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Oracle Q3 2017-18 results see cloud revenue grow to $1.6bn

Oracle’s third-quarter results for fiscal year 2018 show an increase of almost 7% of overall revenue to $9.8bn, of which 18% was cloud

Oracle has announced cloud revenue of $1.6bn, and total sales of S$9.8bn, for the third quarter of its 2017-18 year.

Cloud represented 18% of overall revenue, and software as a service (SaaS) was up by 33% to $1.2bn on the same year-ago quarter. The supplier reported infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) revenue as, taken together, $415m, up by 28%.

In the same quarter last year, cloud represented 13% of overall revenue, and stood at $1.2bn. Overall revenue was $9.2bn.

GAAP (generally accepted accounting principles) operating profit was up by 15% to $3.4bn, giving an operating margin of 35%.

However, the company reported a GAAP net loss of $4bn, due to a one-time charge totalling $6.9bn related to the US 2017 Tax Cuts and Jobs Act. This was also reported as a non-GAAP net profit of $3.5bn, up by 21%. The loss proved unpopular on financial markets, causing a 0.61% intra-day drop in share price on the New York Stock Exchange.

In a statement, Oracle co-CEO Safra Catz said: “I feel quite confident that we will comfortably deliver on my original [full-year 2017-18] forecast of double-digit non-GAAP earnings per share growth.”

In the analyst earnings call, a transcript of which is provided by the SeekingAlpha financial news website, Catz said of cloud revenue: “Cloud PaaS and IaaS revenue, excluding legacy hosting services, saw growth of 49% in constant currency and 56% in US dollars. As legacy hosting services become a smaller part of total PaaS and IaaS, the underlying growth of PaaS and next-generation IaaS will be more visible.”

Fellow co-CEO Mark Hurd said in the statement: “Our Fusion ERP and HCM SaaS applications suite revenues grew 65% in the quarter. Our Cloud SaaS applications business is rapidly approaching $5bn … and it’s still early days.

“Less than 15% of our on-premise applications customers have begun to migrate their applications to the cloud. As the other 85% of our applications customers start to move their applications … we have a huge opportunity… We expect to more than double the size of our SaaS business very quickly.”

More on recent enterprise IT financial results

  • SAP declared full-year 2017 revenue of €23.5bn, of which nearly €2.8bn was cloud, alongside acquisition of Callidus, a cloud-based “lead to money” service.
  • Oracle’s second-quarter 2017-18 results showed an increase in cloud revenue of 44%, and overall growth of 4% to US$9.6bn. Executives are bullish against competition, buoyed by artificial intelligence makeover of database.
  • Microsoft propels Dynamics and Azure growth in Q1 2018 earnings.

On the analyst call, he highlighted customer wins for the quarter, including Avis Budget Group for ERP, Dubai Ports for Fusion ERP, Grant Thornton for HCM (Human Capital Management), and Morrisons Supermarkets for both Fusion ERP and HCM.

Oracle’s founder and CTO, Larry Ellison, said: “The Oracle autonomous database is now fully available in the Oracle Cloud.” This was in reference to the core database upgrade, underpinned by the addition of machine learning for automatic patching and other repair, the supplier announced at its OpenWorld event in San Francisco in October 2017.

“And there are more autonomous cloud services to come,” he continued, including autonomous analytics, mobility, application development and integration, in 2018. “Oracle’s new suite of Autonomous PaaS services delivers an unprecedented level of automation and cost savings to our customers,” he said.

On the call, Ellison revealed that Oracle itself has moved to the cloud: “One of the biggest users we have has now just migrated to the cloud, and that would be us, Oracle. We have migrated the entire company to SaaS. That’s an important point because we’ve moved the suite of ERP capabilities that we had traditionally on-premise to cloud.”

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