Oracle posts flat 3Q sales, but claims growing cloud revenues

Ellison claims that customers are turning to Oracle for integrated cloud applications

Oracle has reported revenues down one per cent to $9.6 billion in the quarter to the end of February - in line with analyst expectations, but with a small rise in "cloud services and licence support" failing to overcome an eight per cent decline in hardware sales.

The results also indicate that the rise in cloud computing revenues heralded by the company less than two years ago has slowed, possibly vindicating claims made in a recent investor law suit that the company had strong-armed some customers into shifting to the Oracle cloud.

However, in a conference call, co-CEO Safra Catz asserted that cloud was growing strongly. "We're seeing robust double-digit growth rates for total cloud revenue in all regions, with especially strong growth in Asia Pacific. In terms of product categories, ERP grew in the mid-30s and the verticals grew in the high 30s," said Catz.

She added: "Our software business has remained extremely stable and resilient as we have made the transition to faster-growing SaaS business that entailed trading nonrecurring upfront license revenue for recurrent long-term subscription revenue."

Catz added that it was shifting its cloud focus to its infrastructure business, which would include its widely used database products.

Mark Hurd, Catz' co-CEO, also described it as a "solid quarter", and claimed that the company's "overall ERP and HCM [human capital management] annualized revenue is now $2.8 billion", reflect growth "in the mid 20s". He was also keen to emphasise big account wins, including On Semiconductor, Balck & Veatch and Amica Mutual.

Founder and chairman Larry Ellison, meanwhile, claimed that "the growth in our cloud applications business has been driven by our Fusion Suite and NetSuite. Both the Fusion Suite of applications and NetSuite are growing very, very rapidly".

Ellison claimed that Oracle provides a more integrated approach to cloud computing applications compared to rivals.

"Both Fusion and NetSuite are integrated suites of applications, including sales, service, human resources, financials, supply chain and manufacturing applications. No other cloud services provider has such a comprehensive suite of applications covering both the front office and the back office.

"Most customers want their cloud services provider to make their applications work together. Customers do not like to be responsible for the complex process of integrating lots of different applications, running on lots of different vendors' clouds."

NetSuite was established as a cloud computing enterprise applications company as long ago as 1998, but was acquired by Oracle for $9.3 billion in July 2016.

However, Oracle's claims of cloud computer growth have been somewhat undermined by its decision last year to roll-up reporting of software sales and licence revenues with cloud revenues. According to critics, this was done in order to obfuscate disappointing sales growth in cloud.