Oracle Reports Better Than Expected Q3 Results As Cloud Revenue Accelerates

On this Tuesday, Oracle reported better-than-expected fiscal third quarter earnings, but fell short of revenue projections. The firm delivered non-GAAP third quarter earnings of 64 cents a share on revenue of $9 billion. Net income for the quarter remained $2.14 billion (50 cents a share).

Larry Ellison, Oracle executive chairman and CTO said “In absolute dollar terms, Oracle is already selling more enterprise SaaS and PaaS new cloud revenue than any other company in the world — including Salesforce.com. We are growing much faster than Salesforce.com. We also have many more SaaS products than Salesforce.com. In some of our most important SaaS markets, such as ERP, HCM, supply chain and manufacturing, Salesforce.com does not participate at all.” Cloud software as a service (SaaS) and platform as a service (PaaS) revenue remained $583 million, increased by 57 % in USD (which is nearly 61 % in constant currency). Cloud infrastructure as a service (IaaS) revenue remained $152 million, down 2 % in USD (up 2 % in constant currency). Short-term deferred revenues were $6.9 billion, up 7% in USD (up 11% in constant currency) compared with a year ago.

Safra Catz, CEO of Oracle added “Our Cloud SaaS and PaaS revenue growth rate accelerated to 61% in constant currency in Q3. This dramatic revenue increase drove our non-GAAP SaaS and PaaS gross margins up to 51% in Q3 as compared with 43% in Q2. Our cloud business is now in a hyper-growth phase. Our gross margins are climbing toward our target of 80%. These two factors will ignite substantial EPS and cash flow growth over Oracle’s next few quarters.”

The company’s shares moved up more than 4 % on Tuesday and closed Tuesday at $38.74, with a consensus price target of $43.50 and a 52-week trading range of $33.13 to $45.24.

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Amy Sue, CFA, is equity analyst and reports Basic Materials, Financial & REIT and Industrial Goods sectors. Prior joining Broadway Leader, Amy Sue worked with Wells Fargo. If you have a great story idea for Amy Sue, you can write at [editor@broadwayleader.com].

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