163 companies).2
India’s enterprise software market is expected to reach US$3.96bn in 2013, i.e., a growth of 14.5% over 2012 market value of US$3.46bn. This will make India the fourth largest enterprise software market in the Asia Pacific. Also, the Indian business intelligence (BI) software market is expected to reach a value of US$140mn by 2014 and will include contributions from BI platforms, packaged analytic applications and corporate performance management (CPM) software.3
SAP completed its acquisition of Hybris, which will now enable SAP to deliver the next-generation eCommerce platform based on latest technology. In Q3’13, SAP’s net profit soared by 30% to US$1,009mn compared to US$773mn in Q3’12 fueled by the growth in its cloud computing business.
VMware took the inorganic growth path with the acquisition of Desktone Inc. which is an industry leader in desktop-as-a-service (DaaS) with an advanced multi-tenant desktop virtualisation platform for delivering Windows desktops and applications as a cloud service.