Oracle Corp.’s streak of revenue gains continued for a fifth straight quarter, buoyed by corporate demand for the cloud-based software it provides for business operations, e-commerce and databases.
Adjusted sales rose 7% to $9.21 billion in the fiscal first quarter, exceeding analysts’ estimates, as sales of cloud-based products continued to make up a bigger portion of the total. Profit also topped average projections, helped by holding down growth in operating expenses.
Oracle executives are investing in new products and hiring more salespeople to add revenue from cloud-related products, which let businesses access software and services via the internet instead of running the programs from their own systems. Cloud-based sales jumped 51% during the quarter ended Aug. 31, the company said Thursday in a statement. Oracle already counts many of the largest corporations in the world as customers, and has been increasingly pushing to switch these clients’ business-software purchases to the cloud.
“They’re leveraging their existing relationships to sell a lot more cloud stuff,” says Patrick Walravens, an analyst at JMP Securities. “It’s been working so far.”
Oracle CEO Mark Hurd, in a prepared statement yesterday, asserted that Oracle’s cloud applications business was outpacing its competition’s. “With SaaS revenue up 62%, our cloud applications business continues to grow more than twice as fast as Salesforce.com,” he said. “ERP is our largest and most important cloud applications business. We now have about 5,000 Fusion ERP customers plus 12,000 NetSuite ERP customers in the Oracle Cloud. That’s 30 times more ERP customers than Workday.”
NetSuite’s ERP system directly integrates with NetSuite’s SuiteCommerce e-commerce software, which is listed as the e-commerce platform by 24 companies in the B2B E-Commerce 300. 16 companies in the B2B E-Commerce 300 list Oracle Commerce for their e-commerce platform, and 18 list Salesforce.com as their customer relationship management platform.
SaaS, or software-as-a-service, lets clients access Oracle’s technology via a web browser without having to deploy it on their own infrastructure. ERP, or enterprise resource planning software, includes software applications for managing such operations as inventory, accounting and customer activity.
Salesforce.com Inc. last month reported a 25.5% increase in revenue for the fiscal second quarter ended July 31, to $2.4 billion, prompting CEO Marc Benioff to project that Salesforce would become the first cloud-based enterprise software company to surpass $10 billion in annual sales.
Oracle followed Benioff’s projection with an announcement late last month that it planned to hire an additional 5,000 employees for its cloud business. Yesterday, it revealed additional cloud plans.
“In a couple of weeks, we will announce the world’s first fully autonomous database cloud service,” said Oracle chairman and chief technology officer, Larry Ellison. “Based on machine learning, the latest version of Oracle is a totally automated ’self-driving’ system that does not require human beings to manage or tune the database. Using AI to eliminate most sources of human error enables Oracle to offer database SLA’s that guarantee 99.995% reliability while charging much less than AWS.” Artificial intelligence, or AI, is a term used to describe software that learns from the data it compiles to improve on its own such functions as recommending products or sources of products. SLA is short for service level agreement and AWS refers to Amazon Web Services.
Shares of Redwood City, Calif.-based Oracle rose as much as 2.2% in extended trading after the report. Investors have been encouraged by the company’s success in selling cloud-based software this year, sending the shares up 37% to record highs.
New software licenses, a measure that’s tied to the company’s traditional installed on-premise software offerings, declined 6.2%. That compares with a drop of 5% in the prior period.
Revenue from cloud-based applications, including programs that help companies handle finance and human resources tasks—climbed 62%. The other part of the cloud business—which includes databases and access to raw computing power—rose 28%.
Revenue, adjusted for items such as contract terms, was $9.21 billion compared with analysts’ projection of $9.03 billion, according to data compiled by Bloomberg. Profit excluding certain costs was 62 cents a share, topping the average estimate of 60 cents.
Oracle has propped up growth by adding employees and making acquisitions. The recently announced hiring surge for its internet-based software business in the U.S., comes on top of more than 4,000 already brought on this year. The software maker also has been adding workers in Europe and other regions.
Last year, Oracle acquired NetSuite Inc., a provider of cloud-based financial services, for about $9 billion, one of its largest deals ever. NetSuite is now known officially as Oracle NetSuite Global Business Unit.
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