Oracle claims strong quarter and bright future for its cloud services

Cloud-based ERP doing particularly well, says CEO Hurd

Oracle has forecast above-estimate profits for the current quarter after releasing figures showing growth in its cloud services and licence support in Q2. The financial results published yesterday show revenues from "total cloud services and licence support plus cloud licence and on-premise licences" rising 1 per cent to $7.9 bn.

Total revenues in Q2 were $9.6 bn, a rise of 2 per cent in constant currency compared with the same period in 2018.

The period had been good one for Oracle shareholders, said CEO Safra Catz.

"In Q2, non-GAAP earnings per share grew 19 per cent in constant currency," she said in a statement. "In addition to our strong EPS [earnings per share] growth, free cash flow grew 10 per cent to $13.8 bn over the previous twelve months."

Catz added: "I am confident that we will continue to record strong EPS and free cash flow growth during the second half of this fiscal year."

Oracle's strategy remains to gradually move customers from on-premises installations of its enterprise software into its cloud or hybrid cloud services. Its publicity machine has been emphasising the strength of it's cloud services, although this has been hard to ascertain since the company stopped publishing separate figures for cloud and on-premises software earlier this year.

The firm's cloud ERP businesses had a strong quarter, according to CEO Mark Hurd, with Fusion ERP and NetSuite combined experiencing 32 per cent revenue growth.

"Oracle is the clear leader in cloud ERP," Hurd claimed. "ERP has always been the largest segment of the enterprise applications business, so we have lots of room to grow as customers migrate from their traditional on-premise ERP to the Oracle Fusion ERP Cloud."

However, not all analysts were impressed. Oracle's cloud growth looks sluggish compared with rivals like Workday and Salesforce.

"Oracle's growth in cloud services and license support of just 3 per cent appears to be contradicting the strength in the overall cloud market," Daniel Morgan, senior portfolio manager of Synovus Trust Co, told Reuters.

"Oracle is still dragging behind other old line enterprise software players like Microsoft in its transition to becoming a top cloud company," he added.

Oracle's shares rose 5 per cent following the release of the lastest results.