Oracle reported third-quarter earnings that beat analysts’ estimates while cloud revenue posted another big gain as the company continued its shift away from its legacy software licensing business.
Oracle’s non-GAAP earnings were 69 cents a share on revenue of $9.2 billion, up from 64 cents a share on revenue of $9.01 billion a year ago. Analysts had expected earnings of 62 cents a share on revenue of $9.26 billion.
Total cloud revenue rose 63% to $1.2 billion, offsetting the continuing contraction in the software licensing business, where new software license sales brought in $1.4 billion in the quarter, down 15%.
Oracle co-CEO Safra Catz has predicted cloud revenue will exceed software license revenue next fiscal year. “Our pivot to the cloud is now clearly in full swing,” he said on a conference call Wednesday.
The Software-as-a-service (SaaS) and Platform-as-a-service (PaaS) businesses hit $1 billion in revenue for the quarter, up 74% in constant currency, and Mark Hurd, Oracle’s other chief executive, said their growth rate now exceeds that of CRM giant Salesforce.
“If these trends continue, where we are selling more SaaS and PaaS in absolute dollars and growing dramatically faster, it’s just a matter of when we catch and pass Salesforce.com in total cloud revenue,” he said in a news release.
As CNBC reports, Salesforce said last month it expects to achieve its goal of being one of the first $10 billion cloud services companies in the next year with sales of $10.15 billion to $10.20 billion, “faster than any enterprise software company in history.”
Oracle’s total cloud revenues are now 13% of the company’s total sales, up from 8% this time last year, while its on-premise segment now makes up 67% of total revenue, down from 70% in the year-ago period.
Amazon dominates the the “public cloud” market of providing on-demand computing power and data storage, known as infrastructure as a service (IaaS). But Oracle Chairman Larry Ellison said the company’s new Gen2 IaaS “is both faster and lower cost than Amazon Web Services.”