Service Provider Cloud

Oracle's Cloud Transition Pays Off

Oracle, like most mature enterprise vendors, is struggling to make the transition to cloud. But Oracle said Wednesday it has turned the corner.

"Our pivot to cloud is now clearly in full swing," said Oracle Corp. CEO Safra Catz on a call discussing Oracle's third-quarter 2017 earnings on Wednesday.

Oracle Corp. (Nasdaq: ORCL) is seeing revenue increases from cloud overtaking declines in new software licenses, and next year cloud revenue will be bigger than new software license revenue, Catz said. The company expects its business to return to the growth it saw in the previous decade.

That comes as Oracle's competitors' growth is slowing, Catz notes. She didn't name names -- but Amazon Web Services Inc. (AWS) growth lost momentum in the last financial quarter, even as its increases continued to be impressive. (See AWS Growth Slows, But Amazon's Still Killing It in Cloud.)

Oracle's non-GAAP total revenues were $9.3 billion for the quarter, up 3% in US dollars. Cloud revenue was up 62% in the same period. Total 3Q cloud revenue was $1.2 billion, comprising 13% of total company revenue, compared with $735 million, or 8% of total company revenue in the year-ago quarter.

Flying High
Photo: D. Miller
Photo: D. Miller

The total cloud business reached the $5 billion annual run rate mark, Oracle says.

New software license revenue was $1.4 billion, a little more than cloud revenue, for 15% of total revenue. New software license revenue share of total revenue is declining; revenue was $1.7 billion in the year-ago quarter, declining 16% year-over- year. And new software licenses comprised 18% of total revenue in the third quarter of last year.

Non-GAAP SaaS and PaaS revenues were $1.1 billion, up 85% year-over-year in US dollars.

Non-GAAP net income was $2.9 billion, up 6% in US dollars, and non-GAAP earnings per share was $0.69, up 7% in US dollars.

Oracle beat analyst expectations of 62 cents a share on revenue of $9.26 billion.

The company traded at $45.44 up 5.55% after hours Wednesday.

No story about Oracle's cloud strategy is complete without mentioning Larry Ellison's previous cloud skepticism. In 2008 remarks to analysts, Ellison called the cloud "nonsensical" and "complete gibberish," and said articles about cloud computing are "crap."

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— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Friend me on Facebook Editor, Enterprise Cloud News

kq4ym 3/21/2017 | 10:11:24 AM
Re: Long-Term How times change and how predicting the future isn't as easy as it seems. Alhtough Ellison had his doubts about the cloud nine year ago, now it's reported that " revenue increases from cloud overtaking declines in new software licenses, and next year cloud revenue will be bigger than new software license revenue." Probably a shorter term forecast might have been more accurate?
JohnMason 3/19/2017 | 12:58:23 AM
Long-Term Sometimes, a good measure of what a company sees its long-term expected growth to be is the growth in hiring. Does anyone know how hiring is going at Oracle?
Joe Stanganelli 3/16/2017 | 11:58:18 AM
Oracle and cloud To be fair, Ellison's statements at the time were pretty spot on about most of the buzz-hyped evangelism that was going on at the time.  I took his statements as more a commentary on the state of cloud buzz than on cloud computing itself.

As for Oracle and the cloud today and in the future, I'd expect big trouble for the tech giant if Salesforce eventually decides to get into the back office.
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