June 22, 2017

Oracle surpasses initial profit estimates on cloud related services

Oracle’s stock skyrockets owing to unexpectedly high quarterly profits from cloud venture.

Business software giant Oracle’s bold push into the cloud market appears to be gathering momentum as the company’s shares were up a record 5% to USD 48.74 in after-market trading on Wednesday. Amid growing concerns regarding the trend in customers abandoning traditional (and more expensive) licensing models, Oracle has steadily been shifting its focus to cloud based services.

The revenue generated from sales has bettered previous estimates by financial analysts. Oracle reports that their cloud computing and on-site software business income rose 5.3% to reach USD 8.8 billion in Q4 of the fiscal year ended May 31. It accounts for approximately 78% of the company’s total revenue in 2016.

Optimism is abundant at Oracle, as co-CEO Safra Catz says:

We continue to experience rapid adoption of the Oracle Cloud. This cloud hyper-growth is expanding our operating margins, and we expect earnings per share growth to accelerate in fiscal 2018. With cloud computing revenue now at an annualized run rate of USD 6 billion and a growth rate of 66%, we’re clearly the fastest-growing cloud company at scale.

In an effort to reinforce their cloud venture, Oracle signed an agreement with AT&T in April which would see the American telecom company transfer some of their large scale databases to Oracle’s cloud platform. The company stated that they anticipate more of their prime customers to migrate to Oracle Cloud over the course of the year.

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