Oracle's Q2 better than expected; Hardware sales stabilize

Oracle's Q2 better than expected; Hardware sales stabilize

Summary: The bleeding in Oracle's hardware business appears to have stopped and execs tout cloud bookings momentum.

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Oracle's second quarter results were better than expected and the company said software as a service bookings growth was 35 percent. New software licenses and cloud subscriptions sales were up 1 percent from a year ago and the company's hardware business appears to have stabilized.

The company reported second quarter earnings of $3.2 billion, or 56 cents a share, on revenue of $9.3 billion, up 2 percent from a year ago. Non-GAAP earnings were 69 cents a share.

Wall Street was expecting non-GAAP second quarter earnings of 67 cents a share with flat revenue of $9.2 billion.

Despite Oracle president and CFO Safra Catz saying she was "very pleased" with the results (preview), the company remains a work in progress. In short:

  • New software licenses and cloud software subscription revenue was flat at $2.4 billion.
  • License updates and support revenue was up 6 percent in the quarter to $4.5 billion.
  • Hardware systems product revenue was down 3 percent to $713 million, but overall hardware systems sales, which includes support, was flat at $1.3 billion.
oracle q2 units

 

Overall, Oracle's hardware business seems stable relative to previous quarters and cloud bookings were up. The big question is whether Oracle can show meaningful revenue growth while it transitions from licensing to subscriptions.

Catz said software revenue growth of 5 percent goosed cash flow. President Mark Hurd noted that Exadata, Exalogic and Exalytics had double digit revenue growth in the quarter and SPARC SuperCluster and Big Data Appliance had triple digit growth. Notably, Hurd called the bottom for the hardware business. "We expect hardware products will show growth next quarter," said Hurd.

As for CEO Larry Ellison, he said that Fusion Human Capital Management and Salesforce Automation were the fastest growing cloud businesses.

oracle q2 geo

 

Topics: Enterprise Software, Hardware, Oracle

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  • I'd hardly call -3% stabilized. They made up for it with their two service

    plans, the Bendover plan and the upgraded Vaseline+ plan but they cant keep counting on hiding the loses in service plans when behind the smoke screen there's less and less hardware being sold to extort service plans out of. They did show a 19% growth in smoke, mirrors, and doublespeak which just met analysts expectations for both Ellison and Hurd.
    Johnny Vegas