Quarterly figures and earnings calls are never dull with Oracle. While Q4 figures announced last night were unexceptional and showed Oracle’s revenues flat and stagnant, it was Larry Ellison’s reaction that set pulses racing. The response to current stagnation is new cloud partnerships with Microsoft, Salesforce and NetSuite.
Even better -- on Monday coming, Oracle is to hold a joint press conference with Microsoft to announce details of the new partnership, although there has been no indication yet as to when the Salesforce and NetSuite partnerships will be made official and what they will consist of.
Three years ago had someone suggested that we might be hearing this from Larry Ellison at an earnings call, we would have laughed given the vitriol Ellison has directed at Salesforce, its CEO Marc Benioff and its cloud computing model, in the past.
Times change, however, and it seems that over the course of this quarter Oracle has been hit badly by smaller and more agile companies that are offering cloud services and applications as an antidote to the expensive, on-premises deployments that characterize many of the larger tech giants.
But to the Q4 figures first. While Oracle managed to lift its profits by 10% over the quarter and double its dividend to shareholders, it wasn’t able to do anything with its revenues.
Oracle is not unique in this with many other IT companies also reporting sluggish revenues in a poor global economic climate. Oracle has been trying to tackle this with the recruitment of a large number of new sales people who, as yet, have failed to have any impact on revenues.
While Safra Catz, Oracle's co-president, said that the new recruits had managed to improve sales in established markets, they were able to do little in the emerging regions, including China, Brazil and Australia whose economies are beginning to demonstrate significant slow-downs.
Oracle is finding it hard to compete with cloud vendors even though it is slowly shifting in this direction. Sales of licenses and cloud subscriptions increased over the quarter, but only by 1% to just over US$ 4 billion, US$ 0.22 billion short of what had been expected. Overall, it announced profits of US$ 3.81 billion on revenues of US$ 10.95 billion up a mere 0.3% over the quarter.
One other figure that Oracle watchers will be interested in is the performance of Sun. Unfortunately, it wasn’t great. Hardware-systems sales, including products gained in the 2010 acquisition declined 13% to US$ 849 million.
Oracle Cloud Business
However, the announcements around this set of figure were exceptional purely for the peek they provided into the coming quarters, and even years, and the development of Oracle’s cloud business.
Over the past couple of years Oracle has been buying its way into the cloud business through acquisitions.
One of Oracle’s co-presidents, Mark Hurd, during last night’s conference call said that there is now 500 new salespeople that will work exclusively with the cloud offerings and that over the next quarter these will have a positive impact on figures. Even still, it was not all bad:
Oracle’s HCM Cloud, CRM Cloud and ERP Cloud grew 50% as we added over 500 new SaaS customers in Q4 alone…Our annualized SaaS revenue run rate is over $1 billion, making us a strong number two in cloud applications – we are larger than SAP and Workday combined. Furthermore, in Q4 our HCM cloud alone generated more SaaS revenue and added more new Fusion HCM customers than Workday added HCM and ERP customers combined in their most recent quarter,” Hurd said.
But it was the news of the new partnerships that had everyone on the edge of their seat, and it was Larry Ellison that made the announcement.
Next week, we will be announcing technology partnerships with the largest and most important SaaS companies and infrastructure companies in the cloud, and they will be using our technology, committing to our technology for years to come,” he said in the conference call.
The press conference will be fielded by Steve Ballmer, along with Mark Hurd and Satya Nadella, the president of Microsoft’s sever and cloud division.
The announcement concerns Oracle’s 12c, database its multitenancy capabilities, and its use as a cornerstone of cloud computing by cloud vendors, in Ellison’s words, “for years to come.”
Already, SaaS vendors like NetSuite and Salesforce are using Oracle databases so a move to 12c here would be no surprise, but Microsoft is a different story. It has been offering its SQL Server database as a competing product for a long time so terms and conditions of any new partnership will be interesting, or as Ellison describes it -- “startling.”
One further final financial point worth noting is that Oracle will be moving off the Nasdaq and onto the New York Stock Exchange in mid-July. More from Oracle on Monday.
Image courtesy Angela Waye (Shutterstock)