Overall cloud-related revenue was up 47 percent year over year, a metric that is very important to the long-term health of the company.
Oracle received an early and welcome holiday surprise Dec. 17 when its stock took a jump up on news that its quarterly earnings and revenue numbers had exceeded Wall Street estimates.
The earnings report snapped a slump in which the database, data center hardware and cloud-services giant had missed analysts' revenue and profit expectations for three straight quarters because it had trouble gaining sales traction in the ultra-competitive cloud-services sector.
Oracle reported second-quarter earnings of 69 cents per share on $9.6 billion in revenue—up 7 percent year-over year and beating Wall Street projections for $9.51 billion in revenue.
The stock closed at $41.16, up 1.3 percent, in after-hours trading after opening at $40.63. At one point, it was up near $42.
Cloud-Related Revenue Ramping Up
Overall cloud-related revenue was up 47 percent year over year—a metric that is very important to the long-term health of the company and one that was mentioned several times on the conference call with analysts and journalists by Oracle executives.
Software licensing and cloud revenue was up 5 percent to total $7.30 billion; hardware sales, led by new bookings for Exadata analytics units and storage machines, totaled $1.33 billion. Those numbers came close but didn't quite beat the Street. Analysts believed cloud and software sales would hit $7.31 billion; Oracle's self-styled "engineered-together" hardware was forecast to come in at $1.25 billion.
Oracle CEO Mark Hurd said that new cloud bookings grew at a rate of more than 140 percent during the quarter. The company forecasts that new cloud bookings will top $250 million by the fourth quarter 2015.
"As Oracle's cloud business gets bigger, our growth rate is going up. As our competitors' cloud businesses get bigger, their growth rates are going down," Chairman and Chief Technical Officer Larry Ellison said on the conference call.
"We booked over $170 million in new SaaS [software as a service] and PaaS [platform as a service] annually recurring revenue. In Q4 of this fiscal year, we expect to sell over $250 million of new annual SaaS and PaaS subscriptions. This means that in this fiscal year, we will sell well over a $1 billion of new SaaS and PaaS annual subscriptions. What makes this particularly interesting is that next year, Oracle will sell about the same total dollar amount of new SaaS and PaaS business as cloud market leader Salesforce.com. It's going to be close."
Momentum Is Apparent
Of course, these are merely projections. But it is clear that Oracle has now found momentum in its cloud and software subscription and licensing businesses after retooling its own sales force two years ago.
"The key question is can they continue this, to see the type of growth and go against what we've seen in large-cap tech, the softness in the Ciscos, the HPs, the EMCs," analyst Daniel Ives of FBR Capital Markets told CNBC.
"I view this as a step in the right direction, given the disappointing numbers we've seen in the last few quarters. It comes down to cloud; that's putting fuel in the engine. Now you're going to start seeing investors go a little bit glass half full on Oracle here."
Oracle's stock price has gained about 22 percent over the past 12 months.