Update: PaaS And IaaS Continue To Fuel Future Growth For Oracle

| About: Oracle Corporation (ORCL)
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Summary

The company has announced its second quarter earnings.

As we expected, IaaS and PaaS revenues continue to grow at an exceptional rate.

Cloud bookings are also strong for the company and are expected to reach $250 million by the fourth quarter of the current fiscal year.

Oracle (NYSE:ORCL) has announced its second quarter earnings - the company reported an increase of 3% in total revenues to $9.6 billion - software and cloud revenues remain the main component of the revenues at $7.3 billion, and this segment reported growth of 5%. Total new cloud bookings in the quarter grew by 140% and the company expects cloud bookings to reach $250 million by the fourth quarter of the current fiscal year. Non-GAAP earnings per share were up 1% for the quarter at $0.69. Other segments of the company also showed growth and the revenues continue to grow at an impressive rate.

However, the most important growth figures come from the Platform-as-a-service [PaaS] and the Infrastructure-as-a-service [IaaS] products. These results are in line with our expectations. Total revenues for the second quarter from these products stood at $516 million - recording a growth rate of 45%. If the company continues to grow revenues at this rate, then it will not take long for Oracle to generate $1 billion in quarterly revenues from this segment and take total quarterly revenues over $10 billion. This segment is quickly becoming an extremely important segment for the company as its share in total revenues is growing at a rapid pace.

As we have explained in the above-linked article, the IaaS, PaaS and other cloud infrastructure services are growing at about 50% per annum - Oracle's growth rate of 45% is close to the industry growth rate, which shows the company is taking advantage of this growth opportunity. At current growth rates, this segment will soon go over 10% of total revenues of the company and become an integral part of the business. This segment should also allow the company to enhance its margins due to the rapid growth. Oracle's PaaS and IaaS products are getting strong reception from the market and we expect these products to continue to fuel the future growth of the company.

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