Oracle swipes at AWS, Microsoft and Salesforce as cloud revenue hits $1bn

Tom Wright
clock • 3 min read

Cloud now makes up 11 per cent of Oracle's total revenue, hitting double digits for the first time

Oracle has laid down the gauntlet to Amazon Web Services (AWS), Microsoft and Salesforce after its quarterly cloud revenue hit $1bn for the first time.

For the three months ending 28 February 2017 Oracle posted a total revenue of $9.2bn (£7.5bn), up two per cent on the same period last year.

Total cloud revenue was up 62 per cent year on year to just under $1.2bn, taking cloud's contribution to Oracle's total revenue into double digits for the first time at 11 per cent.

On an earnings call, a transcript of which can be found on Seeking Alpha, Oracle co-CEO Safra Catz claimed that Oracle's cloud revenue will surpass its new software licensing revenue next year.

"Our pivot to the cloud is now clearly in full strength," she said. "We continue to see outside growth rates in our cloud business, especially when compared with our key competitors who are all seeing slowing growth.

"More importantly, the increase in revenue from our cloud business has overtaken new software licence business decline on an annual basis.

"Next year I expect our cloud revenue will be larger than our new software licence revenue."

TechMarketView analyst Angela Eager said in a blog post that while Oracle's cloud growth looks promising, it still has some way to go to reach the likes of AWS.

"[Oracle chairman] Larry Ellison makes much of Oracle's desire to challenge Amazon Web Services in IaaS [infrastructure as a service] - at the moment it is long-range gazing at AWS' $3.5bn revenue from its latest quarter," she said.

"There is no doubt that Oracle is continuing to make cloud progress from a technology and a customer adoption perspective, but there are a couple of items of note.

"Q3 SaaS/PaaS [software as-a-service/platform as-a-service] revenue was boosted by the NetSuite contribution and Saas/PaaS growth was slightly down on the 81 per cent growth of Q2. The IaaS business - that is being signposted to eventually be Oracle's largest and fastest-growing cloud segment - is a long way from proving itself.

"When commenting on Oracle's Q217 results, we questioned whether it had bottomed out on its cloud transition; a quarter on and we think it has."

Sticking it to the competition

Senior Oracle executives were bullish when speaking of their completion in the cloud space, claiming to be cheaper than AWS and on course to surpass Salesforce's cloud revenue.

"We have hundreds of thousands of database customers and we have millions and millions of applications that run on the Oracle database," Ellison said.

"Most of those databases and most of those customers will move most of their databases and most of these workloads to the cloud. Right now we have a huge technology lead over both Amazon and Azure with our new generation-two IaaS.

"Generation two of Oracle's IaaS cloud now has the ability to run customers' largest databases, something that is impossible to do using AWS. Amazon can only run relatively small Oracle databases in their cloud.

"Many Oracle workloads now run 10 times faster in the Oracle cloud versus the Amazon cloud [and] it also costs less to run Oracle workloads in the Oracle cloud than the Amazon cloud."

Co-CEO Mark Hurd said the vendor's cloud progress has left it hot on the tail of Salesforce, which reported revenue figures that were below expectations at the end of February.

"Over the last year, we sold more new SaaS and PaaS than Salesforce.com, and we're growing more than three times faster," said Hurd. "If these trends continue - where we are selling more SaaS and PaaS in absolute dollars and growing dramatically faster - it's just a matter of when we catch and pass Salesforce.com in total cloud revenue."

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