Oracle delivered a one-two punch for its latest quarter, posting a sharp jump in its SaaS and IaaS software revenues aided by its hyperscaler business as well as its recent acquisition of Cerner.
For the first quarter of its fiscal 2023, Oracle posted a 18% jump in total revenues to $11.4 billion. The increase would top 23% if the top line is counted in constant currency. Cerner contributed $1.4 billion in sales and CEO Safra Catz said the software heavyweight would have grown 8% organically even without Cerner.
Another upside was derived from its Oracle Cloud Infrastructure business, which saw a 58% rise in sales during the quarter to reach nearly $900 million, its first-time revelation of the OCI’s standalone performance in more than six years. In its 1QFY17, it reported $171 million in sales of its Cloud Infrastructure as a Service, mostly from its hosting operations. That translates into a compound annual growth rate of 32%.
The combined sales of its IaaS and SaaS products totaled $3.6 billion in 1QFY23, up 50% year over year in constant currency. By comparison, the combined sales of Oracle’s IaaS and SaaS have been growing consistently anywhere between $100 million and $200 million sequentially in its fiscal 2022. In 1Q23, Cerner contributed about $500 million in SaaS revenues, while Oracle’s IaaS and core SaaS products accounted for $3.1 billion, consistent with what the vendor has been doing over the past few quarters. If anything, the $900 million addition from its OCI business played a much bigger role behind its robust cloud sales in the latest quarter.
The calling out of the standalone revenue of its IaaS business in 1Q23 underscores the growing momentum of the OCI business unit as it has been adding dozens of regional data centers around the world in recent years and beginning to close in on other hyperscalers including Amazon Web Services and Microsoft Azure.
The OCI’s popularity among Oracle’s applications and database customers is further validated by our latest survey of 223 Oracle’s current customers. Because of its incumbent advantage as well as the payoffs after years of heavy investments in building out dozens of cloud regions globally, OCI is considered the de-facto infrastructure provider for the majority of Oracle customers, especially those that have been migrating their mission-critical workloads such as E-Business Suite, PeopleSoft and JD Edwards to the public cloud in order to optimize their returns on their Oracle investments, in conjunction with the decision to shutter their own data centers.
Among these 223 accounts including the likes of FedEx and State of Texas, Oracle Cloud Infrastructure has emerged as the preferred IaaS provider for more than half of Oracle customers(57%), compared with AWS(32%) and Microsoft Azure at 11%, according to our survey results.
It took less than seven months for FedEx to complete migration of its E-Business Suite – covering more than 500 terabytes of production data alone – to Oracle Cloud Infrastructure in March 2021. The stakes were high because the EBS system with the associated databases manages around 75% of the accounts receivable for the shipper. FedEx’s finance team in charge of AR can now run daily collections analyses worldwide for the first time, while experiencing faster invoice and payment processing and double-digit percentage performance improvements for Cloud-enabled applications.
During its latest quarter, Oracle said it added 1,000 customers to its OCI operations. Dozens of its key accounts such as AT&T Mexico, Avianca, Banco Digimais, Entel, Guitar Center, and Gwinnett County Public Schools have done the same by adopting best practices from such customers as FedEx as they accelerate migration of their mission-critical workloads to OCI in order to reduce IT costs and boost scalability along the way.
Oracle Workloads on Oracle Cloud Infrastructure (OCI)
Source: Apps Run The World, September 2022
