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Oracle 2017-18 Q1 results: Cloud revenue jumps by 51%

Oracle’s first quarter 2017-18 results show jump in cloud revenue of 51%, boosted by NetSuite acquisition. Executives continue to be bullish on cloud growth, and the AI makeover of core database is flagged

Ahead of its annual OpenWorld conference in San Francisco, Oracle has declared first quarter 2017-18 revenue of $9.2bn, up 7% this time last year. Cloud revenue was $1.5bn, up 51% on the same quarter last year, and representing 16% of the total.

Full year 2016-17 cloud revenue was 12% of the annual total of $37.7bn, 4% less than the most recent quarter. The 2016 acquisition of small to medium-sized enterprise-focused cloud applications company NetSuite will have swelled the cloud coffers.

Non-GAAP operating profit for first quarter was up 11% to $3.8bn, and the operating profit margin was 41%.

In a statement, Oracle co-CEO Safra Catz said: “The sustained hyper-growth in our multi-billion dollar cloud business continues to drive Oracle’s overall revenue and earnings higher.”

Fellow CEO Mark Hurd said: “With SaaS [software-as-a-service] revenue up 62%, our cloud applications business continues to grow more than twice as fast as Salesforce.com. ERP [enterprise resource planning] is our largest and most important cloud applications business.

“We now have about 5,000 Fusion ERP customers, plus 12,000 NetSuite ERP customers in the Oracle Cloud. That’s 30 times more ERP customers than Workday,” he added.

Oracle’s founder, chairman and CTO, Larry Ellison, added: “In a couple of weeks, we will announce the world’s first fully autonomous database cloud service. Based on machine learning, the latest version of Oracle is a totally automated ‘self-driving’ system that does not require human beings to manage or tune the database.

“Using AI [artificial intelligence] to eliminate most sources of human error enables Oracle to offer database SLAs [service-level agreements] that guarantee 99.995% reliability while charging much less than AWS.”

Ellison had Amazon Web Services (AWS) square in his sights at 2016’s OpenWorld, where he staked a claim for infrastructure-as-a-service (IaaS) business in enterprise IT, as well as software and platform as a service (PaaS).

Read more about recent enterprise IT financial results

Speaking about the most recent quarterly results, in an analyst call transcribed by the SeekingAlpha financial news service, Catz said: “As our SaaS business continues to scale and grow dramatically, the gross margin has expanded. The gross margin for SaaS in the quarter was 67%, up from 59% last Q1.”

In the same call, Ellison highlighted what will be announced at OpenWorld in two weeks’ time as a major AI makeover for the Oracle database. 

“Oracle will become the world’s first fully autonomous database. Based on machine learning, this new version of Oracle is a totally automated self driving system that does not require a human being either to manage the database or tune the database,” he said..

“Customers moving from Amazon’s Redshift to Oracle’s autonomous databases can expect to cut their cost in half or more, and Oracle will be providing SLAs that guarantee those cost settings to customers that move.”

Hurd mentioned Eurostar International, GlaxoSmithKline and Nestle among a roster of new ERP customers. “I expect Q2 cloud booking growth to be strong or stronger than our Q1 growth rate. We are the fastest growing cloud company at scale,” he added.

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