Oracle’s Push Into Cloud Gathers More Momentum on Sales Growth

Brian Womack (Bloomberg) -- Oracle Corp.’s streak of revenue gains continued for a fifth straight quarter, buoyed by corporate demand for cloud-based software.

Adjusted sales rose 7 percent to $9.21 billion in the fiscal first quarter, exceeding analysts’ estimates, as sales of cloud-based products continued to make up a bigger portion of the total. Profit also topped average projections, helped by holding down growth in operating expenses.

Oracle executives are investing in new products and hiring more salespeople to add revenue from cloud-related products, which let businesses access software and services via the internet instead of running the programs from their own systems. Cloud-based sales jumped 51 percent during the quarter ended Aug. 31, the company said Thursday in a statement. Oracle already counts many of the largest corporations in the world as customers, and has been increasingly pushing to switch these clients’ business-software purchases to the cloud.

“They’re leveraging their existing relationships to sell a lot more cloud stuff,” said Patrick Walravens, an analyst at JMP Securities. “It’s been working so far.”

Shares of Redwood City, California-based Oracle rose as much as 2.2 percent in extended trading after the report. Investors have been encouraged by the company’s success in selling cloud-based software this year, sending the shares up 37 percent to records.

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New software licenses, a measure that’s tied to the company’s traditional installed on-premise software offerings, declined 6.2 percent. That compares with a drop of 5 percent in the prior period.

Revenue from cloud-based applications, including programs that help companies handle finance and human resources tasks -- climbed 62 percent. The other part of the cloud business -- which includes databases and access to raw computing power -- rose 28 percent.

Revenue, adjusted for items such as contract terms, was $9.21 billion compared with analysts’ projection of $9.03 billion, according to data compiled by Bloomberg. Profit excluding certain costs was 62 cents a share, topping the average estimate of 60 cents.

Oracle has propped up growth by adding employees and making acquisitions. The company is hiring 5,000 employees for its internet-based software business in the U.S., on top of more than 4,000 already brought on this year. The software maker also has been adding workers in Europe and other regions.

Last year, the company acquired NetSuite Inc., a provider of cloud-based financial services, for about $9 billion, one of its largest deals ever.

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