Investors had their knives out for Oracle once again on Wednesday after the database giant's fourth-quarter results missed analysts' estimates on both earnings and revenue.
The report capped off a disappointing year for Oracle, one in which its total revenue for the twelve months was flat from the previous year, at $38.23bn. It was an even worse performance than in 2014, when Big Red's revenue grew by just 3 per cent.
As in recent quarters, co-CEO Safra Catz tried to blame the company's lackluster results on the strong US dollar. In constant currency terms, Oracle's annual revenue grew by 4 per cent in fiscal 2015.
She also eagerly highlighted Oracle's cloud revenue for the fourth quarter, which was up 28 per cent from the year-ago period.
"Oracle's planned SaaS and PaaS revenue growth rate is around 60 per cent in constant currency; salesforce.com has a planned growth rate of around 20 per cent," Larry Ellison, the company's CTO and executive chairman, said in a canned statement.
"When you contrast those growth rates it becomes clear that Oracle is on its way to becoming the world's largest enterprise cloud company."
Yet combined revenue from the company's SaaS, PaaS, and IaaS offerings accounted for just 5.4 per cent of the quarter's total, and every other reporting segment was down.
Total revenue for Q4 was $10.71bn, a 5.4 per cent year-on-year decline. Similarly, Oracle's earnings for the quarter were just $0.78 per diluted share, which missed Wall Street's prognostications by a full 9 cents.
Profits were the real disappointment. Oracle posted net income of $2.76bn for the three months ending on May 31, which was down a full 24.4 per cent from last year's quarter. Total net income for 2015 was $9.94bn, which was down 9.3 per cent annually.
Cloud to the rescue? Hardly
There's no disguising Oracle's weakness. However much its execs crow about the cloud, the truth is that its core business is selling and servicing software – and that business isn't doing well. Software accounted for 73.1 per cent of Oracle's sales in the fourth quarter, and total sales shrank.
Sales of new software licenses are considered one of the most important metrics of Big Red's overall health. It sold $3.14bn of them in the fourth quarter, which was down 16.7 per cent, year on year.
Revenue from software license updates and support, meanwhile, was flat, suggesting Oracle is only barely hanging on to the software customers it already has.
The figures weren't quite as bleak on an annual basis. Revenue from updates and support for all of fiscal 2015 was up 3.5 per cent from the previous year, to $18.85bn. But new license revenue for the year was $8.54bn, down 9.4 per cent annually.
Oracle's limping hardware business won't slow the slide, either. Hardware accounted for around 13 per cent of Larry Ellison & Co's revenue for both the fourth quarter and fiscal 2015. Hardware systems sales were down 6 per cent in Q4 and down 5 per cent for the full year at $818m and $2.83bn, respectively. Systems support revenue was $589 for Q4 and $2.38bn for the year, which was essentially flat for both.
Rounding out the picture, Oracle's service business also saw its sales shrink to $899m in the quarter. That 4.4 per cent decline was in keeping with the 4.3 per cent drop for the full year, with total services revenue for 2015 at $3.55bn.
The numbers tell the tale, and Ellison, Catz, and co-CEO Mark Hurd's hand-waving about the cloud hasn't distracted investors from the harsh realities Oracle faces. A conference call with financial analysts on Wednesday had a notably combative tone, and the database giant's shares dipped by more than 6 per cent in after-hours trading on the news. ®