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Market analysis

The worldwide software market is forecast to grow 5.9% YoY in current US$. The compound annual growth rate (CAGR) for the 2013-2018 forecast period will remain close to 6%. Structured Data Management Software, Collaborative Applications and Data Access, Analysis and Delivery solutions are expected to show the strongest growth over the five-year forecast period with a CAGR near 9% from 2013-2018. Leveraging the social dimension of the Internet continues to fuel growth in software as a service. This is complementary to the increased attention to Big Data and analytics solutions, which help enterprises understand and act on anticipated customer behavior and new insights into product reliability and maintenance.1

Adoption of Big Data is still slow among Western European governments but interest is growing steadily. A survey by IDC indicates that of those government executives in Western Europe who are investing or plan to invest in Big Data and analytics, 38% will do so to reduce financial fraud and abuse, 40% to improve revenue collection and 44% to increase overall efficiency.2

Intuit gained momentum with its transition to the cloud, increasing value for its customers. The company’s share grew in tax businesses, and small business subscriber growth continues to accelerate globally. Total company revenue was US$2.4bn, up 9.6%. The EPS grew by 28% YoY with net income growth of 19.7%. Intuit increased TurboTax Online units 14% for the season. It also grew QuickBooks Online subscribers 36% to 624,000, adding more than 60,000 net customers sequentially. Small business segment tax returns was the key driver of revenue growth.

SAP’s Q1’14 software license revenue was €623mn (Q1’13: €657mn), a decrease of 5% YoY, but cloud revenue rose 32% to €221mn. In Q1’14, SAP ‘IFRS’ operating profit increased 12% compared with the same period in the previous year to €723mn (Q1’13: €646mn). This increase is mainly due to a lower impact from acquisitions (deferred revenue write downs and acquisition-related charges) compared to 2013. The operating margin increased by 1.6 percentage points to 19.5% (Q1’13: 17.9%). In Q1’14, profit after tax was €534mn (Q1’13: €520mn), an increase of 3%.

Microsoft Corp. reported revenue of US$20.40bn for Q1’14 which was flat YoY. Gross margin, operating income, net income and diluted earnings per share for the quarter were US$14.46bn (up 8%), US$6.97bn, US$5.66bn and US$0.68 per share, respectively. Devices and Consumer revenue grew 12% to US$8.30bn led by higher demand for Xbox and Bing.

  1. IDC, June 2014
  2. IDC Government Insights Survey May 2014
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Mark McCaffrey
Global leader
Software & internet
Tel: +1 (408) 817 4199