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.

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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.

For the current quarter, Oracle did not publish an outlook. It did mention that it expects to grow revenues at a higher rate than FY18. It also expects a double-digit growth rate on the EPS. For the current quarter, Oracle forecast an EPS of $0.68-$0.70 which was below the Street’s forecast of $0.72.

Oracle’s Cloud Concerns

Oracle realizes that the Cloud is the biggest driver in the market. And earlier this month, it released a new offering for Oracle Cloud SaaS called Oracle Soar. Oracle Soar aims to speed up the migration of on-premises enterprise resource planning, human capital management, supply chain management, and enterprise performance management solutions to SaaS offerings. Soar will help simplify the migration of the company’s E-Business Suite to its cloud applications. Amazon already offers a migration tool for its cloud. But Oracle believes that its migration tool offers a more exhaustive solution as it includes educational and consulting services.

Oracle also made it to Gartner’s Magic Quadrant for Cloud Infrastructure-as-a-Service report. Gartner tagged Oracle’s cloud in the niche player quadrant.

But despite Oracle’s moves, the slowing growth rate suggests that Oracle may need to up its game in the sector. One of the leading concerns that the market has for Oracle’s cloud is the lack of developer community. Oracle may need to take a page from Microsoft’s playbook to address that concern. Recently, Microsoft announced a $7.5 billion acquisition of Github, a leading software development platform.

Oracle should look at making a bold acquisition as well – such as that of Workday, or ServiceNow. With its cache of $67.3 billion in cash and equivalents and securities, it can certainly afford them. Trading at $28 billion, the acquisition of Workday, will help Oracle add more relevant enhancements to its HCM offering. Meanwhile, an addition of ServiceNow, a $32.6 billion company, would add to the cloud capabilities that Oracle can offer to its clients. Either of these acquisitions will give Oracle a much-needed push into the Cloud while ensuring that it gets a lead over rivals like Microsoft and Salesforce who are pushing very hard into Cloud territories.

Its stock is currently trading at $43.30 with a market capitalization of $176.25 billion, a new 52-week low. It touched a 52-week high of $53.48 in March this year.