Although Oracle missed FQ2 sales estimates (while beating on EPS), its on-premise software + cloud revenue (closely watched) rose 2% yr/yr in constant currency, putting it at the high end of a 0%-2% guidance range. It is forecasting even higher revenue growth in SaaS/PaaS next year.
In actual dollars, Q2 software and cloud revenue fell 4% to $7bn. Currency and exchange rates had a 6% impact on total revenue growth (-6% vs. 0%). On-premise revenue fell 7% to $6.4bn; cloud rose 26% to $649m. Within on-premise, software licence sales (which drives future update/support revenue and which was hurt by the cloud shift) fell 18% to $1.68bn, and licence update/product support revenue fell 2% to $4.68bn. Within cloud, SaaS/PaaS (cloud apps and app platforms) revenue rose 34% to $484m, and IaaS (cloud infrastructure) 7% to $165m.
Hardware revenue fell 16% to $1.12bn (mainly due to declining UNIX server sales and weak enterprise IT spending), with hardware products dropping 20% to $573m and hardware support 11% to $550m. Services revenue (not counting hardware/software support) fell 8% to $861M.
Oracle still expects to "sell and book" over $1.5bn worth of SaaS/PaaS business in FY16 (ends May '16). On a constant currency basis, Oracle has guided on its FQ2 call (webcast) 0%-3% yr/yr FQ3 revenue growth, and EPS of $0.63-$0.66. Consensus in actual dollars is for -0.6% revenue growth and EPS of $0.65. The company has also set FQ4 guidance (also in constant currency) for 1%-3% revenue growth and EPS of $0.83-$0.86.With SaaS/PaaS billings growth have steadily exceeded revenue growth in recent quarters - FQ2 SaaS/PaaS billings were up 68% in dollars vs. revenue growth of 34% - constant currency, SaaS/PaaS revenue growth is expected to increase to 49%-53% in FQ3, and 55%-59% in FQ4.Total software/cloud revenue is expected to be up 3%-4% in FQ3, and 1%-3% in FQ4. IaaS revenue growth is expected to be up just 3%-7% in FQ3, and 1%-5% in FQ4.