Image may be NSFW.
Clik here to view.
Q2 was more of a relief for Oracle than a result but it edged past market expectations and unlike Q1 (see here), it did not let watchers down with a disappointing current quarter forecast.
Total revenue was up 2% yoy (as reported and cc) in the quarter ending November 30 2013, to $9.3bn. This was just ahead of the $9.2bn the market was expecting and at the top of the range Oracle had forecast (-1% to +2% cc). Net income was down 1% to $2.6bn and the operating margin dropped one percentage point to 37%. EMEA revenue grew a modest 3% from $2.7bn to $2.8bn.
The low level of revenue growth indicates cloud subscription sales are making themselves felt, indeed the company boasted that it now has a $1bn SaaS business (something we have heard previously) with bookings in the quarter up 35%, and double digit growth for Fusion HCM and Fusion Salesforce Automation. It would have been more interesting to hear how other Fusion modules are faring to see how die-hard back office functions are moving to the cloud - the interpretation is that this continues to go slowly. CEO Mark Hurd revealed that Oracle has a dedicated team to chasing Workday prospects, and another focused on Salesforce.com. This is evidently paying dividends but surely there would be richer long-term pickings if it concentrated on other back office areas.
The combined new software licence and cloud subscriptions revenue metric showed flat revenue growth at $2.4bn (up 1% cc) which indicates an ongoing decline in on-premise sales. New products, such as the 12c database, have yet to make an impact but it is expected to deliver tangible results over the next 12-18 months. Licence update revenue was up 6% to $4.5m, so this side of the business remains stable.
Q3 guidance is for revenue growth in the 3%-7% range ($9.2bn to $9.6bn cc), with new licence revenue up 2%-12% cc. This suggests tensions are easing and enterprises and cautiously releasing budget.
