Oracle reported another mixed financial quarter, breaking even on quarter-to-quarter revenue and showing a healthy return on stock investment, but missing Wall Street analysts' expectations on overall performance.
On March 17, Oracle posted adjusted third-quarter earnings per share of 68 cents, meeting Wall Street projections. But it missed estimates on its revenue, which totaled $9.33 billion for the quarter. Analysts had expected Oracle to report $9.46 billion in revenue, according to a consensus estimate from Thomson Reuters.
In choosing to look on the bright side for its investors, the company noted that its growth in the cloud sector has been faster than senior executives anticipated. While the cloud software division represents only a small portion of the company's overall business, total SaaS (software-as-a-service), PaaS (platform-as-a-service) and IaaS (infrastructure-as-a-service) cloud revenue was up an impressive 29 percent to $527 million.
"Our cloud results were much, much better than expected, as we're clearly growing faster than Salesforce," Oracle CEO Safra Catz said on the company's earnings call.
The company's stock price improved about 2 percent from its close at $42.87, selling at $43.70 in after-hours trading at 5 p.m. Pacific time on March 17.
Several years ago, Oracle CEO Larry Ellison scoffed at the cloud business (including software-as-a-service and platform-as-a-service) as being mere “market-speak.”
"It's just computers connected to each other over the Internet," Ellison said then. Now the cloud is one of the company's major growth areas.
"In Q3, we sold nearly $200 million of new SaaS and PaaS business as measured in annual recurring revenue," Oracle President Mark Hurd said.
"In Q4, we expect to sell over $300 million of new SaaS and PaaS annual recurring revenue. That means we have a real chance to sell more SaaS and PaaS new business this coming quarter than any other cloud services provider," he added. "I think our hyper-growth in the cloud comes as a big surprise to a lot of people."
Oracle also announced that its board of directors declared a quarterly cash dividend of 15 cents per share of outstanding common stock, reflecting a 25 percent increase over the current quarterly dividend of 12 cents.