What Could Drive Oracle’s Revenue Growth in Fiscal 2018



Key catalysts

Oracle (ORCL) has generated mid-single-digit growth in the last three quarters. In fiscal 2017, the company returned to growth after witnessing revenue decline for two years, mainly due to strong cloud demand.

Despite entering the cloud space later than leading cloud players such as Amazon (AMZN), Microsoft (MSFT), and IBM (IBM), Oracle has accelerated its cloud computing business by migrating its customer’s database to the cloud, and its aggressive acquisition strategy has supported its cloud product portfolio. Acquisitions reduce the time needed to create new software for its cloud platform, thereby winning more clients.

As shown in the graph above, Oracle’s revenue has grown at a compound annual rate of 0.3% in the last five years. Meanwhile, in the last five quarters, it has grown at a compound annual rate of 1.5%, driven by cloud demand. In the first three months of fiscal 2018, the company’s revenue rose year-over-year to $28.6 billion from $26.8 billion.

Other tailwinds

The company’s wide-margin products, such as its Fusion ERP (enterprise resource planning) and HCM (human capital management) products, have continued to gain traction across industries. Oracle’s license business, buoyed by BYOD (bring your own device) programs, could be another revenue driver. The successful integration of Netsuite and the ongoing digitalization trend could also drive the company’s top line. New and innovative products, such as Oracle’s fully autonomous self-driving database, could further contribute to Oracle’s revenue growth in fiscal 2018.

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