Concur Executing Steadily in Fast-Growing SaaS Market

Gartner estimates that the worldwide SaaS market was worth $12.3 billion last year and projects it will grow to $14.5 billion this year. Further, IDC estimates that worldwide SaaS market revenue will grow at an annual rate of 26% over the next few years to reach $53.6 billion by 2015. IDC also projects that by 2015, SaaS will account for 73% of public cloud services revenue. Existing SaaS vendors such as Concur are gearing up for this growth.

Solid Financials for Q3
Concur’s (Nasdaq:CNQR) Q3 revenues grew 27% over the year to $113.2 million ahead of the Street’s target of $112.7 million. Revenue growth was driven by increased adoption by the small and medium business (SMB) segment. EPS grew from $0.29 a year ago to $0.34 to breeze past the market’s estimates of $0.26.

For the current quarter, Concur estimated revenues of $118 million, falling short of the Street’s target of $119.9 million. Concur’s projections of EPS of $0.38 were ahead of the market’s expectations of $0.23. Concur projects fiscal revenues to grow 26% over the year, with non-GAAP earnings of $1.37 per share, compared with Street’s projections of $0.86 per share.

New Business Travel Products Put Concur Under Monopoly Spotlight
Recently, Concur announced a tie-up with Gogo, a provider of in-flight connectivity solutions. Through the agreement, business travelers will be able to buy Gogo’s in-flight Internet sessions through Concur’s T&E cloud. When business travelers book their air travel through the Concur platform, they will be able to view the availability of Gogo connectivity service and purchase a suitable Gogo pass as well.

The company also began offering an invoice management solution as part of its mid-market solution suite. The solution lets organizations collect, approve, and pay invoices through the tool, thus improving the process for both the accounts payable teams and business travelers. Additional features within the corporate travel suite include the addition of Concur Open Booking, a travel option that lets business travelers book hotels and rental cars outside Concur Travel, and integrate into their existing travel transactions and itinerary data within Concur Travel. Concur integrated the email parsing technology within its solutions so that travelers can now view a single itinerary that combines GDS and direct connect bookings for travel booked outside of Concur.

Concur’s growth is coming with its share of legal issues. The company was recently selected by the U.S. General Services Administration (GSA) for a 15-year deal to offer integrated travel and expense management solutions. The contract is estimated to be worth $1.4 billion. However, the selection is being contested by e-travel vendor CWT Sato Travel, which believes that the move will turn Concur into a monopoly on government travel services for all civilian agencies.

The market is pleased with Concur’s performance. Gartner’s recent report, Market Share Analysis: ERP Software, Worldwide 2011, ranked Concur as the largest SaaS provider within the ERP market based on its software revenues for 2011. The stock is trading at $72.30, with a market cap of about $3.98 billion. It touched a 52-week high of $72.39 earlier in August.