Oracle’s Q1 numbers came out a day earlier than planned yesterday in tandem with the news that co-CEO Mark Hurd is taking a leave of absence for unspecified medical reasons.
With the annual OpenWorld jamboree taking place next week, it was an out-of-the-blue announcement, but in the words of Hurd’s co-CEO Safra Catz:
We felt it made sense to share all of our news at once.
In a memo to Oracle staffers, Hurd himself said:
Though we all worked hard together to close the first quarter, I’ve decided that I need to spend time focused on my health. At my request, the Board of Directors has granted me a medical leave of absence. As you all know, Larry, Safra and I have worked together as a strong team and I have great confidence that they and the entire executive management team will do a terrific job executing the exciting plans we will showcase at the upcoming OpenWorld. I love Oracle and wish you all success during my absence.
That message was echoed by Catz as she hosted the firm’s Q1 quarterly results analyst call:
As the three of us have always worked as a team on managing Oracle, Larry and I will cover Mark’s responsibilities during his absence with support from the rest of our strong management team.
And that sharing of responsibilities kicked off with the quarterly numbers. For Q1, revenue was essentially flat year-on-year on $9.2 billion, while net income fell 6% to $2.1 billion. Cloud Services and License Support rose 3% to $6.8 billion, representing 74% of revenue, most of which is recurring according to Catz. Cloud Licence and On Premise Licence revenue was down 6% to $812 million.
Hurd’s usual role of highlighting customer successes from the quarter was taken over by Chief Technology Officer Larry Ellison, who drilled down heavily on some bold ambitions for ERP market dominance. The goal is to be:
The biggest back office player - period!
Estimating that Oracle has a 95% marketshare in cloud ERP with Fusion - now boasting 6500 customers and NetSuite with 18,000, he said:
We have a massive opportunity ahead of us in ERP and HCM. Not only do we have an enormous ERP and HCM customer base who can upgrade to the cloud, but more than half of the current ERP and HCM market is served by companies who have no SaaS upgrade path. These companies products are vulnerable to being replaced and we are in the process of replacing them.
Among the customers he cited:
- Bangkok Bank of Thailand which is upgrading its e-business suite with Fusion Financial Cloud service and Enterprise Performance Management.
- Envision Healthcare where Oracle beat Workday to replace its legacy Infor/Lawson system.
- Lyft which is upgrading a portion of their ERP system which started out as a NetSuite user, but is now Fusion as it plans for growth going forward.
- Penn National Gaming, a competitive win against "an unnamed German company located in a town called Waldorf".
- BAE Systems chose Fusion HCM to upgrade their HR and standardise on the cloud.
- Dubai Holdings expanded its Oracle relationship by adding both Fusion HCM and Taleo for recruiting.
- McDonald’s chose Fusion HCM and Payroll to replace an on premise legacy system.
- SouthWest Gas, displacing SAP and beating Workday as the firm moves from on premise to the cloud.
We are at the beginning of a back office upgrade cycle that will benefit us for years to come. We are already overwhelmingly the largest ERP vendor in the cloud. It won’t be long before we are just the largest ERP supplier - period.
The CTO’s other main focus was the Oracle Autonomous Database, for which he reeled off a number of stats to back up claims that traction is showing:
- In Q1 the company added 3,700 new Autonomous Database trials.
- Autonomous Database added 500 new customers in Q1
- There are now over 2000 paying customers, including 7/11, Cargo Jet Canada, Siemens Energy, Stanley Black and Decker and Uber.
- Around 45% of people who are using the Autonomous Database are also using the Oracle Analytics Cloud.
- Thirteen percent of Autonomous Database customers had never bought a database from Oracle.
- 43% of workloads going onto Autonomous Database are net new, not being moved from on premise.
To make the business case for Autonomous Database, Ellison pointed to Capital One’s data breach, arguing that Amazon Web Service’s attitude towards the crisis was one of:
‘You are responsible for running your systems and if you make mistakes, it’s on you, it’s not on us”’ That is not an unreasonable position. When you have a manual systems and your users are responsible for configuring the system, when your users are responsible for backing the system up, when your users are responsible for encrypting the data, when your users are responsible for patching the system, user errors can lead to catastrophic results. In a manual system, there’s no way to prevent that.
In an autonomous system, the Capital One data breach could never have happened. The Oracle Autonomous Database doesn’t let human beings configure the system; it configures itself automatically. It doesn’t ask human beings to patch it to close security holes. The system automatically patches itself while running. It doesn’t ask if you want to back up or encrypt your data; it does that automatically while it’s running. The only way you can prevent data theft is to eliminate human error.
Next week at OpenWorld, the autonomous discussion will broaden out, promised Ellison:
We are not stopping at Autonomous Database…it’s our goal to deliver the world’s first and only completely autonomous cloud. The most important thing is keeping your data safe...but you really should have a bunch of autonomous services.
Mark Hurd’s health has been the subject of speculation for some time in Silicon Valley, but the timing of the announcement on the eve of OpenWorld still came as a surprise. Certainly there will be a very empty chair at the conference next week where Hurd typically loomed large.
That said, there’s a clear sense that there won’t be a major disruption in day-to-day management execution. As I said at the time when Ellison stepped aside to become CTO, he was never going to stray far from the center of action and he and Catz will more than ensure that the lights stay on, although Hurd’s sales leadership will be missed.
From a personal point of view, I’ve always enjoyed meeting and talking with Hurd whose frankness on a range of topics has been genuine and welcome in an industry that too often chases the hype cycle. On behalf of everyone at diginomica, our best wishes for his recovery and a return to the co-CEO chair where he belongs.
Footnote - diginomica will be on the ground at OpenWorld. Look out for dedicated coverage starting from Monday.