Oracle Revenues Fall But Cloud Growth Continues

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Larry Ellison applauds “hyper-growth” in SaaS and PaaS divisions, as cloud grows almost 50 percent

Strong sales in the cloud department did not stop Oracle’s revenue falling one percent this week as the software vendor reported its fourth quarter results.

In the quarter ending May 31, Oracle’s profits hit $2.81 billion (£2bn), up from $2.76 billion in the same quarter a year ago. But total revenue dropped one percent, down to $10.59 billion (£7.42bn).

Revenues from Oracle’s cloud division rocketed almost 50 percent in the quarter to $859 million (£602m), the company reported on Thursday.

SaaS and PaaS

Specifically, Oracle’s SaaS and PaaS divisions hit growth of 66 percent year-over-year, with cloud infrastructure revenue growing five percent.

larry_ellison oracle open world keynoteOracle CEO Safra Catz said that this cloud growth is not expected to slow down, as the company raised its guideance for the next quarter’s SaaS and PaaS revenue growth to between 75 and 80 percent.

“Fourth quarter SaaS and PaaS revenue growth accelerated to 68 percent in constant currency, significantly higher than my guidance,” said Catz. “SaaS and PaaS gross margins continued to improve throughout the year, exiting FY16 at 56 percent. Bookings in Q4 were also very strong.”

Oracle said it had added 1,600 new SaaS customers and 2,000 new PaaS customers in the quarter. The company is now reporting it also commands nearly 2,600 Fusion Enterprise Resource Planning (ERP) customers for its public cloud service, “ten-times more cloud ERP customers that Workday”.

“We expect that the SaaS and PaaS hyper-growth we experienced in FY16 will continue on for the next few years,” added Oracle Executive Chairman Larry Ellison.

“That gives us a fighting chance to be the first cloud company to reach $10 billion (£7bn) in SaaS and PaaS revenue. We’re also very excited about the availability of version 2 of Oracle’s IaaS – which will enable us to speed up the growth of our IaaS business, which customers want to buy in conjunction with our SaaS and PaaS.”

Meanwhile, Oracle’s on-premise software business slowed again in the quarter, with revenue flat at $8.4 billion (£5.9bn).

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