Oracle has reported revenue and earnings growth in its first quarter, with its revenue from new software licences rising 7%, to $563m (£314m).
Oracle posted revenue of $2.22bn for the quarter ended 31 August, also up 7% from the same quarter last year.
Net income was $509m, up 16% from last year. Chief financial officer Harry You said Oracle's trailing 12-month operating income of $4bn and operating margin of 38.5% were all-time highs.
Revenue was slightly below analysts' $2.23bn mean estimate.
Oracle's general and administrative expenses grew sharply over past year as it spent $28.5m on its campaign to acquire PeopleSoft.
Its sales and marketing, product support, research and development, and administrative costs all rose but it kept its total operating expenses nearly flat by trimming its services costs by 5%, saving $23m.
Core database sales drove Oracle's software sales growth, and Oracle president Charles Phillips said its advantage over rivals in that market is clear. "We have grid, they don't," he said.
Growing industry interest in deploying distributed computing platforms is driving sales of Oracle's grid-enabling database technology, he said.
Sales of new licences for applications plunged from last year's first quarter, however, falling to $69m, a 36% decline. Oracle's total applications revenue, including support and services, fell 9% to $497m.
Phillips and other Oracle executives downplayed the seriousness of the applications sales decline. You, who joined Oracle two months ago from Accenture, said the company was unhappy with the applications results but expects growth in later quarters.
Phillips said Oracle is restructuring its applications sales group, creating a dedicated sales force in each geographic region. It is also rolling out a major update of its E-Business Suite, version 11i10, that Phillips expects to spark sales growth.
Oracle's services group also showed declines, as services revenue fell 7% to $476m and consulting revenue slipped 11%. Those declines, however, were expected, and will probably continue throughout the financial year, You said.
Oracle, along with its customer companies, is increasingly tapping lower-cost labour in developing countries for IT services work, and its billing rates are lower for those consultants, he said. He also said Oracle's increasing reliance on outside partners has reduced its services revenue.
Oracle's trend toward hiring in developing countries is evident in its headcount numbers. Its US headcount fell, as it did every quarter last year, to 16,500 - about 1,000 fewer US workers than it had at the end of last year's first quarter. However, its international headcount grew by nearly 3,000, raising its total employee roster to 42,100.
You said Oracle is optimistic about its growth for the rest of the financial year. "We appear to have powered through a lull in the economy," he said. "The software industry [trend] is the strong becoming stronger and the weak becoming weaker and less relevant to the market."
Executives briefly addressed Oracle's campaign to take over PeopleSoft through a hostile, $7.7bn tender offer to PeopleSoft's shareholders.
Oracle remains committed to acquiring PeopleSoft but still faces two major hurdles, according to president Safra Catz. Winning approval for the deal from the European Commission, and the repeal of PeopleSoft's "poison pill", an anti-takeover provision in PeopleSoft's bylaws. Because of those obstacles, no deal is imminent, Catz said.
Stacy Cowley writes for IDG News Service