Oracle's third-quarter results are in, and once again it's time to dig into the numbers a bit as well as extract key takeways from the vendor's often entertaining and eye-opening earnings conference call. Here's a look at the highlights:
SaaS on Parade
Oracle gained 942 new SaaS customers in the quarter, with more than half for products under the Fusion banner. The number of new SaaS ERP customers grew over Q2, with 334 compared to 311, and Oracle's SaaS ERP installed base is "well over" 1,800 customers, according to CEO Mark Hurd.
Perhaps more telling is that Oracle had 783 SaaS customer expansions during Q3, something Hurd called "an all-time high." Oracle now has an installed base for SaaS of 11,000 customers.
"For customers it is clear that adoption on the HCM side of Oracle's cloud products is in full swing and we see similar indicators for the ERP and CRM products," says Constellation Research VP and principal analyst Holger Mueller. "The question is no longer if, but how long you want to continue running Oracle products on-premises, without an active evaluation strategy for moving to the cloud—looking at Oracle's products first and then as needed for alternatives."
Ellison on Microsoft's 'Interesting' Database Moves
Oracle CTO and executive chairman Larry Ellison had some interesting remarks about the company's database business on the call:
We see the next generation of our database business predominantly in the cloud, though we'll still sell an awful lot of that software on premise.
We have a huge installed base that wants to migrate to the cloud but still wants to have an on-premise infrastructure. And we provide graceful compatibility and coexistence with what's in your data center and what's in the cloud as you begin that decade-long migration to the cloud. Sorry for the long answer. We've made a bunch of enhancements to our database, including multitenancy, in memory, a lot of advanced security, to make it easier and safer to go to the cloud. We think that gives us a huge competitive advantage and that our customers aren't going to leave us. Quite the contrary, our customers are going to move a lot of what they have to the Oracle cloud.
Ellison seemed unfazed by a question about Microsoft's recent move to port SQL Server to Linux—merely calling it "interesting"—and an accompanying license migration offer to Oracle database customers:
The beauty of what we offer is the same exact database experience on-premise and in the cloud, and the ability for our customers to move a workload from on-premise and into the cloud and move data from on premise into the cloud with the push of a button. That's something that Microsoft can't offer.
What he didn't acknowledge was that Microsoft and others will likely work hard in coming months and years to make database migrations easier and easier, particularly in the cloud.
On-Premise License Revenue Falls, But Maintenance Holds Steady
New on-premise software license revenue in the quarter was $1.7 billion, a 15 percent drop year over year. CEO Safra Catz termed the change as natural given customers turning to cloud products.
Meanwhile, however, maintenance revenue was unchanged at $4.7 billion. "Attach and renewal rates are running at their usual high level," Catz said on the call. This result could speak to a couple of other possibilities. For one, Oracle may be successfully fending off competition from third-party maintenance providers such as Rimini Street. Secondly, audits and true-ups could be helping replace any support revenue lost by customers who don't renew.
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