Its cloud business is now half the size of Salesforce, and the gap is closing quickly.
One of the drawbacks to the Christmas season is that good stories slip by and no one covers them until much later, if at all. Such was the case with Oracle’s third quarter earnings, released on December 17. By that point, not many people were paying attention (tip of the hat to Forbes for first noticing it) to anything except shopping lists, but what Oracle had to say was significant.
Oracle is pulling off a minor miracle. It is adapting to and adopting a whole new technology and business model that should, in theory, be completely contrary and contradictory to its current model. One of the subtheories of Geoffrey Moore’s business bible, Crossing the Chasm, is that companies established in one old industry are often unable to change with the times when their market shifts. As a result, they are often left behind or forced to go through a painful reinvention.
On paper, that should be the case for Oracle. It’s firmly wedded to on-premises software, has a decidedly 1980s-90s business model of licenses rather than subscriptions, and its leader is 70 years old in an insanely ageist industry where no one over 30 can get venture money.
Yet the company is adapting and picking up customers fast. Look at the stats disclosed by Larry Ellison and co-CEOs Mark Hurd and Safra Catz during their earnings call with financial analysts.
- Total cloud revenue reached $590 million for the quarter, a 47% increase from the third quarter of last year.
- Cloud SaaS and PaaS revenue of $364 million, up 41% from last year and more than double last year’s growth.
- Cloud infrastructure as a service revenue of $155 million, up 62%, although that’s due in part to the prior year being comparatively low.
- 860 new SaaS customers, 230 of which subscribe to more than one set of apps.
- Nearly 650 existing customers expanded their cloud services in the quarter.
- More than 460 new SaaS customers in Oracle’s Customer Experience (CX) business.
- 250 new SaaS customers in its ERP and Enterprise Performance Management (EPM) business.
- 230 new customers in Human Capital Management (HCM).
- Oracle’s Fusion products saw triple-digit growth in both revenue and bookings.
- 150 new customers in Oracle’s four-month-old platform as a service (PaaS) business