Oracle's Earnings Call


Oracle is flying high as it goes into its annual Oracle OpenWorld customer conference, based on the news from its earnings call on Thursday. It's clear that the company has succeeded in pivoting from on-premises to cloud software offerings.

While it will continue to service its on-premises customers, the revenue acceleration from cloud products and services suggests that Oracle will derive an increasing share of its future revenues from cloud solutions.

Co-CEO Safra Catz said during the earnings call that the quarter's US$816 million in combined revenue from cloud, SaaS and PaaS was up 82 percent from the prior year and up 80 percent from her guidance to analysts.

Organic growth in SaaS and PaaS has accelerated for seven straight quarters, according to the company. It was a very good quarter for Oracle.

CTO Larry Ellison said that the growth was primarily from new business and not from converting a large portion of Oracle's customer base to cloud solutions. This is significant, because the customer base is seen as a huge reservoir of future business.

However, it must be noted that in another part of the presentation, Catz said that license revenues were down -- a natural consequence of the shift to cloud computing but one that nevertheless must be stated.

Oracle's cloud revenue growth was significant, and at $8.7 billion, overall revenues were substantial. However, the company still has some distance to travel to reach the performance of Salesforce's annual revenues are roughly on a par with Oracle's quarterly revenues, but Salesforce captures all of its revenues -- north of $2 billion in a quarter -- from cloud operations.

Although Oracle's cloud revenues are noteworthy, executives were careful to point out that they come from infrastructure services as well as Software as a Service. Oracle competes with Amazon, whose AWS services deliver running computer hardware with operating systems and databases preinstalled, so that customers don't have to expend the effort to install and manage their own infrastructures.

So, while Oracle's cloud revenues are impressive, they're not comparable to those of pure cloud companies -- but that's to be expected given Oracle's position and large legacy base.

Still, success is success, and Oracle has established momentum along with a credible claim to being a major player in the new world of cloud computing. This comes at a time when much of its installed customer base must be wondering what comes next, and how to reduce the costs associated with running a modern IT department.

Cloud solutions are clearly a part of any long-term corporate technology direction, and the news Oracle shared this week will help the company's cause next week, as it makes its annual pitch to customers to further invest in its products and services.

Denis Pombriant is a well-known CRM industry researcher, strategist, writer and speaker. His new book, You Can't Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. He can be reached at [email protected]

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