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Oracle 2016-17 results: cloud revenue up 60%, overall growth 2%

Oracle’s full-year and fourth quarter results for fiscal year 2016-17 indicate 2% growth in overall revenue, with cloud representing 12% of total. Executives are once again bullish on cloud ERP growth prospects

Oracle has declared full year 2016-17 revenue of $37.7bn, up 2% on the previous year. Cloud revenue was $4.6bn, up 60% on the year before and representing 12% of the total.

The supplier stated that fourth quarter software as a service (SaaS) revenue was up 67% to $964m on the same quarter last year, while platform as a service (PaaS) plus infrastructure as a service (IaaS) revenue was up 40% to $397m.

For the full year, operating income was $12.7bn, and operating margin was 34%. For the fourth quarter, operating income was up 3% to $4.1bn, and the operating margin was 37%.

For the full year, SaaS revenues were up 61% to $3.2bn compared with fiscal year 2016. PaaS and IaaS revenues were up 60% to $1.4bn, and total cloud revenues were up 60%.

Oracle co-CEO Safra Catz said in a statement: “We continue to experience rapid adoption of the Oracle Cloud, led by the 75% growth in our SaaS business in the fourth quarter. This cloud hypergrowth is expanding our operating margins, and we expect earnings per share growth to accelerate in fiscal 2018.”

Co-CEO Mark Hurd said: “We sold $855m of new annual recurring revenue [ARR] for cloud in the fourth quarter, putting us over our $2bn ARR bookings goal for fiscal year 2017. We also delivered more than $1 bn in quarterly SaaS revenue for the first time. We expect to sell a lot more than $2bn in new cloud ARR in fiscal year 2018.”

Completing the triumvirate, Oracle’s founder, chairman and CTO, Larry Ellison, said: “AT&T has agreed to migrate thousands of existing Oracle databases containing petabytes of data, plus their associated applications workloads to the Oracle Cloud. In the coming year, I expect more of our big customers to migrate their Oracle databases to the Oracle Cloud.”

At the supplier’s OpenWorld customer conference in San Francisco in October 2016, 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 in the past several years.

Read more about recent enterprise IT financial results

  • SAP announced €5.29bn in first quarter 2017 revenue, of which €906m was for cloud subscription and support, 17% of the total.
  • Oracle’s third-quarter results for fiscal year 2017 show 2% growth in overall revenue, with cloud representing 13% of the total.
  • With Amazon Web Services’ growth rate continuing to decline over successive quarters, what does this mean for its cloud rivalry with Microsoft and Google?

In the financial results statement released for fiscal year 2016-17, IaaS and PaaS revenues are reported together, and separately from SaaS revenue.

Speaking about this year’s third quarter results, Oracle co-CEO Safra Catz said, on an annualised basis, the company’s “total cloud business has reached the $5bn mark”, which is $400m more than reported for the year.

In an earnings call with analysts about the full year results, as transcribed by the Seeking Alpha financial news service, Catz said: “The cloud has become our predominant growth vehicle. You can see the continuing revenue momentum of our cloud business in the cloud billings and deferred revenue.

“The gross deferred revenue balance is now over $2.4bn, up 63% in US dollars. Cloud billings grew 42% in US dollars this quarter.”

Ellison said: “Last fiscal year, we sold more than $2bn in cloud annually recurring revenue. This is the second year in a row that we sold more cloud ARR than We are now well on our way to passing them and becoming number one in the enterprise SaaS market.

“Furthermore, Oracle is now the clear leader in cloud ERP [enterprise resource planning]. Oracle also competes in IaaS and Paas – here, our primary competitor is Amazon Web Services. During this new fiscal year, we expect both our PaaS and IaaS businesses to accelerate into hypergrowth.”

Hurd drew attention to the AT&T deal: “While it provided no revenue at all in the fourth quarter, it’s a very strategic win as a reference to all of our customers about the modernisation of databases and the movement of them to the cloud.”

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