Oracle was able to slightly beat expectations of $9.1B when they reported total Q2 revenue of $9.3B. Oracle’s total revenue only grew 2% which represented the 7th quarter in a row of negative to nominal top line growth.
Oracle’s total software revenues were $6.9B, up 3.7% from last year with new software license and cloud software subscriptions revenue experiencing negative .4% growth year-over-year at $2.4B. Achieving negative growth in new software license and cloud software subscriptions revenue is especially troubling given the fact that each new software license sold carries with it future support revenue stream and renewal revenue. Software updates and product support revenues drive about half of the total company revenues ($4.5B for the quarter). Achieving only a 3.7% increase in total software revenue is also an area that needs to be improved if Oracle is going to truly accelerate Oracle’s total revenue growth, as total software revenue consistently represents roughly 75% of total revenue.
Oracle will focus its attention on the cloud, database and engineered systems specifically to ignite Oracle’s revenue growth.
There is a land grab underway in the market and those organizations that are in the midst of evaluating an Oracle solution, especially cloud, database or engineered systems, will have a significant amount of leverage to negotiate a highly competitive and compelling deal construct. Introducing competitive solutions from SAP, Workday, Salesforce, Microsoft and IBM into the solution evaluations and negotiations will generate the best results.