Oracle Focuses on Cloud Native Applications

Oracle (NYSE: ORCL) continues to struggle to meet market expectations. The recently reported second quarter results missed revenue forecasts despite beating earnings. The market was not pleased, and the stock fell 5% post the result announcement.

Oracle’s Financials

Revenue for the second quarter grew 0.4% over the year to $9.61 billion, falling short of the market’s forecast of $9.65 billion. EPS of $0.90 was ahead of the market’s forecast of $0.88.

Oracle is counting on two key products to drive its growth – ERP applications and Autonomous Database. Within ERP, it has more than 7,000 Fusion ERP customers and 20,000 NetSuite ERP customers. The company claimed that it had more than doubled its revenue from the Oracle Autonomous Database and increased its Fusion Enterprise Resource Planning Cloud by 37%. Revenues from NetSuite ERP revenues grew 29% over the year.

By segment, cloud services and license support revenues grew 3% to $6.8 billion. Cloud licenses and on-premise license revenues fell 7% to $1.1 billion. Hardware revenues fell 2% to $871 million and services revenues fell 1% to $806 million.

For the quarter, cloud and license revenues grew 1% to $7.94 billion: applications revenues grew 4% to $2.91 billion and infrastructure related revenues were flat at $5.03 billion.

For the current quarter, analysts expect Oracle to report revenues of $9.84 billion with an EPS of $0.97. They expect Oracle to end the year with revenues of $40.07 billion and an EPS of $3.88. Oracle provided an outlook of an EPS of $0.95-$0.97 for the quarter.

Oracle’s Cloud Focus

Oracle’s cloud revenues are still a far cry from Amazon’s and Microsoft’s. It is pushing hard on competing with them and recently announced plans to hire 2,000 more workers to roll out its cloud computing service. It plans to open around 20 more cloud data centers by the end of next year, compared with the 16 it has already established. Additionally, it is also continuing to upgrade its cloud offerings.

Last year, Oracle had introduced the Cloud Native Framework, which offers capabilities for running cloud native workloads on-premises, on third-party clouds, and on Oracle Cloud. It recently added several new services to the offering. Earlier this year, Oracle had introduced Oracle Streaming, a cloud native messaging platform for Oracle developers.

Recently, Oracle announced the General Availability release of compatibility with Apache Kafka, a leading message bus platform for building event-driven applications and real-time big data infrastructure for analytics. The enhancement will use the Kafka ecosystem with the Kafka API, thus eliminating vendor lock-in and will integrate with Oracle Cloud AuthN and AuthZ to fulfill enterprise security needs.

Oracle also introduced an API Gateway, a fully managed gateway that enables developers to create governed HTTP/S interfaces for other Oracle Cloud Infrastructure services, including Oracle Functions, Container Engine for Kubernetes, and Compute. API Gateway will provide for policy enforcement for security authentication and rate-limiting HTTP/S endpoints.

Additionally, it introduced Logging capabilities that are a scalable log management and analytics platform for all logs. The feature lets users manage logs generated by their resources and applications and conduct analytics.

Recently, it introduced a cloud native deployment option for Billing and Revenue Management (BRM). The service is focused on helping digital service providers meet the monetization requirements for their 5G services by leveraging a cloud native, microservices-based architecture framework.

Its stock is currently trading at $53.50 with a market capitalization of $176 billion. It touched a 52-week high of $60.50 in July this year. It has recovered from the 52-week low of $42.40 that it was trading at nearly a year ago.

Photo credit: Joey Rozier/Flickr.com.