Oracle Projects Growing Revenue After Years of Cloud Slog

Nico Grant (Bloomberg) -- Oracle Corp. gave a better-than-expected forecast for quarterly revenue, in a sign of improving demand for the software giant’s cloud computing technology after years of stagnant sales.

Revenue will climb 2% to 4%, an estimated $10 billion to $10.4 billion, in the period that ends in February, Chief Executive Officer Safra Catz said Thursday in a conference call. Analysts, on average, projected $9.94 billion, according to data compiled by Bloomberg. Such gains would keep Oracle on track to post three consecutive quarters of sales growth after two fiscal years of declining revenue.

Profit, excluding some items, will be $1.09 to $1.13 a share in the current quarter, Catz said. Analysts projected $1.04.

Catz and Executive Chairman Larry Ellison have tried to focus on cloud computing services in an effort to revive languid revenue growth at the world’s second-largest software maker. Customer interest in the firm’s internet-based applications has finally offset declining demand for its legacy tools. Oracle said sales of its Fusion application for managing corporate finances jumped 33% in the quarter, while revenue from NetSuite’s financial software, targeted to small and mid-sized businesses, increased 21%.

Ellison said demand from large clients for Oracle’s infrastructure cloud services outstripped supply in the last quarter, so the company is scurrying to expand data centers.

Related:Colocation Powers Oracle’s Hybrid Cloud Play On Two Fronts

Sales climbed 1.9% to $9.8 billion in the fiscal second quarter, which ended Nov. 30, the Redwood Shores, California-based company said earlier in a statement, in line with analysts’ expectations of $9.79 billion. Profit, excluding some items, was $1.06 a share, beating estimates by 6 cents.

Shares were little changed in extended trading after closing at $59.48 in New York. The stock has gained 12% this year.

Ellison sought to reassure investors that Oracle will continue to lead the market for databases, the company’s signature product, and asserted that Oracle’s tool is “much faster” than the one sold by Snowflake Inc., a company that has seen its market value more than triple to almost $106 billion since its mid-September initial public offering.

“Snowflake is a decent product, a good product, I think, and it’s just killing RedShift over at Amazon,” he said. “So it’s doing extremely well. But it doesn’t remotely compare to Oracle Autonomous Database.”

Oracle reported that cloud license and on-premise license sales decreased 3% to $1.09 billion in fiscal second quarter, suggesting the company is signing fewer new software deals. Analysts had expected $1.15 billion.

Revenue from cloud services and license support climbed 4% to $7.1 billion. That metric includes sales from hosting customers’ data in the cloud, but a large portion is generated by maintenance fees for traditional software kept on clients’ corporate servers.

Oracle is trying to become a technology partner and cloud computing services provider to ByteDance Ltd.’s TikTok in its bid to land major customers for its public cloud, but the deal remains mired in U.S. regulatory review. Executives didn’t provide an update on the proposal Thursday.