Oracle Exits FY20 with Bold Plans To Thrive In the Cloud

Database giant is projected to log $8B in Cloud apps revenues in 2021

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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.

CEO Safra Catz outlines Fusion ERP and HCM growth
CEO Safra Catz outlines Fusion ERP and HCM growth

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 [email protected] 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

VendorCash On Hand, $BAnnual Revenues, $BCash As a Percent of Annual Revenues
Microsoft$138$126110%
Oracle$37$3995%
Alphabet$120$13688%
Workday$3$465%
Salesforce$10$1757%
Intuit$4$1039%
Adobe$4$1236%
Apple$93$26535%
SAP$9$2733%
Amazon$49$23221%
Cisco$10$5021%
Intel$11$7116%
IBM$12$8015%
Dell$12$9113%
ADP$2$1511%

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

CustomerIndustryEmpl.RevenueCountryNew Product
AdventHealthHealthcare80000$11.00BUnited StatesOracle Analytics Cloud
AIRBUSAerospace and Defense136518$79.26BNetherlandsOracle Analytics Cloud
American Express CompanyBanking and Financial Services64000$30.90BUnited StatesOracle Analytics Cloud
ArcadisConstruction and Real Estate26822$3.92BNetherlandsOracle Analytics Cloud
BGC Brokers L.P.Banking and Financial Services5200$2.10BUnited StatesOracle Analytics Cloud
Bitron ElectronicsManufacturing2396$560.0MItalyOracle Analytics Cloud
Caixa Bank SABanking and Financial Services35569$10.16BSpainOracle Analytics Cloud
China Eastern Airlines Co., Ltd.Transportation80000$17.08BChinaOracle Analytics Cloud
City of MemphisGovernment6560$1.30BUnited StatesOracle Analytics Cloud
DaimlerAutomotive298611$194.55BGermanyOracle Analytics Cloud
Edw. C. Levy Co.Construction and Real Estate3000$335.0MUnited StatesOracle Analytics Cloud
EmblemHealthInsurance5000$10.00BUnited StatesOracle Analytics Cloud
Exelon CorporationUtilities32713$34.44BUnited StatesOracle Analytics Cloud
Florida International UniversityEducation10000$1.56BUnited StatesOracle Analytics Cloud
Gire SABanking and Financial Services700$100.0MArgentinaOracle Analytics Cloud
Hearst CorporationMedia20000$11.40BUnited StatesOracle Analytics Cloud
Kadmon Holdings, Inc.Life Sciences115$5.0MUnited StatesOracle Analytics Cloud
Macy’sRetail130000$24.97BUnited StatesOracle Analytics Cloud
Mitsubishi ElectricManufacturing145817$42.09BJapanOracle Analytics Cloud
NHS Business Services AuthorityGovernment2955$2.84BUnited KingdomOracle Analytics Cloud
Remington HotelsLeisure and Hospitality3318$888.0MUnited StatesOracle Analytics Cloud
Afia International CompanyProfessional Services32000$5.81BSaudi ArabiaOracle Autonomous Database
Aon AffinityBanking and Financial Services50000$11.00BUnited KingdomOracle Autonomous Database
Apple, Inc.Retail137000$260.17BUnited StatesOracle Autonomous Database
Bank of America CorporationBanking and Financial Services209000$91.24BUnited StatesOracle Autonomous Database
Big Lots, Inc.Retail10500$5.32BUnited StatesOracle Autonomous Database
Campbell Soup CompanyConsumer Packaged Goods19000$8.11BUnited StatesOracle Autonomous Database
ComcastCommunications190000$108.94BUnited StatesOracle Autonomous Database
Deutsche Bank (Germany)Banking and Financial Services86667$23.05BGermanyOracle Autonomous Database
ENGIEUtilities171000$68.00BFranceOracle Autonomous Database
Federal Reserve BoardGovernment17359$900.0MUnited StatesOracle Autonomous Database
Grupo DPSPRetail26000$3.00BBrazilOracle Autonomous Database
JPMorgan Chase & Co.Banking and Financial Services256720$115.63BUnited StatesOracle Autonomous Database
Metro-Goldwyn-Mayer Studios IncMedia4000$500.0MUnited StatesOracle Autonomous Database
Adventist HealthNon Profit5500$800.0MUnited StatesOracle ERP Cloud
Banco DaviviendaBanking and Financial Services12500$3.80BColombiaOracle ERP Cloud
Blue Shield of CaliforniaNon Profit6800$17.00BUnited StatesOracle ERP Cloud
Carillion PlcProfessional Services40000$4.00BUnited KingdomOracle ERP Cloud
Chicago Sun-TimesMedia350$372.0MUnited StatesOracle ERP Cloud
CSX CorporationTransportation22475$12.25BUnited StatesOracle ERP Cloud
dunnhumbyProfessional Services3124$500.0MUnited KingdomOracle ERP Cloud
EurostarLeisure and Hospitality1800$1.07BUnited KingdomOracle ERP Cloud
Federal Deposit InsuranceInsurance8713$39.10BUnited StatesOracle ERP Cloud
Fox Home EntertainmentMedia12100$13.28BUnited StatesOracle ERP Cloud
Igloo Products Corp.Manufacturing1200$350.0MUnited StatesOracle ERP Cloud
J.M. Huber CorporationOil, Gas and Chemicals4100$2.20BUnited StatesOracle ERP Cloud
Kentucky State UniversityEducation1600$53.0MUnited StatesOracle ERP Cloud
LifeLabs Medical Laboratory ServicesLife Sciences7582$2.81BCanadaOracle ERP Cloud
Markel CorporationInsurance17400$6.95BUnited StatesOracle ERP Cloud
McKesson CorporationLife Sciences80000$214.32BUnited StatesOracle ERP Cloud
Ocwen Financial CorporationBanking and Financial Services5600$1.06BUnited StatesOracle ERP Cloud
Orange FranceCommunications157000$42.00BFranceOracle ERP Cloud
Pontificia Universidad JaverianaEducation5086$223.0MColombiaOracle ERP Cloud
San Bernardino Community College DistrictEducation14253$12.37BUnited StatesOracle ERP Cloud
State of NebraskaGovernment19067$9.70BUnited StatesOracle ERP Cloud
Toshiba AmericaManufacturing6600$2.96BUnited StatesOracle ERP Cloud
ViewsonicConsumer Packaged Goods800$1.20BUnited StatesOracle ERP Cloud
Visa Inc.Banking and Financial Services17000$20.61BUnited StatesOracle ERP Cloud
West Midlands PoliceGovernment10884$728.0MUnited KingdomOracle ERP Cloud
2 Sisters Food GroupManufacturing23000$4.30BUnited KingdomOracle HCM Cloud
A.S.R.Insurance4622$9.30BNetherlandsOracle HCM Cloud
Abu Dhabi CustomsGovernment1500$300.0MUnited Arab EmiratesOracle HCM Cloud
Accelya Holding World S.LProfessional Services3000$300.0MSpainOracle HCM Cloud
BAE SystemsAerospace and Defense31700$9.75BUnited StatesOracle HCM Cloud
Bahrain Petroleum CompanyOil, Gas and Chemicals2500$3.00BBahrainOracle HCM Cloud
Bank of EnglandBanking and Financial Services4368$1.00BUnited KingdomOracle HCM Cloud
Baylor UniversityEducation2993$750.0MUnited StatesOracle HCM Cloud
Birmingham City CouncilGovernment7000$1.05BUnited KingdomOracle HCM Cloud
C.R. Bard (Becton Dickinson Company)Manufacturing16300$3.80BUnited StatesOracle HCM Cloud
Cairn Oil and GasOIl, Gas and Chemicals3000$5.46BIndiaOracle HCM Cloud
Cantor FitzgeraldBanking and Financial Services12000$5.00BUnited StatesOracle HCM Cloud
Cengage LearningProfessional Services4900$1.46BUnited StatesOracle HCM Cloud
Chick-fil-ARetail25830$10.50BUnited StatesOracle HCM Cloud
City of AtlantaGovernment6602$2.80BUnited StatesOracle HCM Cloud
Coca-Cola EnterprisesManufacturing23357$14.68BUnited KingdomOracle HCM Cloud
Dahman KuwaitHealthcare4000$500.0MKuwaitOracle HCM Cloud
DCP Midstream, LPOil, Gas and Chemicals2250$9.80BUnited StatesOracle HCM Cloud
David Pieris Motor Company (Pvt) LtdAutomotive1000$100.0MSri LankaOracle HCM Cloud
Dyson LtdManufacturing12500$5.70BUnited KingdomOracle HCM Cloud
Eindhoven University of TechnologyEducation3200$365.0MNetherlandsOracle HCM Cloud
El Seif Engineering ContractingConstruction and Real Estate10000$1.20BSaudi ArabiaOracle HCM Cloud
Energypac Engineering LtdManufacturing4423$150.0MIndiaOracle HCM Cloud
Fairpoint CommunicationsMedia3000$1.27BUnited StatesOracle HCM Cloud
Federal National Mortgage AssociationBanking and Financial Services7500$21.69BUnited StatesOracle HCM Cloud
FIFE CouncilGovernment18000$984.0MUnited KingdomOracle HCM Cloud
Ford Motor Company LtdAutomotive13000$3.00BUnited KingdomOracle HCM Cloud
G&K ServicesRetail8000$978.0MUnited StatesOracle HCM Cloud
G4S plcProfessional Services558000$7.76BUnited KingdomOracle HCM Cloud
Hanson LimitedManufacturing3500$1.50BUnited KingdomOracle HCM Cloud
ING GroupBanking and Financial Services54000$20.06BNetherlandsOracle HCM Cloud
Institute of Electrical and Electronics Engineers (IEEE)Non Profit900$480.0MUnited StatesOracle HCM Cloud
J Sainsbury plcRetail185000$35.41BUnited KingdomOracle HCM Cloud
Johnson Matthey plcManufacturing14000$10.75BUnited KingdomOracle HCM Cloud
Kentucky State UniversityEducation1600$53.0MUnited StatesOracle HCM Cloud
Kuwait National Petroleum CompanyOil, Gas and Chemicals6378$29.80BKuwaitOracle HCM Cloud
Ladbrokes CoralLeisure and Hospitality16685$1.66BUnited KingdomOracle HCM Cloud
Life Care ServicesHealthcare600$100.0MUnited StatesOracle HCM Cloud
M. H. Alshaya Co.Retail60000$10.00BKuwaitOracle HCM Cloud
MetLife, Inc.Insurance48000$69.62BUnited StatesOracle HCM Cloud
National Football LeagueLeisure and Hospitality10000$144.80BUnited StatesOracle HCM Cloud
Nykredit Bank A/SBanking and Financial Services3377$1.00BDenmarkOracle HCM Cloud
Oasis Investment CompanyManufacturing10500$1.00BUnited Arab EmiratesOracle HCM Cloud
Olin CorporationOil, Gas and Chemicals6500$6.95BUnited StatesOracle HCM Cloud
Pacific Dental ServicesLeisure and Hospitality7036$893.0MUnited StatesOracle HCM Cloud
Pella CorporationManufacturing7000$2.00BUnited StatesOracle HCM Cloud
Quad GraphicsManufacturing19600$3.92BUnited StatesOracle HCM Cloud
Quest Diagnostics IncorporatedHealthcare47000$7.70BUnited StatesOracle HCM Cloud
Samsonite USAConsumer Packaged Goods4500$1.30BUnited StatesOracle HCM Cloud
Sandwell Metropolitan Borough CouncilGovernment4126$750.0MUnited KingdomOracle HCM Cloud
SaudiGulf AirlinesAerospace and Defense1300$300.0MSaudi ArabiaOracle HCM Cloud
The Co-operative GroupRetail70000$13.24BUnited KingdomOracle HCM Cloud
U.S. NavyAerospace and Defense200000$26.28BUnited StatesOracle HCM Cloud
University of WollongongEducation2400$412.0MAustraliaOracle HCM Cloud
Vertiv Group CorpManufacturing19700$4.30BUnited StatesOracle HCM Cloud
VodafoneZiggoCommunications6400$4.33BNetherlandsOracle HCM Cloud
Wake Forest Baptist Medical CenterHealthcare13440$3.40BUnited StatesOracle HCM Cloud
Walsall CouncilGovernment5320$772.0MUnited KingdomOracle HCM Cloud
WarburtonsManufacturing4500$753.0MUnited KingdomOracle HCM Cloud
Wintrust Financial CorporationBanking and Financial Services4000$1.40BUnited StatesOracle HCM Cloud

Source: Apps Run The World, July 2020