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Oracle Q3 2016-17 results: cloud revenue up, overall growth 2%

Oracle’s third-quarter results for fiscal year 2017 show 2% growth in overall revenue, with cloud representing 13% of the total. Executives are bullish on cloud ERP growth prospects

Oracle’s third-quarter results for 2016-17 indicate 2% growth in top-line revenue compared with the same quarter last year – a rise from $9bn to $9.2bn.

Cloud revenue was $1.2bn, 13% of the total, representing a 63% increase from last year, when it stood at $735m for the equivalent quarter, making up 8.2% of overall revenue.

The company’s cloud revenue for the quarter comprised $1bn for software as a service (SaaS) and platform as a service (PaaS) combined, and $200m for infrastructure as a service (IaaS). Operating profit was $3bn and operating margin 32%.

Oracle chairman and chief technology officer Larry Ellison said in a statement: “Both our SaaS and PaaS businesses are doing great, but I’m even more excited about our second-generation IaaS business, which is both faster and lower-cost than Amazon Web Services. And now our biggest customers can run their largest and most demanding Oracle database workloads in the Oracle Cloud – something that is absolutely impossible to do in the Amazon Cloud.”

At the supplier’s OpenWorld customer conference in San Francisco last October, Ellison staked a claim for IaaS business in enterprise IT, as well as SaaS and PaaS. The supplier has been on a march to the cloud for several years.

Oracle co-CEO Safra Catz said that on an annualised basis, the company’s “total cloud business has reached the $5bn mark, and our SaaS and PaaS businesses grew at the astonishing rate of 85% in Q3”.

In an earnings call with analysts, transcribed by the Seeking Alpha financial news service, Catz said: “Next year I expect our cloud revenue will be larger than our new software licence revenue.”

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Fellow CEO Mark Hurd added: “Over the past year, we sold more new SaaS and PaaS than, and we’re growing more than three times faster. It’s just a matter of when we catch and pass in total cloud revenue.”

In the analyst call, Hurd added: “In ERP [enterprise resource planning], we were up 280% organically and with NetSuite [acquired in 2016], ERP is now our largest pillar. Our active base of [cloud] ERP customers is now approaching 3,700 and, in total, we now have 13,103 customers in our SaaS active base and 25,000 with NetSuite.”

On the analyst call, Ellison said on the topic of ERP: “Our ability now to service much smaller customers than we could have serviced in the past is because the cloud allows you to deploy ERP in much, much lower costs. You don’t have to have ERP. You don’t have to build the datacentre. Obviously, you don’t have to hire programmers. You don’t have to hire a bunch of data operations people.

“We do all that for you, and therefore the available market has at least doubled what it used to be. And we’re also beginning to see, as Mark [Hurd] said, SAP customers moving their ERP and some very, very large SAP customers looking very closely at our ERP systems. So we expect to have some big wins in the SAP install base.”

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