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Software Companies 3Q17 Review: IBM, Oracle, Symantec, Microsoft

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Part 3
Software Companies 3Q17 Review: IBM, Oracle, Symantec, Microsoft PART 3 OF 10

What’s Giving Oracle a Strong Start to Fiscal 2018?

Oracle’s CEO cites strong start to fiscal 2018

Oracle (ORCL) has reported fiscal 1Q18 (August quarter) results that exceeded Wall Street expectations on key items.

Revenue of $9.2 billion rose 7.0% YoY (year-over-year) and surpassed the consensus estimate by $180 million. As for earnings, Oracle posted adjusted EPS (earnings per share) of $0.62, a 12% rise YoY and above the consensus estimate of $0.60.

Commenting on Oracle’s 1Q18 performance, CEO (chief executive officer) Safra Catz stated that “Oracle is off to a very, very strong start in FY18.”

What’s Giving Oracle a Strong Start to Fiscal 2018?

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Strong cloud performance gives Oracle confidence

What’s underpinning Oracle’s strong start in fiscal 2018? Cloud computing was at the center of Oracle’s strong 1Q18 results that led management to claim a strong start to the current fiscal year.

Oracle generated total cloud revenue of $1.5 billion in 1Q18, a 51% rise YoY. Cloud accounted for 16% of Oracle’s revenues in the latest quarter, an 11% rise from the year-ago quarter. Cloud is Oracle’s fastest-growing segment. Oracle’s legacy license business rose 3.0% YoY, and its Services business rose 6.0% YoY. However, its Hardware business fell 5.0% YoY. Legacy license sales contributed 54% to Oracle’s revenues in the latest quarter.

Catz added, “The sustained hyper-growth in our multi-billion dollar cloud business continues to drive Oracle’s overall revenue and earnings higher and higher.”

Stiff competition in cloud computing market

Considering how its cloud rivals fared in the latest quarter, it appears Oracle has some tough competition ahead in the cloud computing industry. Amazon’s (AMZN), Microsoft’s (MSFT), and International Business Machines’ (IBM) core clouds rose 42%, 90%, and 20% YoY, respectively, in their quarters that correspond to Oracle’s 1Q18. Alphabet’s (GOOGL) Google, another cloud vendor, reported a 40% rise YoY in its Google Other revenues segment where cloud revenues are reported.

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