Oracle cloud sales climb to $1.5 billion
Also, co-founder Larry Ellison touts new version of company’s database product slated to debut at Oracle Open World conference in San Francisco next month
REDWOOD CITY » Oracle’s decision to move more of its business into the cloud continued to pay off in its fiscal first quarter, but its outlook disappointed investors Thursday.
Oracle on Thursday reported total cloud revenue of $1.5 billion for its first quarter, a 51 percent increase over the same period a year ago. The growth in cloud-business revenue seemed to demonstrate where Oracle’s future is headed. The quarter marked the first time Oracle reported more sales from its cloud offerings than new software licenses, which fell by 6 percent from last year’s first quarter, to $966 million.
Oracle Co- Chief Executive Safra Catz said the “sustained hyper-growth” of the company’s cloud business was at the root of Oracle’s overall betterthan- expected quarterly results, and should improve its business in the years to come.
“With a larger and more predictable share of revenue, we expect larger margin growth” going forward, Catz said during a conference call to discuss Oracle’s results.
Oracle said that for the three months ending August 31, it earned $2.2 billion, or 52 cents a share, on revenue of $9.2 billion, compared with a profit of $1.8 billion, or 43 cents a share, on $8.6 billion in sales in the same period a year ago.
Excluding one- time items, Oracle earned $2.7 billion, or 62 cents a share.
By that measure, Oracle topped the forecasts of Wall Street analysts, who had expected the company to earn 60 cents a share on $9.03 billion in revenue.
But Catz said that for its second quarter, the company expects earnings, excluding one-time items, to be in a range of 64 cents to 68 cents a share, with revenue rising between 2 percent and 4 percent from the $9 billion it reported a year ago. That would put Oracle’s sales in a range of $9.18 billion to $9.36 billion.
Analysts had earlier forecast Oracle to earn 68 cents a share, on revenue of $9.4 billion for the period that ends in November.
Because of that outlook, Oracle’s shares pulled back by about 4.4 percent to $50.46 in after-hours trading as of 4:21 p.m. PDT.
Oracle breaks down its cloud business into two categories: software as a service ( known in the industry as SaaS), which is cloud-based software sold on a subscription basis, and platform as a service ( PaaS), or an application platform that lets customers develop, run and manage applications without having to build the histor- ically costly infrastructure necessary for such technology setups.
SaaS revenue rose 62 percent in the first quarter from a year ago, to $1.1 billion, while its PaaS sales, along with associated infrastructure, climbed 28 percent, to $400 million.
Rob Enderle, technology analyst and president of research firm the Enderle Group, said Oracle is “executing impressively well” with its cloud business, especially considering that it is an old- school software company making a big move into new areas of the industry.
“They aren’t really a turnaround (company), but they remain in transition and the new revenues would indicate that this transition is going surprisingly well,” Enderle said.
On a conference call, Larry Ellison, Oracle’s cofounder, chairman and chief technology officer, touted the company’s upcoming Oracle Open World conference in San Francisco in October. Ellison said that at the event, Oracle will show off the next version of its database product, which is “totally automated and doesn’t need any human being to tune or manage the database.”
Ellison, who often likes to use company conference calls to tout what he thinks makes Oracle better than its competitors, said that “AWS can’t do any of this stuff,” in reference to the capabilities of Amazon’s own Amazon Web Services cloud-based software offerings.