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Oracle profit slides 24 percent as customers move to the cloud

James Niccolai | June 18, 2015
Oracle has reported a sharp drop in profit for the quarter just ended, with customers spending more on its cloud services but less on software that runs in their own data centers.

He also went to great pains to explain that Oracle is growing faster in cloud applications than rivals Salesforce.com and Workday -- although that might not be surprising, since for Oracle it's a newer business. "Clearly, our cloud business has entered hyper-growth," Ellison said.

Oracle's total revenue for the quarter, which ended May 31, was $10.7 billion, the company said. That was down five percent from a year earlier and below the $10.9 billion that financial analysts had expected, according to Thomson Reuters.

Net income was $2.8 billion, down 24 percent from a year earlier. Excluding certain one-time items, earnings per share was $0.78, well short of the analyst forecast of $0.86.

Oracle's business has shown signs of slowing -- its sales last quarter were flat from the year before -- but this is the first quarter in more than two years that its overall sales have dropped.

That was largely due to the strengthening dollar, which can make products from U.S. companies more expensive to buy overseas. Oracle said its total revenue would have increased three percent without the currency impact.

But even allowing for the currency effect, sales of new software licenses were down 10 percent. Revenue from license updates and support fees climbed eight percent on that basis, and total hardware revenue climbed five percent.

 

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