Oracle profit slides despite rapid growth in cloud

SaaS and PaaS sales climbed sharply, but revenue and profits were down

Oracle reported its fourth consecutive quarter of declining revenue on Tuesday, as rapid growth in its cloud business failed to offset the tepid demand for more traditional products.

Oracle said sales of its cloud services jumped 40 percent in the quarter ended Feb. 29, to $735 million, led by its platform-as-a-service and software-as-a-service offerings.

But those cloud services accounted for only 8 percent of its overall business, and when it came to the hardware and software that customers install in their own data centers, the picture was less rosy.

Sales of Oracle's on-premises software, including its database and ERP products, fell 4 percent from last year to $6.3 billion, the company said. Hardware sales fell 13 percent to $1.1 billion.

The results were pulled down by the strong U.S. dollar, but even allowing for the currency impact, hardware sales declined and software revenue was flat.

The challenge Oracle faces is that businesses are shifting spending to the cloud and away from equipment they install in house. Oracle needs to make sure it captures a large chunk of that cloud spending, and doesn't lose it to rivals like Amazon and Workday.

"Our customers are not going to leave us," Chairman Larry Ellison said during Oracle's earnings call. "On the contrary, they're going to move a lot of what they have to the Oracle cloud."

There are some positive signs. Oracle added 942 new SaaS customers last quarter, CEO Mark Hurd said, bringing the total to 11,000. He rattled off a long list of names to make his point, including Blue Shield of California and Japan Airlines.

Oracle has more than 10 times the number of ERP customers as Workday, Ellison bragged. And it plays in areas that Salesforce.com does not, like human resources management.

But the trends overall haven't been good. Oracle's net profit has been flat or down for eight straight quarters now, and even allowing for the strong dollar, its net profit fell 8 percent in the recent period.

Revenue overall last quarter was $9.0 billion, down 3 percent from the year before and slightly lower than analysts had expected, according to Thomson Reuters.

Excluding one-time charges, earnings per share was $0.64, which was slightly better than expected. That pushed Oracle's stock 4 percent higher in after hours trading, to $40.34.

Oracle isn't known as being the easiest vendor to work with, and Safra Catz, who shares the CEO title with Hurd, made a vague pledge Tuesday that changes are coming.

"We're aiming to be the easiest company in the business to do business with, and you're going to see some very good, positive changes that we think customers will love," she said.

She didn't elaborate, and an Oracle spokeswoman didn't reply to a request for comment.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

James Niccolai

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?