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SAP (SAP - Analyst Report) reported third-quarter earnings per share of €0.78 ($1.03), which increased 17.0% year over year (88 cents a share) and beat the Zacks Consensus Estimate of 98 cents a share by 5.1%. The company’s flagship innovation SAP HANA continued to be a growth driver along with its cloud business.

Total revenue was €4.1 billion ($5.37 billion) in the third quarter of 2013, up 9% year over year in constant currency. Revenues also beat the Zacks Consensus Estimate of $5.33 billion.

Revenues by Segment

Software & Could Subscriptions: This segment includes Software and Maintenance revenues.  The segment revenues in the quarter were €1.17 billion ($1.56 billion), up 13% year over year in constant currency.

Support Revenues: The segment reported revenues of €2.2 billion ($2.9 billion), up 11% year over year (in constant currency).

Software and Software-Related Service Revenues: This sub-segment includes Support, Subscription and other software-related services revenues. Revenues in this segment grew 12% year over year to €3.36 billion ($4.4 billion).

Revenues by Region

The company witnessed strong growth in the EMEA region with 14% growth in non-IFRS software and cloud subscription revenues. The growth was impressive in the light of the continued market uncertainty in Europe and a very tough year-over-year comparison.

Growth in the top line was driven by strong double-digit growth in the Netherlands, Switzerland and the U.K. Revenues for the segment in Asia Pacific Japan grew 3% due to continued macroeconomic challenges with particularly strong performance in China.

The Americas region reported a strong third quarter with software and cloud subscription revenues increasing 17% year-over-year. This increase was driven by excellent software revenue performance in Latin America, especially Brazil and strong cloud subscription and support revenue growth in North America.

Cash and Balance Sheet

Operating profit grew 15% year over year to €1.30 billion ($1.7 billion) in the quarter.

Exiting the quarter, the company’s operating cash flow was flat year over year at €3.0 billion ($4.0 billion), due to higher working capital requirements. Cash and cash equivalents grew 31.4% year over year to €3.3 billion ($4.3 billion).

Outlook

Concurrent with the earnings release, management reiterated guidance for full year 2013.

The company expects full year 2013 software & cloud subscriptions revenues to increase in the range of 14% – 20% at constant currencies. The full-year 2013 cloud subscription and support revenues are expected to be around €750 million at constant currencies.

The company expects full-year 2013 non-IFRS software and software-related service revenues to increase 10% as against 11% – 13% growth mentioned earlier. Operating profit for the full year is expected to be in the range of €5.85 billion to €5.95 billion at constant currencies. SAP HANA software revenue is expected in the range of €650 million to €700 million.

While SAP has a Zacks Rank #3 (Hold), some other players in the same industry such as Blackbaud Inc. (BLKB - Snapshot Report) and Infoblox Inc. (BLOX - Snapshot Report) have a Zacks Rank of #1 (Strong Buy). Another company Concur Technologies Inc. (CNQR - Analyst Report) is also worth considering and carries a Zacks Rank #2 (Buy).

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