San Francisco. Oracle Corp, the world’s second-largest software maker, reported third-quarter sales that slightly topped projections, signalling that the company may be gaining momentum in its transition to cloud-based computing.
Revenue in the period ended February 28 was $9.61 billion, the Redwood City, California-based company said Thursday in a statement. Analysts had predicted $9.59 billion, the average of estimates compiled by Bloomberg. Profit, excluding some expenses, was 87 cents a share, compared with estimates of 84 cents.
Oracle has built up a wide array of internet-based programs in a bid to steal market share from cloud leaders Amazon.com Inc., Microsoft Corp and Salesforce.com Inc. Yet the company has struggled to persuade corporate customers to replace existing software run from their own computer servers — especially when it comes to its most lucrative products, such as databases. To compensate for the slow progress, Chief Executive Officer Mark Hurd, who shares the role with Safra Catz, has set a goal of reaching 50 per cent market share in internet-based applications. The result has been a teetering journey to the cloud that showed signs of progress in the most recent period.
Oracle shares were little changed in extended trading following the report, after closing at $53.05. The stock has gained 17 per cent so far this year.
Revenue from cloud services and license support gained 1 per cent to $6.66 billion in the third quarter, Oracle said. While that metric includes revenue from hosting customers’ data on the cloud, a large portion of the total is likely to be from maintenance fees for traditional software housed on clients’ servers. The unit accounted for more than 69 per cent of total revenue.
Cloud license and on-premise license sales decreased 4 per cent to $1.25 billion, but were flat without the impact of currency fluctuations. That drop is a sign the company is having a hard time persuading new customers to sign contracts. Instead, clients are taking advantage of Oracle’s Bring Your Own License program, in which a company can move existing software to Oracle’s cloud without signing a new deal.
Oracle Chairman and Chief Technology Officer Larry Ellison said that the company’s autonomous database, a version of the software that was designed for the cloud, is gaining traction with clients. Oracle had almost 1,000 paying autonomous database customers and added about 4,000 trials of the software in the fiscal third quarter.
“It’s early days, but this is the most successful introduction of a new product in Oracle’s 40-year history,” Ellison said in the statement.
Hurd said last month that autonomous database deals ranged from $20,000 to $600,000 in value over the past year.