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How Oracle’s Cloud Offerings Performed in 2Q18

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Cloud offerings growth was less than expected

Earlier in the series, we discussed Oracle’s (ORCL) share buyback program, which was fueled by the company’s huge cash reserves. We also discussed the expected rise in Oracle’s cash reserves, which the company could use to make more acquisitions.

On December 14, 2017, Oracle announced its fiscal 2Q18 results. Its revenue and non-GAAP EPS of $9.63 billion and $0.70 exceeded analysts’ expectations by $60 million and $0.02, respectively. Now let’s look into the performance of Oracle’s cloud offerings in fiscal 2Q18. Oracle’s cloud SaaS revenue rose 55% to $1.1 billion, while its cloud PaaS and IaaS rose 21% to $39 million. Oracle’s total cloud revenue in fiscal 2Q18 grew 44% to $1.52 billion. Despite the strong double-digit growth, Oracle’s total cloud and SaaS revenues fell short of analysts’ expectations of $1.56 billion and $1.14 billion, respectively.

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3Q18 marked the second straight quarter of lower-than-expected guidance for cloud revenues

In the current quarter, Oracle expects its cloud revenues to grow in the range of 21% to 25% on a YoY basis. The company’s guidance also failed to meet analysts’ expectation of 42% growth in the current quarter. Fiscal 3Q18 marked the second consecutive quarter that Oracle gave a lower-than-expected guidance for its cloud business.

In fiscal 1Q18, the company projected its cloud revenues would rise 39% to 43%. Oracle exceeded its own guidance with actual cloud revenue growth of 44%.

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