Oracle’s Q212 is quite a contrast to the same quarter a year ago - see Oracle shocks: spikes wider market fears. In Q211, Oracle stated that it had struggled to close deals and had come up against a more stringent renewals process (total revenue for the quarter was down 2% vs. expectations at the time of 7% growth). In Q212, total revenues were up 5% at constant currency to $9.2b (3% with the US dollar strengthening). And revenue growth from software license and cloud subscriptions was 18% (ccy) to $2.4b; all geographies reported double-digit growth. The difference, according to Oracle’s CFO, Safra Catz, is that customers want to close deals in November and December this year. Also positive news was net income moving in the right direction as operating expenses were brought down – GAAP net income was up 20% at constant currency to $2.6b while the operating margin improved from 35% (Q211) to 38%.
Elsewhere at constant currency, software license updates and product support revenues were up 8% to £4.3b; services revenues were down 3% to $1.1b and hardware systems revenues were down 16% to $1.2b. Referring to the “downsizing” of the hardware business through the de-emphasis on low-margin servers, Larry Ellison, Oracle’s Chief Executive, stated that the acquisition of Sun Microsystems three years ago had “proven to be one of the most strategic and profitable acquisitions we have ever made”. He highlighted that products like Exadata and the SPARC SuperCluster would continue to drive profitability and also, by the end of this fiscal year “drive growth in (Oracle’s) hardware business”. Oracle hardware is at the centre of operations as Oracle applies its ‘engineered together’ theme to the public and private cloud (see Oracle driving for an end-to-end cloud stack).
In EMEA, the worldwide trends were even more pronounced with new software licenses and cloud software subscriptions up 12% (ccy) in Q2 compared to just 1% growth in the previous quarter, and hardware system product revenues down 25%, compared to a 30% fall in Q1.