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Why Oracle Expects Cloud ARR of $2 Billion in Fiscal 2018

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Oracle’s cloud offerings in fiscal 2018

Earlier in this series, we discussed Oracle’s (ORCL) cloud offerings’ performance in fiscal 4Q17. Although Oracle is finding it difficult to report overall revenue growth, with the exception of fiscal 4Q17, its cloud offerings have shown consistent growth. This growth is visible in its cloud revenue growth trend.

Safra Catz, Oracle’s co-CEO, attributed the company’s strong fiscal 4Q17 results to “rapid adoption of the Oracle Cloud,” ushered in by 75% growth in the company’s SaaS business. In fiscal 2017, its Cloud segment’s bookings reached $2.1 billion.
Gartner

This increased traction of Oracle’s cloud offerings prompted Mark Hurd, Oracle’s co-CEO, to expect to sell “a lot more than $2B in new cloud ARR” in fiscal 2018 after exceeding this fiscal year’s goal. ARR refers to annualized recurring revenue.

Continuing with its habit of including Salesforce (CRM) in its earnings releases, Oracle noted, “This is the second year in a row that we sold more cloud ARR than salesforce.com.”

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Oracle’s improved position in the cloud IaaS space

The chart above represents Gartner’s Magic Quadrant for cloud IaaS,[1. infrastructure-as-a-service] in which Gartner categorizes players based on their vision and ability to execute. It shows that Amazon (AMZN) and Microsoft (MSFT) are well ahead of their peers, while Google (GOOG) is slowly moving ahead.

Alibaba (BABA), IBM (IBM), and Oracle were the new entrants into the Gartner Magic Quadrant’s visionary group.

Later in this series, we’ll see that despite strong traction of its cloud offerings, Oracle still has a long way to go in the competitive, consolidated cloud space.

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