Note: The Skinny blog is written by Rick Smith, editor and co-founder of WRAL Tech Wire and business editor of WRAL.com.
RESEARCH TRIANGLE PARK, N.C. – While Chief Executive Officer Jim Goodnight touted to an audience of executives in Singapore that SAS is having another strong year, the media back home stirred up a storm with reports that the world’s largest software firm had instituted a hiring freeze.
SAS officials quickly sought to play down the quotes from Goodnight given in an interview with Inc. magazine, noting that hiring in fact was continuing.
And Wednesday morning, Chief Marketing Officer Jim Davis talked at length with WRAL Tech Wire and WRAL.com about just how good a year SAS is having at age 35. He did so acknowledging that SAS doesn’t talk about annual revenues until much later in the year.
Concerned about the reporting of the Inc. interview, Davis agreed to a phone interview as he arrived after midnight local time following a six-hour flight from the conference in Singapore.
“The fact of the matter is that our new sales revenue through July are up over 20 percent from this time last year, which was a pretty darn good year for us,” Davis said while en route to a hotel. “These are new sales.
“Typically the bulk of our revenues come in the fourth quarter, so we actually feel the investment in headcount is paying off.”
Goodnight was so pleased with recent figures that he shared the sales growth news with the more than 600 executives from Asia Pacific who turned out for the SAS conference at a new, posh Singapore resort, Davis said. SAS introduced new products, such as social media tools (see graphic with this story) and analytics for fast analysis of “big data” utilizing high performance computing.
New hires “paying fruit”
Davis also noted that revenue from renewals is very strong. Keeping current customers and getting them to increase contract size with new or updated services provides the bulk of SAS revenues at some 70 percent. The addition of new people for sales and product development was designed to boost sales – and they are, Davis stressed.
“Our headcount is up in excess of 5 percent this year,” Davis said. At the time of the Inc. interview about a month ago, Davis said Goodnight was concerned.
“Jim was seeing expenses going up,” Davis said, noting that people costs are the biggest investment for the company. “it might be a little unnerving early in the year,” he added, noting that new sales people needed time to generate new business. “We do sort of take the pulse of the company at mid-year, and every year we get that same conservative feeling.
“Now,” he said happily, “it’s paying fruit.”
Another record year?
What SAS describes as “TSR” or total software revenue for news and renewals is “definitely up.” While Davis said he was reluctant to make any forecasts, he said he expects revenues to top the $2.4 billion of 2010, which would continue an unbroken streak of annual growth since the firm’s founding.
Making Davis reluctant to predict another year is that SAS revenues resemble a “hockey stick” with most of the money come in the final quarter, he explained.
In 2008, as Goodnight told Inc., that last quarter was a disaster. That event led Goodnight to declare there would be no layoffs in 2009 in order to calm his company. But he also clamped down on headcount while cutting expenses.
Contrary to continuing gloomy reports about the global economy that “scare the stock market,” Davis said SAS is seeing growth across all geographies. Europe, Middle East, Africa lead in revenues followed closely by North American and Asia, a ranking that runs counter to conventional wisdom given the debt crisis in Europe and the stagnating U.S. economy.
SAS is experiencing growth by delivering solutions, not technology, Davis added. Fraud prevention and revenue recovery solutions, rapid retail pricing capability and analytics solutions to help lower costs provide customers with rapid returns on investment, making buying and renewal decisions easier, he explained. SAS also is seeing growth in life sciences.
“The demand is high,” Davis said. “The payback is strong – and that’s even more important in a difficult economy.”
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