Oracle is entering a new stage of growth, with revenue from its software-as-a-service (SaaS) and platform-as-a-service (PaaS) in Q3 far exceeding expectations. With stock on the rise, renewal rates high, and growth exceeding that of its competitors, things are looking good for Oracle.

On an Oracle blog post, CEO Safra Catz described this growth period as a “hypergrowth phase,” as SaaS and PaaS revenue rises a shocking 61 percent, reaching $583 million. This outpaces earlier predictions of growth, expected to be somewhere between 49 and 53 percent, by a significant degree.

The profits are only increasing as Oracle can finally settle its spending on data centers and cloud infrastructure down. The big expenses have been paid, and the stage is set for the investments to pay off. Of course you have to spend money to make money, and Oracle’s been doing both, so its gross margin is now at 50 percent – an increase from the previous quarter’s 45 percent, although still a ways away from the 80 percent goalpost.

PaaS has brought in well over 1,000 new customers, bringing its total to around 5,000 overall, in addition to its 310,000 on-premise database customers. At the same time, Oracle added over 900 new SaaS customers, while expanding business with nearly 800 more.

Not only are more customers coming to Oracle, but more are staying. Oracle SaaS subscriptions have a high renewal rate, although there’s no word yet on how ERP and HCM cloud apps are faring when it comes to renewals.

By offering both SaaS and PaaS, Oracle is managing to outsell and outgrow its competitors that specialize in one or the other. CEO Mark Hurd explains this success as using the “connection rate” between different application pillars, which provides them an edge over competitors that only offer one or the other; after all, organizations often have multiple cloud needs, so a provider that can offer more than one is an appealing prospect.

Q3 was very kind to Oracle, so Q4 is looking promising. The hypergrowth phase has just begun, and there’s no stopping this momentum.

Photo by Peter Kaminski