After a bumpy fourth quarter earlier in the summer, Oracle bounced back yesterday with a strong Q1, bolstered by a combination of cloud computing growth and the rise of remote working leading to more revenue coming from the firm’s infrastructure deal with Zoom.
Q1 sales were up to 1.6% to $9.37 billion, while net income rose to $2.25 billion, up from $2.14 billion a year ago. Other stats of note from the quarter ended 31 August included:
- Cloud license and on-premise license revenue was up 9% year-on-year at $886 million.
- Fusion ERP revenue growth of 33%.
- The quarter ended with 7,300 Fusion ERP customers.
- NetSuite ERP growth of 23%.
- 23,000 NetSuite customers by quarter end.
- Fusion HCM up 22% year-on-year.
- Infrastructure subscription revenues were $4.1 billion, up 1%.
Customer success stories from the quarter included:
- McDonald’s move to migrate its North American financial systems to Oracle Cloud Infrastructure.
- US grocery giant Albertsons updating its HR with Oracle Cloud HCM in line with its wider cloud first strategy.
- Iron Mountain selected Oracle’s Cloud ERP and Procurement as part of a push to bring its global business together on a single cloud platform.
- Jewellery retailer James Avery, an existing Oracle Cloud Infrastructure (OCI) customer utilizing Exadata Cloud Services for non-production applications, expanded its usage to include moving production database workloads to OCI by using Oracle Exadata Cloud@Customer.
Meanwhile coinciding with the results announcement, Oracle announced a deal with Xactly to port its flagship Icent product to Oracle Cloud Infrastructure. No value was put on the deal, but it includes “the majority” of Xactly’s computing services needs, with some other products continuing to run on Amazon and Salesforce clouds.
Chief Technology Officer Larry Ellison was on upbeat form in his remarks to analysts following the results announcement, arguing that Oracle is in a “unique” position in the cloud industry:
Oracle is the only cloud vendor that competes in both the enterprise applications market SaaS, and the Infrastructure as a Service market. Our competitors in SaaS are people like Salesforce and Workday; our competitors in IaaS are people like Microsoft and Amazon. They're different markets. We're the only one that spans these two markets. It's a very interesting dynamic.
He pointed to the continued rise in remote working as fueling Oracle business via its Zoom relationship:
There is not a major video conferencing company that isn't talking to Oracle [about] moving to the Oracle Cloud. Zoom is a perfect example of why customers are choosing Oracle Cloud Infrastructure. We see the benefits of choosing OCI [in] Zoom’s results. Zoom’s recent earnings were stunning. Zoom may be the fastest company ever to have their company name become a verb. At Oracle, we love Zoom, as most of our employees continue to work from home. And we love that Zoom’s usage of Oracle Cloud Infrastructure services delivered triple digit revenue growth in sequential quarters from Q4 last year to Q1 this year.
Ellison also took time out to drill down on the recent expansion of the Cloud@Customer offering, which replicate many of the attributes of a public cloud, whilst remaining on-site and behind a company’s firewall:
We came up with Oracle Autonomous Database in 2018, but if you're an on-premise user, there was no way to get access to the Oracle Autonomous Database until a couple of months ago. So, the Oracle Autonomous Database was available on our public cloud and has been for three years and it keeps getting better and better, but if you're an on a big on-premise customer, you know, you didn't have the late access to our latest and greatest database. It was a very strange situation for Oracle that our late technology was not available for the vast majority of our customers.
All of a sudden, with our Database Cloud@Customer at very low prices you can get Oracle Autonomous Database and all the latest and greatest features we offer in the database. And have it delivered to your data center behind your firewall. And we think that growth here is going to be explosive. We had a Version 1, and, full disclosure, we had a Version 1 of this that was rather difficult to install and difficult to use. Version 2 is kind of the extreme opposite, we learned a lot. Version 2 is, you know really plug and play, goes in very, very fast and it's very simple to use, incredibly reliable.
He predicted this will become one the bigger stories of Oracle’s current fiscal year with “triple digit growth”. It also serves another important purpose:
The other thing is it's just going to preserve our database franchise...People are going to make the choice to upgrade or move from their current version of Oracle to Autonomous Database. And once with Autonomous Database they're not going anywhere.
The COVID blip that caused some issues previously looks to be behind Oracle for this quarter and it was a clearly upbeat Ellison who dominated the analyst conference call.
Hanging over the whole call was of course the shadow of TikTok and Oracle’s interest - approved by President Trump - of purchasing its US operations. CEO Safra Catz dealt with that topic from the off, warning:
We will be making no comments regarding the press reports about TikTok, so there's no need to ask.
That remains a story then for another day…