HAMPTON, N.H. – Oracle’s (NYSE: ORCL) F2Q18/C4Q17 earnings release Thursday delivered 55% year-to-year growth in Cloud SaaS revenues, nearing $4.5 billion in annual run rate, particularly driven by growth in ERP [enterprise resource planning] and HCM [human capital management] uptake.
Oracle Cloud SaaS
[Oracle has a strong presence in the Research Triangle area, built around its acquisitions of Tekelec in Morrisville and Netsuite, the corporate parent of Durham-based Bronto.]
Oracle executives noted they expected $2 billion in new SaaS subscriptions over the next four quarters, implying SaaS revenues of over $1.6 billion by 4Q18. With hardware declines in excess of 7% year-to-year, Oracle still managed to deliver more than 6% total revenue growth over the period.
Oracle executives continued to emphasize the opportunity that the Platform and Infrastructure segment (both traditional and cloud) present for the business.
Cloud PaaS and IaaS revenue struggled to deliver year-to-year growth, as Oracle’s now de-emphasized hosting business declines in the wake of new cloud focus.
- VIDEO: You can watch an overview of Oracle’s cloud strategy online.
Oracle’s license and maintenance “on-premises” revenues, on the other hand, saw accelerated growth as customers begin to understand and embrace BYOL [bring your own license] as a cost-effective means to leverage license investments in their transition to cloud.
Oracle expects this improvement in license and maintenance on the platform and infrastructure side to improve notably as the autonomous database becomes available and customers purchase supporting technologies around database licenses and host them on Oracle’s Cloud Infrastructure.
Ultimately, TBR expects SaaS growth to weaken in 2018, as the acquisition of NetSuite becomes fully incorporated in year-ago compares, but shows promise for reaccelerated growth as features of Release 13 resonate with customers and as Oracle’s Adaptive Intelligence capabilities become deciding factors for adoption.
Conversely, the compelling benefits of Oracle’s fully-autonomous database will drive adoption both in license and subscription offerings in the latter half of 2018.
(C) TBR
