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How Oracle’s Software Licensing Business Is Performing

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Oracle’s Software Licensing segment’s revenue growth

Earlier in this series, we discussed Oracle’s (ORCL) cloud database strategy to compete with Amazon (AMZN). Let’s see how its Software Licensing business performed in fiscal 2Q18. The Software Licensing segment includes new software licenses, software license updates, and product support. Thus, it has a significant contribution to the company’s overall revenues. In fiscal 2Q18, this segment’s revenues grew 3.7% to ~$5.0 billion. In fiscal 2Q18, its contribution towards the company’s overall revenues stood at ~51.5% compared to ~53% in fiscal 2Q17.

Though cloud offerings failed to lift the market sentiment, they continue to dominate Oracle’s fiscal 2Q18 results. However, the Software Licensing segment, which is Oracle’s largest business segment, has a high margin, and thus its contribution can’t be ignored.

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New software licenses

Within its Software Licensing segment, Oracle’s new software licenses revenues were almost flat. They rose 0.4% to ~$1.4 billion in fiscal 2Q18. New license sales hold special significance on an industry level, as they’re considered a barometer for customer demand for their databases and other business applications.

Highlighting the role of BYOL (bring your own license) in the revival of growth in new software licenses, Safra Catz, Oracle’s CEO, said, “Because BYOL is now available and customers better understand their tradition options to move to the Oracle Cloud, technology new software license revenue is dramatically improving from the declines we were seeing previously.”

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