Oracle Cloud Shift Continues As Q4, Full-Year Revenues Dip - InformationWeek
IoT
IoT
Cloud // Platform as a Service
News
6/17/2016
10:06 AM
Connect Directly
Twitter
RSS
E-Mail
50%
50%

Oracle Cloud Shift Continues As Q4, Full-Year Revenues Dip

Oracle revenues declined slightly year-over-year in the fourth fiscal quarter, but they still beat analyst estimates. Meanwhile, Chairman and CTO Larry Ellison told financial analysts the company is ready to meet customer demand in the Infrastructure-as-a-Service market with its second-generation data center technology.

7 PaaS Startups To Watch
7 PaaS Startups To Watch
(Click image for larger view and slideshow.)

Oracle fourth quarter revenues, announced Thursday, came in slightly higher than Thompson Reuters consensus analyst estimates, even as revenues continued year-over-year declines, both for the quarter and for the full fiscal year.

The results come as the software giant, known for its enterprise applications and database software, is working to transition many of its solutions -- along with its own business model. Oracle is aiming to fit into a marketplace in which cloud computing continues to grow, and on-premises software sales are flat or declining. The company is emphasizing software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS) offerings.

Oracle's Q4 revenues were $10.6 billion, compared with $10.7 billion posted during the same period a year ago. Analysts had expected $10.5 billion. The company reported diluted earnings per share of 66 cents, slightly higher than last year's 62 cents per diluted share for the same period.

(Image: gong hangxu/iStockphoto)

(Image: gong hangxu/iStockphoto)

For the full fiscal year, Oracle's total revenues came in at $37 billion, a decline from the previous year's $38.2 billion. Earnings per diluted share for the year were $2.07, down from the previous year's $2.21.

Oracle put the spotlight on its growing cloud sales in its results announcement. Cloud SaaS and PaaS revenues were $690 million for the quarter, up 66% over the same period a year ago.

"Fourth quarter SaaS and PaaS revenue growth accelerated to 68% in constant currency, significantly higher than my guidance," said Oracle co-CEO Safra Catz, in a prepared statement. She said strong bookings in Q4 enabled her to raise guidance for Q1 SaaS and PaaS revenue, predicting growth of 75%-80% over the same period a year ago.

In the same statement, Co-CEO Mark Hurd said Oracle added more than 1,600 new SaaS customers and more than 2,000 new PaaS customers in Q4. "In Fusion ERP alone, we added more than 800 new cloud customers," he said. "Today, Oracle has nearly 2,600 Fusion ERP customers in the Oracle Public Cloud -- that's 10-times more cloud ERP customers than Workday."

[Will IoT push PaaS to the next level? Read 7 Reasons the IoT Will Run on PaaS.]

During the Thursday earnings call, Oracle executives touted the company's high growth rates in SaaS and PaaS revenues, saying the rates exceeded those of competitors such as Salesforce and Workday.

While Catz and Hurd put the focus on SaaS and PaaS growth, Oracle founder, CTO, and chairman Larry Ellison said during the earnings call that Oracle was also working on its IaaS game. This would pit the company against IaaS heavyweight Amazon Web Services (AWS). During the earnings call, Ellison called IaaS the third leg of Oracle's cloud strategy, and said his company is experiencing "a huge amount of demand from existing SaaS customers" for IaaS, and also big demand from database customers.

Ellison said Oracle has now built the second generation of its data center, and claimed it is highly competitive to anything else out there in terms of cost, scalability, and reliability. "We made the investment," Ellison said. "We have the right technology with our second-generation data centers."

But Oracle may already be losing some IaaS customers to AWS. Chipmaker Exar recently told InformationWeek about how it moved to AWS from on-premises when it migrated from Oracle 11 to Oracle 12. Perhaps Oracle believes it can recapture some lost business by ramping up its IaaS efforts going forward.

Cloud SaaS competitor Salesforce may be going a different route, embracing AWS and putting some of its technology into the IaaS AWS cloud.

Oracle's Ellison squarely targeted cloud competitors during his Oracle OpenWorld keynote address in October 2015. The move to offer IaaS pushed Oracle into new territory, but so far this business segment hasn't demonstrated the same kind of growth for Oracle as PaaS and SaaS.

For instance, in Oracle's Q3, IaaS revenue was $152 million, and in Q4 IaaS revenue was $169 million. For the fiscal year, IaaS contributed $646 million in revenue, making up a wafer-thin slice of Oracle's total revenue pie of $37 billion.

Jessica Davis has spent a career covering the intersection of business and technology at titles including IDG's Infoworld, Ziff Davis Enterprise's eWeek and Channel Insider, and Penton Technology's MSPmentor. She's passionate about the practical use of business intelligence, ... View Full Bio

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Video
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll