Oracle Total SaaS, PaaS and IaaS Cloud Revenue Strongly Up for 2015 Q3

Oracle announced that fiscal 2015 Q3 total revenues were unchanged at $9.3 billion. Without the currency headwinds caused by the strengthening of the U.S. dollar, the company said total revenues would have been up 6% as measured in constant currency.

Software and cloud revenues were up 1% to $7.2 billion, and up 7% in constant currency. Cloud software-as-a-service (SaaS) and platform-as-a-service (PaaS) grew 30% to $372 million, and grew 34% in constant currency. In total, Oracle’s SaaS, PaaS and IaaS cloud revenue were up 29% to $527 million and up 33% in constant currency. Hardware systems revenues were down 2% to $1.3 billion, but were up 5% in constant currency.

Oracle CEO Safra Catz

“We beat the midpoint of my constant currency guidance on every single financial metric this past quarter,” said Oracle CEO, Safra Catz in a statement released by the company. “EPS was up 9%, total revenue was up 6%, hardware revenues were up 5%, software and cloud revenues were up 7%, and total cloud SaaS, PaaS and IaaS revenues were up 33%. Once you normalize for exchange rates, it was a very strong growth quarter for us.”

“Our customers are clearly embracing Oracle PaaS faster than we expected, which is actually great for us,” said Catz in her remarks during the conference call announcing the results. “Just to give you a little bit of insight on how we look at the business:  For every million dollars of license we sell we expect to collect another million dollars from support over 5 years for a total of $2 million - while for every million dollars of PaaS we sell we actually expect to collect $5 million over 5 years. That’s what we are looking at in our business and though it may have some short-term effect, it is actually already showing up in the revenues.”

Oracle CEO Mark Hurd

Overall, it was “a very solid quarter for Oracle and a great cloud quarter for Oracle,” Oracle CEO Mark Hurd noted.  “We added nearly 800 brand new SaaS customers, nearly 530 existing customers expanded their cloud services in the quarter; in HCM - 220 new customers; in Customer Experience - 407 new customers; in ERP - 160 new customers,” he added.  “Premise software grew 6% and we expect continued growth. Engineered systems grew 15% in the quarter. We sold over than 1,000 systems, including over 500 Exadata units booked.”

Oracle’s cloud business is already above a $2 billion run rate, said Hurd. “Our SaaS/ PaaS pipeline is already large and growing rapidly and it is growing faster than what you are seeing in the bookings - that being the pipeline. We now expect q4 bookings of $300 million - $50 million higher than before.  We also expect FY15 bookings growth to be greater than 100%,” he said. “Clearly, the migration to the cloud is happening faster than we expected.”

Oracle Chairman and CTO Larry Ellison

Saving his prepared remarks for last, Oracle chairman and CTO Larry Ellison.  said,  “By the end of this quarter, Oracle will have sold over 1,000 cloud ERP systems. We are on our way to building the largest ERP business in the cloud,” noted Ellison. “Oracle now has a cloud revenue run rate of well over $2 billion a year. We are already the world’s second largest SaaS and PaaS company.”

Oracle’s cloud business is growing faster than even he expected, Ellison said. “Our cloud bookings are now growing at over 100% per year,” he said. “I now believe that Oracle will sell more new SaaS and PaaS business than in this current calendar year 2015. It is going to be close but I think we are going to sell more in the cloud than they do this year. I suspect that might come as a big surprise to a lot of people out there. You won’t have to wait very long to find out who is going to win this.”

A replay of the conference call is available here