Oracle Cloud Growth Falls Shy of Estimates

Oracle's total cloud revenues grew at a healthy rate in its latest financial quarter, but it wasn't enough to assuage Wall Street concerns.

The company reported its second-quarter earnings on Thursday for the period ended Nov. 30. Oracle's Software-as-a-Service (SaaS) business grew by 55 percent over the same period last year, drawing $1.12 billion.

Its combined Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS) operations grew by 21 percent, earning $396 million for the quarter. Oracle kickstarted a major IaaS push late last year in a bid to compete against market leader Amazon Web Services Inc. (AWS).

All together, Oracle's cloud businesses earned $1.52 billion in Q2, making up less than one-fifth of the company's total revenues of $9.6 billion. Growth for its overall cloud business was 44 percent year over year.

Compared to Wall Street estimates, however, Oracle's cloud earnings were a slight miss: Analysts expected total cloud revenues to hit $1.56 billion, and SaaS revenues at $1.14 billion.

Oracle's Q3 projections also don't bode well for its outlook. During the earnings call, Oracle CEO Safra Catz projected cloud revenues to grow at a much more sedate pace -- anywhere between 21 percent and 25 percent year over year. Analysts had been expecting 42 percent growth, in comparison.

Oracle stock dropped by as much as 6 percent on Friday morning trading.

Nevertheless, Catz characterized Oracle's cloud as "gathering momentum" in a prepared statement. "I expect the business to continue to grow and strengthen over the coming quarters," Catz said.

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.


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