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Oracle cloud software revenues rise another 77 percent in Q1 2017

Scott Carey | Sept. 21, 2016
In its first financial results of 2017 Oracle announced total revenue was up two percent to $8.6 billion.

In its first financial results of 2017 the US enterprise software giant Oracle announced total revenue was up two percent to $8.6 billion. This is just shy of expectations, which were set at between two and five percent total revenue growth.

Shares subsequently dropped three percent overnight, with uncertainty around the company's proposed $9.3 billion acquisition of NetSuite also playing a part. Net profit for the quarter was $1.8 billion.

Oracle continues to see growth of its combined Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) cloud business, with Q1 revenues up 77 percent to $798 million. This is in line with Oracle expectations of between 75-80 percent growth.

In his statement about the results CEO Mark Hurd said: "This year we are on track to sell more than $2 billion of SaaS and PaaS annually recurring revenue. We believe this will be the second year in a row that Oracle has sold more SaaS and PaaS than any cloud services provider."

Hurd couldn't resist a dig at cloud Enterprise Resource Planning (ERP) software provider Workday in his statement, continuing a trend that chairman Larry Ellison set by calling out Salesforce in previous results statements. Hurd said: "In the first quarter alone, we added more than 750 new SaaS customers including 344 new SaaS Fusion ERP customers - that's more ERP customers than Workday has sold in the history of their company."

It's important to remember that total cloud revenue of $969 million is just eleven percent of its total revenue - up from seven percent this time last year - but Oracle is focused on the growth of its cloud business as it transitions away from on-premise software and hardware.

New licence revenue continues to fall, down 11 percent to $1 billion, but its core on-premise software revenues remain flat at $5.8 billion. Total hardware revenues also continue to fall, down 12 percent to $996 million.

Away from SaaS and PaaS, Oracle's Infrastructure-as-a-Service (IaaS) continues to struggle to match the likes of Amazon Web Services and Microsoft Azure, with just $171 million coming in from that division. Compare that to the market leader AWS, which booked eye watering Q2 2016 revenues of nearly $3 billion.

It is expected that Oracle will announce a next generation of its IaaS business at its OpenWorld conference next week, with Ellison declaring that it will be 20 percent cheaper than AWS. 

Oracle is also currently locked in a lawsuit with a former employee who claims that her contract was terminated after she threatened to blow the whistle on Oracle's "improper accounting practices in its cloud services business", according to Reuters.


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