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Oracle Q3 2016: cloud revenue grows, US currency strength takes toll

SaaS and PaaS combined contributed $583m in third quarter, up 57% in US dollar terms, while IaaS was down 2% in dollars to $152m

Oracle’s third-quarter results for 2015-16 show continued growth in cloud revenue, which now makes up 8% of its overall revenue.

The strength of the US dollar took a toll. Total revenue of $9bn is 3% down on the equivalent quarter a year ago.

Software as a service (SaaS) and platform as a service (PaaS) combined contributed $583m, up 57% in US dollar terms, while infrastructure as a service (IaaS) was down 2% in dollars to $152m.

On-premise software revenue, still the mainstay of Oracle’s revenue, was $6.3bn, down 4% in dollars. Hardware revenue was down 13% in dollars to $1.1bn, and services revenue was 7% down in dollars to $793m.

Oracle chairman and CTO Larry Ellison said in a statement: “In absolute dollar terms, Oracle is already selling more enterprise SaaS and PaaS new cloud revenue than any other company in the world – including

Safra Catz, Oracle co-CEO, said: “Our Cloud SaaS and PaaS revenue growth rate accelerated to 61% in constant currency in Q3. Our cloud business is now in a hyper-growth phase. Our gross margins are climbing toward our target of 80%.”

In an earnings call with analysts, Catz added: “The move to cloud is a generational shift in technology that is the biggest and most important opportunity in our company’s history. We embarked on this transformation over 10 years ago, when we began rewriting all of our software to enable our customers to leverage our solutions as cloud solution.

“We now have the most complete set of cloud services in the industry, with more than11,000 of our customers around the word already using these cloud services to help run their business.”

Read more enterprise software results

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  • Oracle’s Q2 results for the 2016 fiscal year indicate 26% growth in cloud revenue to $649m, 7% of its total revenue.
  • October 2015 results round-up from Microscope: Microsoft, Amazon, Juniper and NetSuite.

Fellow CEO Mark Hurd said: “Q3 SaaS and PaaS bookings were up 77% in constant currency. We added 942 new SaaS customers in the quarter, including several customers that switched from Workday HCM to Oracle Fusion HCM.

“We had more than 250 customers go live on Fusion SaaS HCM and Fusion ERP in Q3 alone. We now have over 11,000 SaaS customers with nearly 2,000 Fusion ERP customers.”

On the analyst call, in answer to a question about cloud momentum outside the US, Hurd added: “I think the… acceptance of cloud market is global. It used to be, three, four years ago when I was talking about cloud in Europe, I would get incredible amounts of resistance to issues around security, data sovereignty, and so on. Many of those are beginning to go away.

“These customers want to know their data is in their country and that’s much of the capex we invested a couple of years ago that we put in, and that’s a big advantage for us. Most of our competitors don’t have that infrastructure deployed around the world.”

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