The Channel logo


By | Neil McAllister 18th December 2014 00:04

Hurd'n'Catz leading Oracle to the cloud, but core biz still lags

Software, hardware remained sluggish in Q2

Oracle beat analysts' estimates for once for the second quarter of its fiscal 2015, with an earnings report that otherwise showed only modest results.

The database giant's total revenues of $9.6bn for the three months that ended on November 30 were better than expected, but still only amounted to 3.5 per cent year-on-year growth.

Oracle managed to post earnings of $0.69 per diluted share, which was about a penny better than the average Wall Street estimate. But its net income was down 2 per cent annually, to $2.5bn, as it was buffeted by both a weakened dollar and less-than-stellar sales overall.

As in past quarters, Oracle's core software customer base remained loyal, with revenues from software license updates and product support growing by 5.6 per cent from the year-ago period, to $4.8bn.

But sales of new software licenses – which might be the best predictor of long-term growth for the software business – were down yet again. At just $2.0bn for the quarter, they shrank 3.6 per cent from a year ago, which was an even bigger dip than they took in Q1 of 2015.

The one bright spot in Oracle's software portfolio was its cloud business, which once again grew by double digits. Total cloud revenues were up 45 per cent, year-on-year, to $516m. Revenues for Oracle's PaaS and SaaS offerings accounted for $361m of that, which was a 39 per cent gain, while IaaS was up 60 per cent, to $155m.

In a conference call with financial analysts on Wednesday, Oracle CEO CTO Larry Ellison said that by the fourth quarter of fiscal 2015, Oracle expects to pull in $250m in new, recurring annual PaaS and SaaS subscriptions. And if that growth rate continues, he said, next year Oracle will sell as much PaaS and SaaS combined as market leader

Be that as it may, however, the cloud is not where Oracle really makes its money – not by a long shot. Its combined PaaS, SaaS, and IaaS revenues amounted to just 5.4 per cent of the total, in fact. Meanwhile, the other major segments of its business – hardware and services – also showed weakness.

Total hardware revenues for the quarter were flat, year-on-year. Product sales were flat at $717m, while hardware support sales gained just 1.3 per cent, to $617m. Despite Ellison's claims that integrated hardware and software solutions are what customers want, not many of them seem to be stepping up to buy from Oracle.

Services revenues, meanwhile, were down 2.5 per cent from the year-ago period, to $935m.

Still, Wall Street seemed unbothered by Oracle's somewhat lackluster results. Some meager growth is better than none, after all – and, perhaps buoyed by the executive team's tub-thumping about its cloud gains, investors sent Big Red's share price up nearly 5 per cent in after-hours trading. ®

comment icon Read 1 comment on this article or post a comment alert Send corrections


Frank Jennings

What do you do? Use manual typwriters or live in a Scottish croft? Our man advises
A rusty petrol pump at an abandoned gas station. Pic by Silvia B. Jakiello via shutterstock

Trevor Pott

Among other things, Active Directory needs an overhaul
Baby looks taken aback/shocked/affronted. Photo by Shutterstock

Kat Hall

Plans for 2 million FTTP connections in next four years 'not enough'
Microsoft CEO Satya Nadella


League of gentlemen poster - Tubbs and Edward at the local shop. Copyright BBC
One reselling man tells his tale of woe