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.
Gladys Rama is the senior site producer for RCPmag.com and senior editor of AWSInsider.net.