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Oracle sets sights on taking SaaS market crown

Simon Quicke


Oracle has boasted of its growing cloud business and indicated that although it missed expectations with its latest set of financial results the firm is positioning itself for future growth.

With the vendor now claiming to be the second largest SaaS player globally, behind Salesforce.com, it delivered a 23% increase in SaaS/PaaS revenues in the fourth fiscal quarter ended 31 May the growth in subscription-based sales was used to explain why some of the revenues investors had been hoping for had been deferred.

There was also growth in the infrastructure as a service area with revenues climbing 13% to $128m but overall net income fell by 4% to $3.6bn and revenue climbed to $11.3bn, up by 3%, but new software license sales were flat for the quarter and for the financial year as a whole.

The hardware business, which has been under going its own change from the traditional Sun operation into an engineered systems business saw 2% growth in the quarter.

Moving to the cloud has an inevitable hit on the numbers and takes time to deliver, which could be clearly seen in ASdobe's numbers earlier this week which saw the first improvement after several quarters of declines while the transition to a hosted model was taking place.

But Oracle president and CFO Safra Catz said that it was so far finding that it could make the transition to a cloud model without hitting the bottom line too much in the process.

"Our cloud subscription business is now approaching a run rate of $2 billion a year," said Catz. "As our business has transitioned, more software revenues are being recognized over the life of a subscription rather than upfront. We're making this transition to cloud subscriptions and ratable revenue recognition while continuously increasing our top-line revenue and our bottom-line profits year-after-year."

Larry Ellison, CEO of Oracle, said that the firm intended to increase the focus on cloud and had its sights set on overtaking Salesforce.com and becoming the largest SaaS player in the market, leaning on a range of applications that included CRM, ERP and HCM.


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