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What hardware? Oracle is on cloud nine, er, twelve right now – $200,000,000,000

IT giant's market cap soars after (mostly) strong financials

Oracle says it has finally turned the corner with its cloud compute transition as it reports big gains for the business, both in the quarter and the fiscal year.

The database giant said that its cloud and SaaS units now account for more than 10 per cent of its total revenue haul and will take on an even larger share of the total business going forward.

This may not be entirely by choice; both the on-premises software and hardware groups have reported falling revenues, with hardware dropping by double digits.

For the Q4 FY 2017 period, ending May 31st:

  • Revenues of $10.9bn were up 3 per cent from last year's $10.6bn and better than analysts' estimated $10.5bn.
  • Net income was $3.2bn, a 15 per cent jump from $2.8bn in Q4 2016.
  • Earnings per share of $0.78 were right in line with analyst estimates.
  • Hardware revenue was $1.1bn, down 13 per cent from the year-ago quarter.
  • Cloud revenue of $1.36bn for the quarter was up 58 per cent from last year.
  • On-prem software revenue was $7.52bn, down 1 per cent from the year-ago.
  • Services revenue checked in at $894m, up 3 per cent year-over-year.

Over the full 2017 fiscal year (ending May 31), Oracle saw its cloud operation grow to take a major portion of its overall revenues.

  • Full year revenues of $37.7bn were up 2 per cent from last year.
  • Net income was $9.3bn, a 5 per cent improvement over FY 2016.
  • Cloud revenue of $4.6bn was up 60 per cent. Cloud accounted for 12 per cent of Oracle's full-year revenue.
  • On-prem software revenue checked in at $25.6bn, a 2 per cent drop from last year. It remains the bulk of Oracle's business, accounting for 68 per cent of revenues.
  • Hardware revenues were $4.15bn, down 11 per cent for the full year. For the first time, Oracle made more from cloud than it did the hardware business.
  • Services revenue was $3.36bn, down one per cent. Services were 9 per cent of total revenues for the year.

"The cloud has become our predominant growth vehicle," declared Oracle co-CEO Safra Katz in a call with analysts. She said Oracle has turned a corner on its effort to refocus around cloud and SaaS and away from the "drag" of the fading hardware and on-prem software efforts.

"This not a one-year phenomena, what you should see is we will have less drag from the transition and the base will continue to grow," Katz proclaimed. "You are going to see less of a drag as that side is smaller compared to our cloud business."

Essentially, it appears Oracle has hit its stride with cloud, at least according to market watchers. “Oracle’s finally turned the corner in terms of its cloud momentum,” said analyst Josh Olson. “For years, it’s been kind of struggle. But they’ve, I think, found their footing.”

Oracle shares were up over 10 per cent in after-hours trading at $51.30 per share, making it a $200bn enterprise tech giant. ®

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