In recent analyst calls, Oracle Corp. executives have spoken with confidence about the company’s plans to overtake Amazon Web Services Inc. in the cloud infrastructure market. That kind of braggadocio was notably absent in today’s briefing call following the release of fiscal first-quarter earnings results.

A $50 million revenue miss led by a shortfall in cloud services and license support revenue canceled out earnings-per-share results that slightly beat analyst estimates, sending Oracle stock down more than 4 percent in after-hours trading.

Total quarterly revenue rose just 2 percent, to $9.2 billion after accounting for currency changes. Cloud services and license support revenue rose 4 percent, half the previous quarter’s growth, to $6.61 billion. That missed analysts’ estimates of $6.68 billion.

Cloud license and on-premises license revenues were flat at $867 million. The one bright spot was that Oracle reported earnings per share of 71 cents per share, up 10 cents from the same quarter a year ago and better than the 68 cents analysts were expecting.

Apples-to-apples comparisons with other cloud infrastructure-as-a-service companies are difficult because Oracle doesn’t report IaaS revenues as a distinct line item. But with single-digit revenue growth in a cloud market in which competitors are growing 50 percent or better, off a much larger base, Oracle is clearly falling further behind.

Executives disputed the perception that cloud revenues missed, saying the discrepancy was mainly the result of currency variations. “Relative to the guidance we gave in cloud, revenue beat that number,” said Chief Executive Mark Hurd.

Analysts aren’t buying it, though. “Oracle’s biggest issue with the cloud is that it started so late and, for a while, even fought hard against it,” said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy.

Oracle is being squeezed by high-growth public cloud companies on one side and hybrid cloud competitors on the other that are doing a better job of laying out a roadmap to enterprise customers, said Charles King, principal analyst at Pund-IT Inc. “That’s a tough place to be stuck,” he said.

Focus on the good news

Not surprisingly, executives chose to focus on the good news, touting strong growth in software-as-a-service. “The vast majority of ERP applications running in the cloud are either Oracle Fusion or Oracle NetSuite systems,” said Hurd, adding that the company now counts 5,500 customers of the former and 15,000 of the latter. NetSuite, in particular, had a “spectacular quarter,” he said, with revenue growth of 26 percent and a 39 percent jump in bookings.

“Oracle is well on its way to becoming the world’s largest SaaS applications company,” said Chairman and Chief Technology Officer Larry Ellison (pictured). He said the company’s SaaS pipeline is at record levels and that sales of its platform-as-a-service products are now “material and significant.”

Hurd said 90 percent of trailing 12-month SaaS revenue was subscriptions, providing the company a strong cash flow going forward. Indeed, Oracle’s operating cash flow of a record $15.5 billion in the quarter was up 5 percent. The company has more than $60 billion in cash and marketable securities, giving it plenty of room to make acquisitions — something Moorhead thinks is likely. It also has a contract backlog of $31.3 billion, said co-CEO Safra Katz.

But revenue growth has been hard to come by in a market that has come to expect double-digit year-over-year increases from cloud providers. With the fall in after-hours prices, Oracle stock is now down for the year, compared with a 7 percent rise in the S&P 500 and more than 13 percent in the Nasdaq. Katz did nothing to raise expectations for the next quarter, saying revenues will grow 2 percent or less “because of a tough comparison” to last year. Growth is expected to accelerate in the third fiscal quarter.

Despite the weak cloud results, Ellison couldn’t resist a swipe at Amazon, saying that Oracle’s new autonomous cloud database is miles ahead of competitors’, including the cloud giant’s. “We may be behind Amazon in infrastructure market share, but we are way ahead in technology,” he said. “We think that advantage can help us gain quickly.”

Analyst King agreed that the “self-driving” features of the new database engine give Oracle an edge. “Successfully delivering on the vision and promises Oracle made around that [product] is critical to the company getting out ahead of competitors,” he said.

But Moorhead sees few other bright spots. “Oracle looks to be one step behind the rest of the industry with the exception of its core, on-prem database,” he said. “Both Microsoft and AWS have very compelling databases which are starting to attract Oracle’s customers.”

Photo: Robert Hof/SiliconANGLE