Oracle exited its fiscal 2020 in good shape as the leading database and ERP vendor rolled out a number of corporate and product measures to prepare itself for a new phase of expansion despite the uncertain duration of the global health crisis.
With robust growth in Cloud applications and services, a leadership position in Cloud ERP and other mission-critical software products, Oracle also saw pockets of strength in such areas as Japan and vertical solutions like core banking since the spread of Covid-19 in early 2020.
For its fourth quarter of fiscal 2020, Oracle posted a 3% rise in Cloud services and license support sales to reach $6.8 billion on total revenues of $10.4 billion, or a 4% drop. For the full year, its Cloud services and license support sales achieved a 4% growth to reach $27.3 billion on total revenues of $39 billion, the same top line it registered in fiscal 2019.
In the latest quarter, Oracle chalked up a 35% jump in Fusion ERP subscription revenues and a 29% rise in Fusion HCM revenues after signing up more than 100 new customers and activated go-live implementations for at least 600,000 Cloud HCM users in North America alone during the three-month period when lockdown, quarantine and other constraints prevented mobility for many amid the pandemic.
Larry Ellison, CTO and co-founder of Oracle, said the number of Fusion ERP and NetSuite customers has exceeded 29,100, up 8% from 27,000 in its 3QFY20, with many of them choosing both Fusion ERP and Fusion HCM in order to achieve enhanced visibility into their financial management and HR operations, an attribute that is becoming more vital than ever as companies aim to better position themselves during the downturn.
If the momentum continues, our projection shows that Oracle could exceed $8 billion in Cloud applications subscription revenues for 2020, up from $6.6 billion in 2019, potentially securing the No. 3 position to close in on Microsoft and Salesforce.
And much of that push will be from Oracle’s organic growth as other enterprise software vendors have been resorting to expand their product portfolios by launching expensive purchases over the past 12 to 18 months. On the other hand, it has been more than two years since Oracle completed any purchase of more than $1 billion after paying $1.6 billion for Aconex, an Australian vendor of Cloud-based construction applications, in March 2018.
In its core database business, Oracle continues to benefit from the lucrative database maintenance fees, which account for the bulk of its infrastructure subscription revenues. Those revenues rose 3.3% to more than $18 billion in fiscal 2020. In 4QFY20, the annualized consumption revenues for its Gen 2 Oracle Cloud Infrastructure and Autonomous Database saw sharp increases of 140% and nearly 70%, respectively, said CEO Safra Catz.
The catalyst for its infrastructure business is the revamped Cloud@Customer program whereby its on-premise database customers will be able to run these new Cloud infrastructure services from their own data centers. Specifically, the new program targets thousands of customers that have been running their Oracle database instances using Oracle Exadata servers since the massively parallel processing systems were introduced in 2009.
For FY20, Oracle’s other bright spots included Oracle Japan, which posted a 4% rise for the year to reach nearly $2 billion in total revenues, an uninterrupted growth streak since 2015. Additionally, Oracle Financial Services Software (OFSS), the formerly iFlex division, was able to sign $23 million worth of Core Banking applications license revenues for the quarter ended March 31, 2020, undeterred by any disruption stemming from the pandemic. The 28% jump in license revenues fueled OFSS’ total revenues by 4% to $169 million for the quarter.
FY20 Product Highlights
At the product level, Oracle extended free offerings to its customers in such areas as Workforce Health and Safety, Employee Care, Scenario Planning as part of what we refer to Enterprise Essentials applications designed to bolster recovery efforts of pandemic-ravaged organizations.
The vendor is also opening up the Oracle Analytics Cloud to a range of Oracle Cloud applications from Fusion ERP to Fusion HCM, in addition to other third-party cloud software data sources, thusly generating more useful dashboards and insights for millions of users. In some of these use cases, Oracle Analytics Cloud, along with these apps, can cut lead time by two-thirds for functions such as contingent hiring during the pandemic or reducing 18 to two hours when running ETL tasks.
In FY20, Oracle also shored up its CX applications by improving their performance with the use of Oracle Autonomous Database, the new Oracle Redwood interface, as well as the Oracle Cloud Infrastructure. Oracle also acquired Crowdtwist for its customer loyalty applications last October, in addition to strengthening the CX ecosystem by partnering with Google and Zilliant, which will integrate CX Service and CX CPQ into their messaging and pricing products, respectively.
The same commitment to delivering ease of integration is also evident in Oracle Hospitality, the former Micros operations, which aims to provide a complete set of REST APIs unified in a single platform for its partners that will have access 3,000 API capabilities in order to introduce a range of touchless, social distancing and self-service options for hotels, quick service restaurants and other guest-driven venues, all of which are adapting to a new operating model in the post-pandemic world.
Regardless of the severity of the downturn, Oracle is bracing for transformative changes in its current fiscal year. According to our analysis, after issuing $20-billion worth of corporate notes in late March, Oracle now holds $37 billion in cash, the second largest sum as a percentage of revenue among its key competitors, right behind Microsoft, as shown in the following table.
Stockpiling Cash Amid The Downturn
|Vendor||Cash On Hand, $B||Annual Revenues, $B||Cash As a Percent of Annual Revenues|
Source: Latest Earnings Results, Revenues Are Trailing Four Quarters.
Either Oracle is stockpiling cash just in case the downturn deepens or it could be firing up its acquisition engine to seize M&A opportunities if the worsening market conditions leave any of its competitors high and dry.
The third scenario is that since its fiscal 2017, Oracle has been rearranging the makeup of its headcount by investing heavily in Cloud services (OCI and Cloud apps) and its professional services organization. Our estimate is that Oracle now assigns more than 10,000 employees to Cloud services, compared with 8,000 in 2017. Because of that, Oracle is gearing up to have more OCI regions to meet data sovereignty requirements of its customers than Amazon Web Services does this year, according to Ellison.
With more of its customers migrating to the Cloud comes burgeoning demand for its professional services, which saw its headcount rise to 25,000 from 24,000 over the past year. Once those investments have been made to bulk up Cloud services and professional services, Oracle could use its substantial cash hoard to fund any program to win new customers by shifting more resources to sales and marketing in FY21 and beyond.
On the other hand, it remains to be seen whether this costly strategy – which results in a debt load of $71.5 billion(up 28% from $56 billion a year ago) – is going to work in one of the most turbulent periods in history. Even though nothing is guaranteed these days, Oracle is resolute and certain about its all-in plan to ensure its ability to survive and thrive in the Cloud while striking its enemies at all costs.
List of Oracle Cloud Apps Customers
|AdventHealth||Healthcare||80000||$11.00B||United States||Oracle Analytics Cloud|
|AIRBUS||Aerospace and Defense||136518||$79.26B||Netherlands||Oracle Analytics Cloud|
|American Express Company||Banking and Financial Services||64000||$30.90B||United States||Oracle Analytics Cloud|
|Arcadis||Construction and Real Estate||26822||$3.92B||Netherlands||Oracle Analytics Cloud|
|BGC Brokers L.P.||Banking and Financial Services||5200||$2.10B||United States||Oracle Analytics Cloud|
|Bitron Electronics||Manufacturing||2396||$560.0M||Italy||Oracle Analytics Cloud|
|Caixa Bank SA||Banking and Financial Services||35569||$10.16B||Spain||Oracle Analytics Cloud|
|China Eastern Airlines Co., Ltd.||Transportation||80000||$17.08B||China||Oracle Analytics Cloud|
|City of Memphis||Government||6560||$1.30B||United States||Oracle Analytics Cloud|
|Daimler||Automotive||298611||$194.55B||Germany||Oracle Analytics Cloud|
|Edw. C. Levy Co.||Construction and Real Estate||3000||$335.0M||United States||Oracle Analytics Cloud|
|EmblemHealth||Insurance||5000||$10.00B||United States||Oracle Analytics Cloud|
|Exelon Corporation||Utilities||32713||$34.44B||United States||Oracle Analytics Cloud|
|Florida International University||Education||10000||$1.56B||United States||Oracle Analytics Cloud|
|Gire SA||Banking and Financial Services||700||$100.0M||Argentina||Oracle Analytics Cloud|
|Hearst Corporation||Media||20000||$11.40B||United States||Oracle Analytics Cloud|
|Kadmon Holdings, Inc.||Life Sciences||115||$5.0M||United States||Oracle Analytics Cloud|
|Macy’s||Retail||130000||$24.97B||United States||Oracle Analytics Cloud|
|Mitsubishi Electric||Manufacturing||145817||$42.09B||Japan||Oracle Analytics Cloud|
|NHS Business Services Authority||Government||2955||$2.84B||United Kingdom||Oracle Analytics Cloud|
|Remington Hotels||Leisure and Hospitality||3318||$888.0M||United States||Oracle Analytics Cloud|
|Afia International Company||Professional Services||32000||$5.81B||Saudi Arabia||Oracle Autonomous Database|
|Aon Affinity||Banking and Financial Services||50000||$11.00B||United Kingdom||Oracle Autonomous Database|
|Apple, Inc.||Retail||137000||$260.17B||United States||Oracle Autonomous Database|
|Bank of America Corporation||Banking and Financial Services||209000||$91.24B||United States||Oracle Autonomous Database|
|Big Lots, Inc.||Retail||10500||$5.32B||United States||Oracle Autonomous Database|
|Campbell Soup Company||Consumer Packaged Goods||19000||$8.11B||United States||Oracle Autonomous Database|
|Comcast||Communications||190000||$108.94B||United States||Oracle Autonomous Database|
|Deutsche Bank (Germany)||Banking and Financial Services||86667||$23.05B||Germany||Oracle Autonomous Database|
|ENGIE||Utilities||171000||$68.00B||France||Oracle Autonomous Database|
|Federal Reserve Board||Government||17359||$900.0M||United States||Oracle Autonomous Database|
|Grupo DPSP||Retail||26000||$3.00B||Brazil||Oracle Autonomous Database|
|JPMorgan Chase & Co.||Banking and Financial Services||256720||$115.63B||United States||Oracle Autonomous Database|
|Metro-Goldwyn-Mayer Studios Inc||Media||4000||$500.0M||United States||Oracle Autonomous Database|
|Adventist Health||Non Profit||5500||$800.0M||United States||Oracle ERP Cloud|
|Banco Davivienda||Banking and Financial Services||12500||$3.80B||Colombia||Oracle ERP Cloud|
|Blue Shield of California||Non Profit||6800||$17.00B||United States||Oracle ERP Cloud|
|Carillion Plc||Professional Services||40000||$4.00B||United Kingdom||Oracle ERP Cloud|
|Chicago Sun-Times||Media||350||$372.0M||United States||Oracle ERP Cloud|
|CSX Corporation||Transportation||22475||$12.25B||United States||Oracle ERP Cloud|
|dunnhumby||Professional Services||3124||$500.0M||United Kingdom||Oracle ERP Cloud|
|Eurostar||Leisure and Hospitality||1800||$1.07B||United Kingdom||Oracle ERP Cloud|
|Federal Deposit Insurance||Insurance||8713||$39.10B||United States||Oracle ERP Cloud|
|Fox Home Entertainment||Media||12100||$13.28B||United States||Oracle ERP Cloud|
|Igloo Products Corp.||Manufacturing||1200||$350.0M||United States||Oracle ERP Cloud|
|J.M. Huber Corporation||Oil, Gas and Chemicals||4100||$2.20B||United States||Oracle ERP Cloud|
|Kentucky State University||Education||1600||$53.0M||United States||Oracle ERP Cloud|
|LifeLabs Medical Laboratory Services||Life Sciences||7582||$2.81B||Canada||Oracle ERP Cloud|
|Markel Corporation||Insurance||17400||$6.95B||United States||Oracle ERP Cloud|
|McKesson Corporation||Life Sciences||80000||$214.32B||United States||Oracle ERP Cloud|
|Ocwen Financial Corporation||Banking and Financial Services||5600||$1.06B||United States||Oracle ERP Cloud|
|Orange France||Communications||157000||$42.00B||France||Oracle ERP Cloud|
|Pontificia Universidad Javeriana||Education||5086||$223.0M||Colombia||Oracle ERP Cloud|
|San Bernardino Community College District||Education||14253||$12.37B||United States||Oracle ERP Cloud|
|State of Nebraska||Government||19067||$9.70B||United States||Oracle ERP Cloud|
|Toshiba America||Manufacturing||6600||$2.96B||United States||Oracle ERP Cloud|
|Viewsonic||Consumer Packaged Goods||800||$1.20B||United States||Oracle ERP Cloud|
|Visa Inc.||Banking and Financial Services||17000||$20.61B||United States||Oracle ERP Cloud|
|West Midlands Police||Government||10884||$728.0M||United Kingdom||Oracle ERP Cloud|
|2 Sisters Food Group||Manufacturing||23000||$4.30B||United Kingdom||Oracle HCM Cloud|
|A.S.R.||Insurance||4622||$9.30B||Netherlands||Oracle HCM Cloud|
|Abu Dhabi Customs||Government||1500||$300.0M||United Arab Emirates||Oracle HCM Cloud|
|Accelya Holding World S.L||Professional Services||3000||$300.0M||Spain||Oracle HCM Cloud|
|BAE Systems||Aerospace and Defense||31700||$9.75B||United States||Oracle HCM Cloud|
|Bahrain Petroleum Company||Oil, Gas and Chemicals||2500||$3.00B||Bahrain||Oracle HCM Cloud|
|Bank of England||Banking and Financial Services||4368||$1.00B||United Kingdom||Oracle HCM Cloud|
|Baylor University||Education||2993||$750.0M||United States||Oracle HCM Cloud|
|Birmingham City Council||Government||7000||$1.05B||United Kingdom||Oracle HCM Cloud|
|C.R. Bard (Becton Dickinson Company)||Manufacturing||16300||$3.80B||United States||Oracle HCM Cloud|
|Cairn Oil and Gas||OIl, Gas and Chemicals||3000||$5.46B||India||Oracle HCM Cloud|
|Cantor Fitzgerald||Banking and Financial Services||12000||$5.00B||United States||Oracle HCM Cloud|
|Cengage Learning||Professional Services||4900||$1.46B||United States||Oracle HCM Cloud|
|Chick-fil-A||Retail||25830||$10.50B||United States||Oracle HCM Cloud|
|City of Atlanta||Government||6602||$2.80B||United States||Oracle HCM Cloud|
|Coca-Cola Enterprises||Manufacturing||23357||$14.68B||United Kingdom||Oracle HCM Cloud|
|Dahman Kuwait||Healthcare||4000||$500.0M||Kuwait||Oracle HCM Cloud|
|DCP Midstream, LP||Oil, Gas and Chemicals||2250||$9.80B||United States||Oracle HCM Cloud|
|David Pieris Motor Company (Pvt) Ltd||Automotive||1000||$100.0M||Sri Lanka||Oracle HCM Cloud|
|Dyson Ltd||Manufacturing||12500||$5.70B||United Kingdom||Oracle HCM Cloud|
|Eindhoven University of Technology||Education||3200||$365.0M||Netherlands||Oracle HCM Cloud|
|El Seif Engineering Contracting||Construction and Real Estate||10000||$1.20B||Saudi Arabia||Oracle HCM Cloud|
|Energypac Engineering Ltd||Manufacturing||4423||$150.0M||India||Oracle HCM Cloud|
|Fairpoint Communications||Media||3000||$1.27B||United States||Oracle HCM Cloud|
|Federal National Mortgage Association||Banking and Financial Services||7500||$21.69B||United States||Oracle HCM Cloud|
|FIFE Council||Government||18000||$984.0M||United Kingdom||Oracle HCM Cloud|
|Ford Motor Company Ltd||Automotive||13000||$3.00B||United Kingdom||Oracle HCM Cloud|
|G&K Services||Retail||8000||$978.0M||United States||Oracle HCM Cloud|
|G4S plc||Professional Services||558000||$7.76B||United Kingdom||Oracle HCM Cloud|
|Hanson Limited||Manufacturing||3500||$1.50B||United Kingdom||Oracle HCM Cloud|
|ING Group||Banking and Financial Services||54000||$20.06B||Netherlands||Oracle HCM Cloud|
|Institute of Electrical and Electronics Engineers (IEEE)||Non Profit||900||$480.0M||United States||Oracle HCM Cloud|
|J Sainsbury plc||Retail||185000||$35.41B||United Kingdom||Oracle HCM Cloud|
|Johnson Matthey plc||Manufacturing||14000||$10.75B||United Kingdom||Oracle HCM Cloud|
|Kentucky State University||Education||1600||$53.0M||United States||Oracle HCM Cloud|
|Kuwait National Petroleum Company||Oil, Gas and Chemicals||6378||$29.80B||Kuwait||Oracle HCM Cloud|
|Ladbrokes Coral||Leisure and Hospitality||16685||$1.66B||United Kingdom||Oracle HCM Cloud|
|Life Care Services||Healthcare||600||$100.0M||United States||Oracle HCM Cloud|
|M. H. Alshaya Co.||Retail||60000||$10.00B||Kuwait||Oracle HCM Cloud|
|MetLife, Inc.||Insurance||48000||$69.62B||United States||Oracle HCM Cloud|
|National Football League||Leisure and Hospitality||10000||$144.80B||United States||Oracle HCM Cloud|
|Nykredit Bank A/S||Banking and Financial Services||3377||$1.00B||Denmark||Oracle HCM Cloud|
|Oasis Investment Company||Manufacturing||10500||$1.00B||United Arab Emirates||Oracle HCM Cloud|
|Olin Corporation||Oil, Gas and Chemicals||6500||$6.95B||United States||Oracle HCM Cloud|
|Pacific Dental Services||Leisure and Hospitality||7036||$893.0M||United States||Oracle HCM Cloud|
|Pella Corporation||Manufacturing||7000||$2.00B||United States||Oracle HCM Cloud|
|Quad Graphics||Manufacturing||19600||$3.92B||United States||Oracle HCM Cloud|
|Quest Diagnostics Incorporated||Healthcare||47000||$7.70B||United States||Oracle HCM Cloud|
|Samsonite USA||Consumer Packaged Goods||4500||$1.30B||United States||Oracle HCM Cloud|
|Sandwell Metropolitan Borough Council||Government||4126||$750.0M||United Kingdom||Oracle HCM Cloud|
|SaudiGulf Airlines||Aerospace and Defense||1300||$300.0M||Saudi Arabia||Oracle HCM Cloud|
|The Co-operative Group||Retail||70000||$13.24B||United Kingdom||Oracle HCM Cloud|
|U.S. Navy||Aerospace and Defense||200000||$26.28B||United States||Oracle HCM Cloud|
|University of Wollongong||Education||2400||$412.0M||Australia||Oracle HCM Cloud|
|Vertiv Group Corp||Manufacturing||19700||$4.30B||United States||Oracle HCM Cloud|
|VodafoneZiggo||Communications||6400||$4.33B||Netherlands||Oracle HCM Cloud|
|Wake Forest Baptist Medical Center||Healthcare||13440||$3.40B||United States||Oracle HCM Cloud|
|Walsall Council||Government||5320||$772.0M||United Kingdom||Oracle HCM Cloud|
|Warburtons||Manufacturing||4500||$753.0M||United Kingdom||Oracle HCM Cloud|
|Wintrust Financial Corporation||Banking and Financial Services||4000||$1.40B||United States||Oracle HCM Cloud|
Source: Apps Run The World, July 2020