Oracle beats Q3 estimates with solid cloud ERP growth

Oracle's Fusion Cloud ERP grew by 30 percent year-over-year in Q3, while NetSuite Cloud ERP grew 24 percent.

Oracle on Wednesday published better-than-expected third quarter financial results, in part driven by solid revenue growth from its cloud ERP businesses. 

Oracle's non-GAAP earnings per share came to $1.16. Total quarterly revenues were $10.09 billion, up 3 percent year-over-year.

Analysts were expecting earnings of $1.11 on revenue of $10.07 billion.

By segment, cloud services and license support revenues in Q3 were up 5 percent, reaching $7.25 billion. Within that category, applications cloud services and license support brought in $2.95 billion, up 5 percent, while infrastructure cloud services and license support brought in $4.3 billion, up 4 percent. 

Cloud license and on-premise license revenues were up 4 percent to $1.28 billion. Hardware brought in $820 million, down 4 percent. Services brought in $737 million, down 5 percent.

Oracle's Fusion Cloud ERP product saw its revenue increase by 30 percent year-over-year. Its NetSuite Cloud ERP revenue grew 24 percent. 

"We continued to extend our huge lead in the cloud ERP market," Oracle CEO Safra Catz said in a statement. "Oracle's rapidly growing highly-profitable, multi-billion dollar cloud ERP businesses helped drive subscription revenue up 5% and operating income up 10% in the quarter.  Subscription revenue now accounts for 72% of Oracle's total revenues, and this highly-predictable recurring revenue-stream along with expense discipline are enabling double-digit increases in non-GAAP earnings per share." 

In a conference call Wednesday, Oracle co-founder and CTO Larry Ellison took direct aim at SAP, citing an article in which SAP CFO Luka Mucic said his company hadn't lost "a single ERP customer" to Oracle. 

"Perhaps he should have checked a little bit more carefully," Ellison said. "In Q3 alone, we signed contracts totaling hundreds of millions of dollars to migrate several very large SAP ERP customers to Oracle Fusion ERP." 

Ellison then proceeded to list dozens of companies and government agencies that have already moved from SAP ERP to Fusion ERP. 

Ellison on Wednesday also touted the growth of Oracle's cloud infrastructure business. Including Autonomous Database sales, cloud infrastructure revenue was up over 100 percent. 

Infrastructure cloud services now have an annualized revenue of more than $2 billion, Catz elaborated on Wednesday's call. Oracle Cloud Infrastructure consumption revenue was up 123 percent, she said, while autonomous database was up 55 percent, and Cloud@customer consumption revenue was up 200 percent.

"We are opening new regions as fast as we can to support our rapidly growing multi-billion dollar infrastructure business," Ellison said in a statement. The company aims to have 36 regions up and running by this summer.

Oracle also announced that its board of directors declared a quarterly cash dividend of 32 cents per share of outstanding common stock.