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

The Mercury News Weekend - - BUSINESS - TECH­NOL­OGY By Rex Crum rcrum@ba­yare­anews­group.com

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.


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