Oracle swipes at AWS, Microsoft and Salesforce as cloud revenue hits $1bn

Joanna Estrada
March 19, 2017

"On an annualised non-GAAP basis, our total cloud business has reached the $5bn mark, and our SaaS and PaaS businesses grew at the astonishing rate of 85% in Q3", Catz said. The company's revenues and profits have been driven to new heights due to the recent decision to lay more emphasis on cloud products.

Oracle shares surged by almost 6% to $43.05 during after-hours trading on the day the earnings were reported. Overall, earnings were much better than many analysts expected, with some before the report expressing concern about the declining license revenues and questioning whether Oracle's transition to the cloud was happening swiftly enough, and shares shot more than 6% higher Thursday.

"Oracle has had a tough half-decade, which may be fondly remembered as 'the half-decade of not making a quarter.'growth in cloud subscriptions is more than offsetting the license revenue declines, even organically, marking a key milestone".

Sales of the company's cloud-computing software and platform service rose almost 62 percent to $1.19 billion.

The company missed on revenue estimates ($9.2 billion) but beat on EPS (69 cents, topping estimates by 7 cents). The growth was likely helped by Oracle's $9.3 billion NetSuite acquisition past year, since this is the first quarter after the closing of the deal.

Oracle Co. (NYSE:ORCL) had its price objective lifted by equities researchers at Bank of America Corp to $54.00 in a research note issued to investors on Thursday. Our new Gen2 IaaS is both faster and lower cost than Amazon Web Services.

Hurd took the opportunity to point out Oracle's lead over another cloud superstar, Salesforce.com Inc.

Within cloud, Infrastructure-as-a-service emerged in the limelight with a 19% y-o-y revenue growth as compared to a 9% growth in Q2, due to benefits from the second generation infrastructure deployment. Mr. Hurd added: "Over the past year, we sold more new SaaS and PaaS than Salesforce.com, and we're growing more than 3 times faster". Doing so makes those customers more inclined to use Amazon's portfolio of cloud services rather than Oracle's. Additionally, he noted that Oracle's largest customers need to manage Oracle database workloads in the Oracle Cloud, a capability that Amazon does not now have. You can expect some of those big deals to be announced in the coming weeks.

Among the leading SaaS players-including Microsoft (MSFT), Salesforce (CRM), and SAP (SAP)-Oracle and Google (GOOG) reported the highest growth.

Income on a GAAP basis for the quarter was $2.24 billion, or 53 cents per share, up about 5 percent from $2.14 billion, or 50 cents per share, for the same period of 2016. Oracle's total profit for the quarter was roughly $2.2 billion, up from about $2.1 billion.

This past year, the company strengthened IaaS and PaaS offerings with the acquisitions of Dyn and NetSuite.

The company revenue to grow between negative one percent and positive two percent. Over time, she added, gross margins on the cloud business will be about 80 percent.

The company also recently disclosed a quarterly dividend, which will be paid on Wednesday, April 26th.

Other reports by Click Lancashire

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