Oracle announced its first quarter of fiscal 2023 results and the first full quarter with Cerner as part of its organisation. Revenues climbed 23% in constant currency to $11.4 billion, with Cerner contributing $1.4 billion to the total. Cloud revenue was up 50% in constant currency to $3.6 billion.
Both its Cloud Infrastructure and Application business showed good growth for Oracle. IaaS revenue rose 58% in constant currency to $0.9 billion, and SaaS rose 48% to $2.7 billion. While Oracle did not reveal how much Fusion and NetSuite attained, their revenues rose 38% and 30% in constant currency.
With a strengthened dollar, the growth was tamer in US currency. Q1 GAAP earnings per share was $0.56, but this would have been higher by 8 cents without the currency impact.
Safra Catz, Oracle CEO, commented: “In Q1, total revenue grew 23% in constant currency beating guidance by $200 million. Even without Cerner, our total revenue grew 8% in constant currency driven by Oracle’s rapidly growing applications and infrastructure cloud businesses. These two cloud businesses now account for more than 30% of our total revenue. As our cloud businesses become a larger-and-larger percentage of our overall business, we expect our constant currency organic revenue growth rate to hit double-digits with a corresponding increase in earnings per share. Cerner will also positively impact revenue and earnings per share growth in the coming quarters as we fully integrate Cerner into Oracle and benefit from the resulting cost efficiencies. This is the first quarter we owned Cerner, and they just delivered the best revenue quarter in their history. We expect Cerner to do even better in the coming quarters as we develop an all-new suite of healthcare cloud services.”
What about those rumoured job losses
The quarter also saw job cuts across the business, initially in the US, but Reuters also reported cuts were likely to happen across Europe and India. The cuts are rumoured to be in the CX division, as Oracle sees it as losing the battle to Salesforce in that arena. However, while many will mourn the job losses, especially those affected, it also shows that Catz is willing to make tough decisions. Oracle also saw its shares rise 1.54% after the results broke yesterday.
Surprisingly during the analyst call, there was no mention of the job losses, though Catz noted: “As we drive Cerner and its profitability to Oracle standards and continue to benefit from economies of scale in the cloud, we will not only continue to grow margin dollars but also grow margin percentages significantly.” Source: Motley Fool.
Cerner provides a boost rather than a drag
Oracle is already moving Cerner data across to the Oracle platform. Ellison noted that it expects to have the first Health Management solution out within 12 months that will use the Oracle architecture including the autonomous database with all the advantages it delivers to customers. For the near future, Catz remains bullish, with Oracle looking to grow revenues between 21-23% in constant currency. Cloud growth will again be between 46-50% in constant currency. That growth, excluding Cerner, will also be above 30% as Oracle sees a strong backlog of bookings.
Ellison advocates hybrid cloud with Microsoft and now AWS
As Oracle cloud continues to grow both its revenues and footprint, Oracle also realises that it is not alone in the market. It also announced Oracle Heatwave on AWS, demonstrating that it is now embracing the hybrid cloud world with Oracle Chairman and CTO Larry Ellison commenting: “Multi-Cloud access to the Oracle Database and Oracle’s MySQL HeatWave database will make the world’s two most popular databases even more popular. In Q1, we expanded our relationship with Microsoft by providing all versions of the Oracle database directly to Microsoft Azure customers. Now all Microsoft customers can directly access the Oracle Exadata Cloud Service, the Oracle Autonomous Database and every other Oracle Database version directly from the Azure Cloud.
“Today we are also announcing that Amazon Web Services customers can directly access Oracle’s MySQL HeatWave database running in the Amazon Cloud. This enables AWS users to run transaction processing, real-time analytics, and machine learning on the single unified MySQL service. MySQL HeatWave delivers 7X better price performance compared to Amazon Redshift and 10X better than Snowflake, 25X faster than Redshift ML, and up to 10X higher throughput than Aurora. See today’s MySQL HeatWave press release for customer performance benchmark verification.”
Enterprise Times: What does this mean
Oracle seems to be bucking the trend, increasing revenues despite a softening for some organisations as inflationary fears are realised. There was no mention of softening, inflation or recession within the analyst call. Can Oracle continue to grow in a toughening climate? It will be interesting to see how things evolve in the coming months. However, Catz and Ellison remain typically bullish, and the results remain very strong.
Oracle has also wasted no time assimilating Cerner and using its technology to boost its prospects shortly. While the next generation of Cerner’s solution is still some distance away, there is already an impact from Oracle taking over the health giant.
