SAS achieves 13.5 percent worldwide revenue growth in 2003

Streak of profitable revenue growth extends to 27 years

CARY, NC  (Feb. 18, 2004)  –  SAS, the largest privately held software company in the world, announced financial results for 2003, reporting overall revenue of $1.34 billion. This represented a 13.5 percent increase in revenue growth and marked the 27th consecutive year of profitable revenue growth for SAS.

"At a time when other large software vendors have experienced reduced revenue and slashed both headcount and R&D spending, SAS has continued to grow in both market presence and revenue," said SAS CEO Dr. Jim Goodnight. "Our ability to tailor our software to industry-specific needs and help companies create data-driven approaches to managing cost pressures, regulatory requirements and the profitability of their customer relationships were key factors behind another successful year."

The economic downturn and market instability during the first half of 2003 have led to a sharpened focus on accurately predicting future revenue streams and cutting costs. SAS continued to give its customers rapid ROI, minimized cost of ownership and shortened implementation times by capitalizing on the fact that the company’s proven technology can be deployed to satisfy specific business issues quickly and efficiently.

"We are pleased with these strong results, particularly as we are poised to make generally available the final phases of revolutionary new technology in the SAS®9 Intelligence Platform, due at the end of first quarter 2004. We will soon follow with SAS®9 solutions based on this landmark technology," said Goodnight. "We expect heightened demand as we present these new software advances to customers, which will take them well beyond the realm of traditional business intelligence applications."

Revenue breakdown

Growth was strong across all geographies, which was particularly notable given the decline in business confidence and spending slowdown during the first half of 2003. SAS saw 46 percent of revenue coming from North America, 43 percent from Europe/Middle East/Africa and 9 percent from the Asia/Pacific region. Latin America, which made up 2 percent of overall revenues, experienced the greatest percentage increase in revenue, up 43 percent over 2002.

From an industry perspective, financial services continues to be the leading source of revenue by industry, accounting for 34 percent of industry-specific revenue for the company. SAS also has seen continued strength in the public sector and in manufacturing, at 13 and 12 percent of industry revenue, respectively. Emerging industry sources of revenue include life sciences, retail and telecommunications, each at 5-7 percent of revenue.

Areas in which SAS experienced significant growth in new sales included one of SAS’ core strengths – data management – which increased by more than 80 percent, with a large portion of that growth driven by data quality initiatives. Applications related to monitoring and managing organizational health – activity-based management, activity-based costing and performance management – increased in new sales by approximately 40 percent. IT management applications new sales revenue increased by 35 percent, risk management applications by about 65 percent, and supply chain management new sales doubled. SAS’ customer intelligence solutions fared well with new sales for marketing automation applications increasing by 70 percent as companies in the financial, retail and telecommunications industries continue to battle for customers.

2003 highlights

SAS continues to demonstrate that it has the most complete solution on the market for supporting the entire intelligence-creation process within all areas of a business – from corporate performance to HR to finance to sales and marketing. SAS has earned a reputation for making it easy for customers to access data from virtually any database or platform, equipping companies to take full advantage of their existing investments in ERP environments. In fact, an IDC report published in August 2003, "Worldwide Data Warehousing Tools Forecast and Analysis, 2003-2007," noted that SAS continues to lead in the data warehouse access tools market.

"SAS has not only one of the broadest portfolios of business analytics software, but importantly holds market leadership positions in several segments of the market including data warehouse access," said Dan Vesset, research manager for IDC. "The breadth of tools and applications provided by SAS has the potential to enable organizations to decrease the complexity of software integration and ongoing maintenance costs."

SAS solutions continued to be successful in 2003, particularly customer intelligence (identifying and retaining the profitable customer segments). CRM Magazine named SAS the CRM Market Leader for CRM analytics and Customer Inter@ction Solutions magazine selected SAS’ marketing automation solution as a CRM product of the year. Other SAS solutions that performed well include supply chain intelligence (enabling organizations to drive revenue and reduce costs by anticipating customer demand, improving procurement strategies, and identifying actions that achieve targeted customer and quality service levels); financial intelligence (corporate governance, financial transparency and activity-based intelligence); and performance management (translating strategy into actions that can be measured and monitored via a "balanced scorecard" throughout the organization and distributed in an easy-to-use dashboard).

SAS also continued to expand its line of industry-specific solutions, combining its unparalleled analytic strength with the added value of domain expertise in such areas as banking, insurance, manufacturing, pharmaceuticals, telecommunications and retail. SAS’ ability to map analytic intelligence from its proven organizational, or horizontal, solutions to industry-specific business models and replicate best practices of strategic business intelligence within targeted sectors sets the company apart from its competitors, providing unique value to the marketplace.

Financial services continues to be the leading source of industry-specific revenue for SAS with more than 2,000 customers in this industry. SAS recognized expanded opportunity in the financial sector, which is facing new compliance requirements such as Basel II, anti-money laundering regulations and the Sarbanes-Oxley Act that require sophisticated data management, analysis and reporting capabilities. SAS launched a business practice to develop solutions designed specifically to address the challenges created by these and other new corporate compliance demands.

SAS also aggressively pursued the opportunity to assist the banking and insurance industries’ need for risk management with two acquisitions in 2003. OpRisk Analytics, a Stamford, Conn.-based company that is a leading provider of operational risk measurement and management solutions, was part of SAS’ strategy to extend its offering of solutions for both corporate and consumer risk measurement and reporting. Canada-based RiskAdvisory, a leading provider of risk management consulting and software to energy companies, contributed great depth in domain expertise for this market.

Increased demand for software that helps businesses understand their customers’ buying patterns will continue to be a driver of company growth. In the third quarter of last year, SAS announced the acquisition of Marketmax, the leader in retail intelligence and merchandising applications, further demonstrating SAS’ commitment to the retail industry. SAS’ ability to provide a complete view of the retail/demand supply chain gives retailers a competitive advantage for external negotiations and internal efficiencies. The linking of Marketmax retail optimization solutions with the total-cost-of-supply information of SAS® Value Chain Analytics helps retailers make more profitable, demand-driven decisions.

SAS will continue to deliver quick ROI to its customers, allowing them to implement technology that is tied to the way they do business more easily. In 2004, SAS will introduce additional targeted vertical solutions beyond banking, insurance and telecommunications, beginning with the retail sector. SAS will place greater focus on the telecommunications industry, which is showing signs of resurgence as the industry looks for solutions to critical business problems such as customer churn.

SAS continued to reap benefits by expanding its investment in developing leading business intelligence and analytic software, while maintaining its investment in the people that innovate and sell its technology. SAS’ top-ten standing in rankings such as CIO Insight's survey for best value and reliability among IT vendors, and Fortune magazine’s best places to work list, support that view. Headcount grew by three percent last year as SAS continued to add people in strategic areas of the business such as sales, marketing, and research and development. The company’s investment of 26 percent of annual revenue back into R&D remains nearly double that of other major software vendors.

SAS received additional accolades throughout 2003 for its leadership within the software industry:

• DM Review magazine voted SAS and its subsidiary DataFlux No. 1 in the Data Quality category.
• CIO Insight magazine ranked SAS in the top ten of its Vendor Value Study. SAS was the only business intelligence software vendor to make the overall top ten in this survey of nearly 1,300 senior IT executives and chief information officers.
• Intelligent Enterprise magazine selected SAS among the top 12 most influential IT solution providers.
• Datamation magazine named SAS® Marketing Automation and SAS® Text Miner as the top products in their respective categories.

Outlook

SAS will extend its lead in the market by providing software that takes customers beyond the traditional notion of business intelligence, not limiting customers’ insight to simply understanding historic performance, but also allowing them to better predict outcomes and plan future strategies.

As the final components of the SAS®9 Intelligence Platform become generally available, SAS will be uniquely positioned to deliver the ability to integrate data across an organization and make intelligence available to use as a strategic company asset. This intelligence platform will revolutionize SAS’ offerings in data warehousing, analytics and reporting. On the heels of this major platform release, SAS will begin shipping enhanced versions of its family of solutions for enterprise intelligence and industry-specific solutions, which all build upon the strength of the new SAS®9 Intelligence Platform – usability, manageability, scalability and interoperability.

"We’re confident that 2004 holds great growth potential," said Goodnight. "SAS will continue to lead in the BI space because customers are looking for a business partner that can quickly demonstrate value based on their industry-specific needs. Competitors entering the BI space have a long way to go to match SAS’ rich, end-to-end offerings. At twice the size of traditional BI reporting vendors, SAS will maintain its overwhelming leadership in this market."

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