WRAL Tech Wire

$trong Fourth Quarter Boosts SAS Revenues to $2.15 Billion

2008 looks to be another good year for SAS, says Jim Davis.

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Consolidation within the business intelligence industry is proving to be a boon to SAS, the world’s largest privately held software company now entering its 32nd year.

While much bigger companies IBM, Oracle and SAP spent billions acquiring BI providers in 2007, SAS stretched its streak of profitable years and growth in revenues to 31 with $2.15 billion. That total is a company record and represents an increase of 15 percent in revenue from 2006. It is one third higher than company executives had predicted entering the fourth quarter. They expected sales to top $2 billion for the first time, but barely.

Jim Davis, chief marketing manager at SAS, attributed the record revenues to an especially strong final three months of ‘07. And a factor in the surge was all the consolidation in the BI software sector, he told WRAL Local Tech Wire in an interview.

“Quite honestly all the consolidation created a lot of uncertainty,” Davis explained. “We were viewed as a stable, viable alternative. We gained a lot of business due to consolidation.”

Since the company is privately held it does not disclose profits. Davis did describe the year as “very profitable.”

Even as the economy showed signs of weakness in the waning days of 2007, SAS continued to receive more orders on a global basis. Davis doesn’t see any end in sight to the trend, either.

“That confusion and uncertainty is certainly carrying forward through 2008 as well,” Davis said.

A second contributing factor is that a softening economy coupled with increasing reports of loan defaults and bank write-downs is leading more executives to buy software to help cut costs and risks, he added.

“While we have a questionable economy today and real problems with credit and services, predictive analytics which we offer plays a very important role in determining credit risks,” he said.

Other SAS tools also help banks and other customers detect fraud instantly, helping companies reduce losses.

“Optimization of activities because a high priority,” Davis said. “Predictive analytics are in vogue and highly profitable.”

SAS is far from a one-trick software pony, as demand for other products demonstrated through the year. BI revenues, for example, made up only 29 percent of overall revenues.

However, much of the global attention in software focused on the BI sector as industry’s use of data continues to skyrocket into petabytes. In 2007, IBM acquired Cognos ($5 billion), SAP bought Business Objects ($6.8 billion) and Oracle purchased Hyperion ($3.3 billion) in the BI software space.

While not denying other companies have expressed an interest in acquiring SAS, Davis said SAS co-founders and owners Jim Goodnight and John Sall have no plans to change the company’s ownership.

“There’s no intention of the owners of SAS to sell or to take the company public,” he said. “There’s no question other companies see the value we provide and who wouldn’t want to have a piece of the action.

“We’re very focused on staying independent for quite some time,” he added. “We consider people being interested in us the ultimate form of flattery.”

SAS revenues were divided 44 percent in the Americas (down 1 percentage point), 45 percent in Europe Middle East and Africa and 11 percent in Asia Pacific (up one percentage point). To Davis, that geographic diversity helps ensure SAS against a potential U.S. recession.

Customer intelligence spending jumped 50 percent, and industry solutions for such things as fraud detection and merchandising soared 28 percent. More than 200 financial institutions now use SAS Enterprise Management.

Through 2007, SAS also expanded its sales reach with vendor partnerships. Those made up 17 percent of new sales, according to Davis. And to further expand its reach SAS began offering software licenses on a less expensive per user basis so smaller firms could afford to purchase its products.

Another sign of SAS’ growth is headcount. SAS employed 10,367 at year’s end, an increase of 2.8 percent. And to further accommodate growth the company has 300 open positions while new people come on board almost daily.

“We’ve already added close to 300 jobs already this year,” Davis said.