Oracle’s cloud revenues continue to go in the right direction – with Larry Ellison predicting its PaaS and IaaS business will outperform SaaS in time.
Total cloud revenues for the company’s most recent quarter hit $1.36 billion (£1.06bn), or 13% of overall revenue, compared to $859 million and 8% this time last year. SaaS contributed 70% of the overall total with $964m, compared to PaaS and IaaS with $397m.
Speaking to analysts after the announcement, Ellison, Oracle’s CTO, said that in addition to the company’s ‘demonstrated strength’ in SaaS – again calling out Salesforce – the company had turned a corner in IaaS and PaaS. “During this new fiscal year, we expect both our PaaS and IaaS businesses to accelerate into hyper growth, the same kind of growth we are seeing with SaaS,” he said, as transcribed by Seeking Alpha.
An example of this was last month, when AT&T agreed to move thousands of its large scale databases to Oracle’s IaaS and PaaS. Ellison promised the deal was ‘just the beginning’, while CEO Mark Hurd added that even if the deal provided no revenue Q4, it was 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.”
While cloud revenues go up, on-premise has fallen year on year. Total quarterly on-premise revenue was $7.52bn, down from $7.58bn this time in 2016, making total revenues at $10.89bn, up 2.7% from $10.59bn this time last year.
The rhetoric echoes what was said at the previous quarter’s results in March. At the time, Hurd said that if trends continued, it would be ‘just a matter of when we catch and pass Salesforce in total cloud revenue’. Ellison said this time around: “The reason we are confident that we will pass Salesforce is because we have a three-fold SaaS application suites for ERP, for HCM and for CRM including financials, procurement, supply chain, manufacturing, human resources, payroll, marketing, sales and service. Salesforce in contrast only competes in three of these nine market areas.”
Yet the figures don’t lie. Earnings Forecast Focus, writing in Seeking Alpha, said this quarter represented a ‘turnaround’ for Oracle. “I expect annual revenues to grow by double digits as soon as next year,” the blogger wrote. “Given that this growth will be attributable to cloud, this will also result in margin expansion and thus higher profits.”
You can read the full Oracle earnings report here.
