Cloud Is Still a Key Driver for Oracle’s Growth



Impressive cloud growth

As we saw previously in this series, Oracle’s (ORCL) cloud offerings—SaaS (software-as-a-service), PaaS (platform-as-a-service), and IaaS (infrastructure-as-a-service)—managed to grow by more than 30% in fiscal 4Q15. The company reported that it won 1,217 SaaS customers in 4Q15—compared to 800 customers in 3Q15. It added 1,419 customers in PaaS.

In 4Q15, Oracle added 312 and 380 new customers to its HCM (human capital management) and ERP (enterprise resource planning) business, respectively. Oracle stated that its cloud revenue crossed the $2.3 billion run rate. Oracle continued to claim that it’s growing faster than Workday (WDAY) and SAP (SAP). It claimed that its ERP customer base of 1,100 in the cloud was ~10X the size of Workday.

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SaaS and PaaS bookings record 200% growth

In its fiscal 4Q15 earnings release, Oracle reported that its SaaS and PaaS bookings grew by ~200% to $426 million. Oracle’s cloud billings grew by 70% from $468 million in fiscal 2014 to $834 million in fiscal 2015.

For comparison, Salesforce and Workday posted 215% and 31% billings growth in their recent quarter. The above-mentioned cloud bookings and billings growth rate is positive for Oracle’s future revenue and earnings growth.

Amazon continues to dominate the cloud space

According to a report by Synergy Research, Amazon (AMZN) continues to dominate the cloud space. It has 30% market share. It’s followed by Microsoft (MSFT) with a 10% market share. Microsoft and Google (GOOG) reported 96% and 87% YoY (year-over-year) growth, respectively, in 4Q14—as the above chart shows. IBM and Salesforce.com are other leading players that made the list of the top five players.

Oracle’s cloud offerings have posted impressive growth in fiscal 4Q15, but it hasn’t made a mark on the top five players in the cloud space.

If you’re bullish about Oracle, you can invest in the Technology Select Sector SPDR Fund (XLK). XLK invests about 3.41% of its holdings in Oracle.


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