UPDATED 01:07 EST / MARCH 16 2016

NEWS

Oracle posts mixed Q3 earnings: Cloud grows but profits slide

Oracle posted a disappointing set of Q3 fiscal 2016 numbers, blaming the strong dollar for cutting into its profits.

The database giant reported revenues of $9 billion for the quarter, a three percent decline from one year ago, and net income of $2.14 billion, down 14 percent year-on-year. Still, the company said that when those figures are adjusted to constant currency, revenues would have actually been up one percent, with income declining by just eight percent.

Despite these declines, Oracle posted non-GAAP earnings of $0.64 per share, beating out analysts estimates of $0.62 per share.

Once again it was Oracle’s cloud Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) businesses that proved to be the outstanding performers, which brought in a combined $583 million in revenues, up 58 percent from one year ago. However, Oracle’s legacy businesses declined once again, with the all-important software revenues, which make up the bulk of its total revenues, sliding by one percent to $7.08 billion for the quarter. Hardware revenues took an even bigger hit, slumping by 13 percent to just $1.13 billion, while service revenues also fell, by eight percent to $793 million.

And once again, Oracle’s President Larry Ellison took the opportunity to laud it over the firm’s cloud performance and have a dig at rival Salesforce.com, Inc.

“We are growing much faster than Salesforce.com,” Ellison said. “We also have many more SaaS products than Salesforce.com. In some of our most important SaaS markets, such as ERP, HCM, Supply Chain and Manufacturing, Salesforce.com does not participate at all.”

“By successfully competing in all of these markets, Oracle has the ability to sustain its high growth over a long period of time,” he concluded.

Oracle has been trying for some time to wean itself off of its declining software and hardware revenues and move in on cloud markets, which is where everyone sees the biggest potential for growth. However, on-premises software revenues still account for some 70 percent of Oracle’s total revenues, and it’s going to be some time before that changes.

Photo Credit: Peter Kaminski via Compfight cc

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