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Recent Update on the Software and Semiconductor Industry

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Part 2
Recent Update on the Software and Semiconductor Industry PART 2 OF 10

A Look at Oracle’s Cloud Predictions for Fiscal 2018

Cloud contributes 13% of revenues

The recent gains in Oracle (ORCL) stock have been mostly driven by investor optimism regarding the company’s Cloud Computing business. Oracle competes with Amazon (AMZN), Microsoft (MSFT), and Salesforce (CRM) in this arena.

In fiscal 4Q17,1 Oracle generated $1.4 billion in cloud-related revenues, up 58% from fiscal 4Q16. Cloud sales made up 13% of the company’s overall revenues in fiscal 4Q17, up from 8.0% of its revenues in fiscal 4Q16.

A Look at Oracle’s Cloud Predictions for Fiscal 2018

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Oracle’s cloud growth 

The bulk of Oracle’s cloud sales come from its SaaS (software-as-a-service) business. The company’s other cloud segments are PaaS (platform-as-a-service) and IaaS (infrastructure-as-a-service), whose sales are combined and reported together.

Oracle’s SaaS sales rose 67% to $964 million in fiscal 4Q17, while PaaS and IaaS combined brought in $397 million in revenues, up 40%. As a result, SaaS is Oracle’s fastest-growing cloud business. Oracle’s SaaS business has more growth headroom, as only a tiny fraction of the company’s traditional software customers have signed up for its cloud-based software offerings.

Oracle’s cloud prediction

Despite the optimistic prospects for Oracle’s SaaS, this is also one of the more competitive cloud segments. In addition to Amazon, Microsoft, and Salesforce, Oracle is also battling Adobe (ADBE) and Automatic Data Processing (ADP) in the SaaS space.

An investor can assess the future of Oracle’s cloud business by looking at its cloud predictions. Oracle’s co-CEO, Mark Hurd, suggested that just two companies could account for 80% of SaaS revenues by 2025. 

  1. fiscal 4Q17 ended May 31, 2017
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