Oracle Needs To Make A Bold Move

Oracle (NYSE: ORCL) recently reported its fourth-quarter results that surpassed market expectations. But the Street was not very thrilled as the analysts remained worried about the continued slowdown in the cloud segment.

Oracle’s Financials

Revenue for the fourth quarter grew 3% over the year to $11.3 billion, compared with the Street’s forecast of $11.2 billion. EPS of $0.99 was significantly ahead of the market’s forecast of $0.94.

Photo Credit: May Wong/Flickr.com

Till recently, Oracle was reporting its cloud business separately and even publishing its performance under the three segments – software-as-a-service, platform-as-a-service, and infrastructure-as-a-service. But during the recent quarter, it changed its segments. Oracle claims that it has ended this classification because it now runs a bring-your-own-license (BYOL) program that lets buyers of its database use their licenses either on Oracle’s cloud infrastructure or its on-premise infrastructure. Oracle thus believes that licenses covered by the BYOL program cannot be clearly classified as on-premise or cloud.

For the reported quarter, revenues from Cloud and On-Premise Software climbed 8% to $6.8 billion. Cloud license and on-premise license revenues fell 5% to $2.5 billion. Its hardware revenues grew 10% to $1.1 billion while its services revenues increased 8% to $883 million.

Despite the new segments, Oracle did reveal during its call that the former Total cloud revenues came in at $1.7 billion for the quarter. The market was looking for $1.69 billion. While it did beat market expectations, the number confirmed the market’s worries of a slow down in cloud growth. For the quarter, Oracle ended up reporting a 21.4% growth in cloud revenues compared with 58% growth reported a year ago, and Amazon’s 49% growth reported earlier this quarter. Clearly, cloud is not growing as strong for Oracle.

Oracle ended fiscal 2018 with revenues growing 6% to $39.83 billion and an EPS of $0.90.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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