Oracle returned to growth after two quarters that fell short of earnings estimates. The company reported new software licenses and cloud software subscriptions increased 4% year-over-year to $1.6 billion. License renewal and support revenues increased 7% to $4.4 billion. Oracle database, Goldengate data-integration software and BI software led software growth.
Hardware sales continued to lag, falling 14% to $669 million. The company said sales of engineered systems, including Exadata, continue to grow, but it acknowledged that top-of-the-line Sparc M series (Unix) server sales are lagging.
Oracle's total quarterly revenues increased 2% year over year (4% in constant currencies) to $8.3 billion, beating Wall Street estimates, according to Reuters.
Oracle's profit picture improved, with net income increasing 6% from Q1 2012 (8% in constant currencies) to $2.1 billion. The first quarter performance initially raised the company's stock price in after-hours trading, but downbeat estimates for the second quarter ultimately weighed on shares.
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Oracle co-president Safra Catz said the company faces particularly tough comparables to the company's best quarter in 2012, so she issued cautious guidance for a 4% decline to 6% increase in revenue for the second quarter. She cited government austerity measures and lukewarm economic conditions as curbing growth, but competition from fast-growing cloud rivals including Salesforce.com in CRM and Workday in HCM and ERP is also a factor.
Co-president Mark Hurd claimed that Oracle is gaining share against its rivals, which may be the case with competitors in on-premises software. SAP's software revenue for the second quarter ended in June was 982 million euros ($1.28 billion), down 7% year-over-year and 3% in constant currencies. But Salesforce, Workday and other cloud vendors continue to rack up double-digit gains. In their most recent respective quarters, Salesforce revenues were up 31%, Workday revenues were up 71% and NetSuite revenues increased 35%.
Hurd also took advantage of the Wednesday conference call with analysts to highlight announcements expected at next week's Oracle OpenWorld conference in San Francisco. The company's in-memory-database answer to SAP Hana was the first thing mentioned.
Oracle CEO Larry Ellison was absent from Wednesday earnings call, attending a "very important Americas Cup Race," Catz reported. But in a prepared statement, Ellison offered what sounds like a preview for his opening keynote at next week's Oracle OpenWorld event in San Francisco.
Touting the coming in-memory option for Oracle database, Ellison said, "Virtually every existing application that runs on top of the Oracle database will run dramatically faster by simply turning on the new In-Memory feature. Our customers don't have to make any changes to their applications whatsoever; they simply flip on the in-memory switch."
That's a clear shot across SAP's bow, though we're sure to hear more pointed barbs from the captain of Oracle.
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