Category Archives: Financial Results

AI, Artificial intelligence, CRM, Financial Results, Marc Benioff, News & Analysis, Salesforce

Marc Benioff backs AI as Salesforce reports 28% growth

Marc Benioff

Salesforce CEO Marc Benioff

Salesforce reported healthy results over the course of Q1, growing 28%, as CEO Marc Benioff backed AI as the next major growth driver, during the company’s quarterly earnings call.

While social and mobile has facilitated Salesforce growth in recent years, the team are backing artificial intelligence as the next major trend to take the company through the targeted $10 billion annual revenue target. Benioff highlighted that in the same way the company is now known for being a social and mobility brand, the ambition is for Salesforce to be perceived as “an AI first company”.

“When I look at kind of the next major trend for Salesforce and our industry that will drive tremendous growth is got to be artificial intelligence,” said Benioff. “And as we look out into the future and we start to look at extreme improvement and advances in artificial intelligence whether it’s machine learning, whether it’s deep learning, whether it’s machine intelligence itself, I think that those kind of capabilities appearing inside our applications that is going to be a major growth capability going forward.”

One of the newest product launches for the company, Salesforce Inbox, uses these AI and machine intelligence opportunities to gives companies a perspective on how they can be more efficient in the sales, service, and marketing processes. SalesforceIQ is another offering which uses the same capabilities as it has an artificial intelligence front end, whereas Benioff also highlighted Sales Cloud has a machine learning front end.

While others in the industry have been very vocal about their progress within the AI field, Salesforce has seemingly been sneaking in under the radar with additional acquisitions including Tempo AI and PredictionIO. SalesforceIQ, an AI-driven calendar app which can prioritize work schedules for sales employees, was incorporated into the product portfolio following the $390 million acquisition of RelateIQ in 2014. These acquisitions, as well as organic development, are aiding the company in adapting to what Benioff described as “an AI first world”.

Salesforce’s new efforts will focus on the new, digitally enabled customers and consumers, who could be seen to driving the transformation worldwide. This new generation is defined by technology and speed, as Benioff highlighted they want services faster and easier than ever before, as well as being ever more reliant on social and mobile technologies. Companies who do not adapt themselves to this new proposition but remain in a more traditional model are those who will struggle to remain competitive.

“We’re in the midst of a massive generational shift; a new generation of customers and consumers is clearly emerging,” said Benioff. “We have been calling them here at Salesforce C generation customers. I mean this is really part of a huge shift that’s happening in computing. We’ve gone from the first generation of computing which was very much about systems of record to the second generation which was systems of engagement we talked about that on these calls many times over the last 10 years.

“And we are clearly moving into this incredible world that the system of intelligence that’s all yielding these incredible systems of customers or C generation customers that are — that our customers are connecting to. And that’s we’re so excited about.”

In terms of financials, revenues for Q1 grew to nearly $2 billion, up 28% in constant currency. Sales Cloud demonstrated 15% year-over-year growth, Service Cloud grew 32%, Marketing Cloud grew 29%, whereas Apps Cloud and other business units grew 45%. Growth in Sales Cloud was the highest recorded in the five previous quarters, which Benioff attributing to a number of new innovations including its Lightning platform, where the team have recently released an updated government edition, as well as Pardot and SteelBrick capabilities.

The team are also raising 2017 revenue guidance to $8.16 billion to $8.2 billion, and are expecting revenues of between $2.005 billion to $2.015 billion in Q2.

“I’m also thrilled to announce we’re raising full-year revenue guidance $80 million raising the guidance we feel really excited about that, $8.2 billion is the high-end of our range and our current outlook puts us on its square path, look we are going to see now that we’re going to realize very shortly our $10 billion dream,” said Benioff. “This is amazing I think that one of the reasons that we are doing so well is because Oracle and SAP are doing so poorly in the cloud”

AWS, Financial Results, hybrid cloud, Managed services, Microsoft Azure, News & Analysis, OpenStack, Private Cloud, Rackspace

Rackspace prioritises AWS and Azure partnerships for future growth

Taylor Rhodes

Taylor Rhodes, President and CEO at Rackspace

Rackspace has reported healthy growth for Q1 2016, as the team continues its transition to become managed services provider, leveraging partnerships with AWS and Microsoft Azure.

Revenues for the first quarter were reported at $518 million, a year-on-year growth of 9.9%, while profits grew 77.5%. Although the growth of the business over the last 12 months has been viewed as generally positive, industry commentators highlighted the $24 million gain from the divestiture of Jungle Disk, and what could be perceived as a lacklustre outlook for the rest of 2016 has dampened the news. The exec team expects revenues of between $519 million and $524 million for the second quarter.

“First, we saw a strong demand for our expertise and support on the AWS and Microsoft Clouds and for our OpenStack private cloud offer. Collectively, we now serve more than 400 customers on these platforms and our demand is scaling rapidly,” Taylor Rhodes, President and CEO at Rackspace. “From the October launch of our AWS service through the end of April, we’ve been actively marketing with AWS and have signed 187 customers across every firm size, geography, and vertical.”

The transition to a managed cloud services company began a number of years ago with the launch of Rackspace’s Fanatical Support services, though seemingly began making real traction within the industry last year, as the team announced expanded partnerships with Microsoft in July, when Azure public and private cloud infrastructure was incorporated into the offering, and AWS in August. The team also recently announced a new partnership with Cloud Technology Partners, which it believes will increase cloud adoption rates.

The partnerships are also enabling the company to diversify its geographical focus as over 40% of the AWS customers are coming from non-U.S. regions. Rhodes also believes the new capital-light business models employed enables the company to roll-out new offerings worldwide. Previously, new products were rolled out first in the USA, due to capital intensity, and then phased out over time into other regions worldwide, however the new model is claimed to offer Rackspace increased flexibility and agility in bringing new offerings to the market.

The shift in strategic direction is supported by a renewed effort in the marketing department, as Rhodes highlighted campaigns will now be directed towards driving brand awareness and demand generation for the managed cloud services business, specifically the Fanatical Support services offered to AWS and Microsoft Azure customers.

“Our new head of Global Sales and Marketing, Alex Pinchev, started work at the beginning of Q1,” said Rhodes. “He and his team are moving aggressively to shift resources toward our new fast-growing offers while sustaining our core business. They are training more of our sales teams to sell our new offers and are hiring additional specialists in areas of high demand. We advised you last quarter that these sales and marketing efforts will take time to gain full traction, that transition contributed to our slow start to the year”

Efforts for Rackspace on the OpenStack front would also appear to be bearing fruit, with the launch of OpenStack Everywhere, Next Generation Bare Metal Servers and the Private Cloud Powered by Red Hat offering. All three offerings would seemingly demonstrate the company’s drive towards the OpenStack private and hybrid cloud market segments. The team are confident in the growth potential of the OpenStack private cloud market, and highlighted a number of major customers wins were through this aspect of the business.

“Our role as the co-founder of OpenStack has given us unique capabilities in software development, DevOps, continuous integration and deployment, and other key disciplines,” said Rhodes. “Those capabilities provide a major differentiation for us versus other managed services providers as we expand to provide managed cloud services on AWS and the Microsoft Cloud.

“We’ve really seen a tipping point, what really looks like a significant tipping point in the market for OpenStack private clouds in the last six months to nine months. Some of our largest deals that we closed in March were OpenStack private cloud deals and some of the largest deals that we have in our pipeline today are OpenStack private cloud deal. So, really that’s the traction that we’re seeing.”

AWS, Financial Results, News & Analysis

AWS quarterly revenues grow 64% to $2.6 billion

amazon awsAWS reported growth of 64% year-on-year growth to $2.6 billion for the quarter, becoming one of the few tech giants to have experienced a healthy Q1.

While IBM, VMWare, Intel and EMC have experienced mixed fortunes during the first few months of 2016, AWS has seemingly weathered the storm successfully. The company now anticipates it will break through the $10 billion barrier for annual revenues, and plans to improve its global footprint with continued expansion and new feature announcements. AWS ended the quarter with 33 Availability Zones in 12 geographic regions, with 11 more planned over the next 12 months.

“I would say there’s no let-up in the pace of invention here, particularly on the AWS side,” said Brian Olsavsky, CFO at Amazon. “We usually quote the number of new features and services to you each quarter, we had 214 in Q1, up from 170 the first quarter of last year. So over 26% growth in this quarter alone coming off a year where I believe the number was 722 significant new features and services delivered for AWS customers last year.”

The company did not update its figures for its data management revenues, at re:Invent AWS disclosed the product suite was at a $1 billion run rate, though it did highlight the Aurora database offering is the fastest growing product in the business unit’s history. The quarter also saw a number of product launches and updates including Amazon Lumberyard, a free, cross-platform, 3D game engine for developers to create games, the general availability of the AWS Database Migration Service, the general availability of Amazon Inspector, an automated security assessment service and updates for its block storage service, Amazon Elastic Block Store.

While the AWS results have generally been well received across the industry, Amazon shares were up 12% during pre-market trading at the time of writing, it would appear to be one of the few bright spots across the quarter for technology businesses, as the accompanying Google Finance screen grab shows.

Finance

 

Financial Results, hybrid cloud, Microsoft, News & Analysis

Mixed fortunes for Microsoft cloud business

Microsoft To Layoff 18,000Microsoft has reported mixed fortunes for its cloud business unit during its quarterly earnings call, as while cloud revenues grew across the board, the results are slightly down on the previous quarter.

Office commercial products and cloud services revenue grew 7%, Office consumer products and cloud services revenue grew 6% and Dynamics products and cloud services revenue grew 9%. Revenue in Intelligent Cloud grew 3% to $6.1 billion, with Azure revenue up 120%, though this is down from 5% and 140% respectively in the previous quarter. Despite the slight slow-down, the team remain upbeat for future business. Profits for the Intelligent Cloud business unit fell 14% to $2.19 billion for the quarter.

“We exceeded $10 billion in commercial cloud annualized revenue run rate,” said Satya Nadella, CEO at Microsoft. “We’re halfway to our FY 2018 goal of $20 billion. This quarter, we surpassed 270 million monthly active devices running Windows 10. We’re proud of our progress and look forward to making more as enterprise deployments accelerate.

“We’re expanding into new markets such as security, analytics and cloud voice, where we see an opportunity and where we can differentiate. For example, the cyber security market is expanding rapidly, and it’s a place where we have unique capabilities, like Advanced Threat Protection, Cloud App Security and Advanced eDiscovery. This combination drove a 35% quarter-over-quarter growth of monthly active users of our premium information protection services in Office 365. A key driver of this growth is our new premium Office 365 suite, E5.”

While the figures show revenues slowing slightly, the company has still demonstrated growth in the cloud computing segment and overall consensus throughout the industry would generally attribute Microsoft as the number two player in the market. Share price took a slight dip following the news, however Nadella leadership and guidance into new markets has seen positive growth in market performance since his appointment in 2014. Share price has increased from just below $40 to roughly $55 during Nadella’ tenure as CEO.

“The cloud is being built into every organization’s quest to optimize and grow,” said Nadella. “With our results this quarter, it remains clear we are one of the two leaders in this market. Azure revenue increased 120% in constant currency, with revenue from premium services growing triple digits for the seventh consecutive quarter. We are innovating in new areas to help organizations digitally transform. We’re expanding our competitive strength in hybrid computing. We’re generating opportunity for developers and partners.”

In terms of moving forward, the company has prioritized the hybrid cloud market as a means of growth. By utilizing the Azure Stack offering, Microsoft claims customers are able to process certain workloads in Azure data centres, while also keeping mission critical workloads in-house on the Azure Stack itself. The company believes the scale of the data centre and Azure Stack offering is number one in the industry.

“That I think is where the world is going to go to, where distributed computing will remain distributers,” said Nadella. “So Azure’s stack is completely unique to Microsoft. No one else who is in the public cloud business at any scale has that kind of capability. So I would say that’s another point of differentiation.”

EMC, Financial Results, Intel, News & Analysis, SAP

Cloud takes top spot at EMC, SAP and Intel quarterly announcements

Growth on a black boardEMC, SAP and Intel have all reported quarterly figures, with cloud taking centre stage during all announcements.

EMC demonstrated positive growth within the cloud business units, though its staple business unit, EMC Information Infrastructure saw double-digit year-on-year declines. The $67 billion merger with Dell was prominent throughout the earnings call, as the team would appear to be in the final stages of confirming the transaction.

SAP’s HANA once again dominated the company’s earnings call, demonstrating healthy growth in revenues and customer numbers over the period. The company saw positive growth worldwide, despite challenging conditions in Latin America.

Finally, Intel is seemingly succeeded in its transition programme as it reported positive growth during Q1. The company is moving away from its historical playground, setting its sights on the increasingly affluent IoT and cloud market segment.

EMC core business unit drags while cloud soars

EMC Corporation has reported its Q1 2016 results at revenues $5.5 billion a year-on-year decrease of 2%, though its VMWare and Pivotal businesses experience positive growth over the same period.

While the EMC Information Infrastructure business saw Q1 revenues decrease of 6% to $3.8 billion, the company was bolstered by 5% revenue growth from VMWare, and a 56% increase from the Pivotal business. The company highlighted healthy growth within the Pivotal cloud and big data subscription software in particular, with annual recurring revenue up over 200% year-on-year, to $116 million.

EMC“Work forces are becoming increasingly mobile,” said Joseph Tucci, President and CEO at EMC Corporation. “There is an explosion of data from connected smart device as sensors and telemetry are being built into every imaginable product. Companies are embarking on digital transformations to exploit this ever increasing amount of data, get more connected with their customers, employees, and suppliers. In short, we feel very good about the depth and breadth of our product portfolio.”

The results continue a trend of under-performance according to analysts, as this is now the sixth straight quarter EMC has missed analyst expectations. The company’s core business also saw declines as sales for its high-end storage services dropped 14%, though the flash storage business countered these declines somewhat, growing 122% year-on-year.

“The spending environment continues to be challenging as customers focus more on transformative IT projects while also minimizing transactional spend,” said Denis Cashman, CFO at EMC Corporation. “This customer behaviour is impacting our traditional business in the near-term. However, the major trends in IT remain intact, and we are having positive discussions with customers regarding how EMC and eventually, the combination of Dell and EMC, can help them with their IT and digital transformation.”

While the management would appear to be upbeat about the progress of EMC as an individual entity, attention could not be drawn away from the $67 billion Dell merger. The company claims the integration programme has been accelerated over recent months, and a number of EMC executives have included in the new leadership team announced by Michael Dell recently. Tucci also claims the team are now only awaiting regulatory approval from China, before the transaction can be completed.

S/4HANA dominates headlines at SAP quarterlies once again.

SAP has reported positive growth in the first quarter of 2016 as the company continues its transition from an enterprise to cloud-focused organization, with S/4HANA demonstrating healthy progress.

SAP1Cloud subscriptions and support revenues grew 33% year-on-year to €678 million, and new cloud bookings grew at 23% over the quarter to €145 million. The cloud business, as well as software support revenues, accounted for 69% of the quarter’s total revenues. EMEA demonstrated solid growth over the period, accounting for an 8% increase, whereas the Americas reported a 29% increase, despite political and economic instability in Brazil creating a challenging environment.

“Our cloud results this quarter leave no doubt that this business continues on its fast-growth path,” Luka Mucic, Chief Operating & Financial Officer at SAP. “Cloud revenue came in at 33% growth this quarter, which marks the 12th quarter in a row with 30%-plus growth rate excluding acquisitions. This is at the high end of our implied guidance range and ticking well ahead of our CAGR through 2020.

“New cloud bookings saw robust growth, up 23% or up 26% at constant currencies. With our strong cloud backlog and our strong bookings performance in 2015, we are well on track to deliver on our midterm growth ambitions in the cloud.”

SAP added more than 500 S/4HANA customers, of which approximately 30% were new. The company now boasts 3,200 customers for across the world for the product. HANA Enterprise Cloud was credited with particularly strong performance from the management team, as it highlighted customers are now utilizing the cloud platform for sensitive and mission critical processes.

“Companies are running their supply chain, manufacturing, asset management, sales and distribution that all operate on a 24/7 basis on the SAP HANA Enterprise Cloud,” William McDermott, CEO at SAP. “The triple-digit growth in this business is a validation of SAP Cloud innovation and we are only getting started.”

Intel cuts 12000 jobs to focus on IoT and cloud markets

Intel has reported year-on-year growth of 7% for Q1, taking the company’s revenues to $13.7 billion. Despite the positive growth, the management team also confirmed it would be cutting 12000 jobs, equivalent to 11% of the global workforce.

IntelThe Internet of Things group reported revenue of $651 million, an increase of 22% year-on-year, Security group revenue was up 12% to $537 million and the Data Centre group reported a 9% year-on-year growth to $4 billion. The company’s historical playground, its Client Computing group which includes PCs and mobile devices, was down 14% to $7.5 billion. The Client Computing group is where the management have revealed the majority of the job cuts will come from.

“Our results over the last year demonstrate a strategy that is working and a solid foundation for growth,” said Intel CEO Brian Krzanich, who is leading the company’s shift away from client computing and towards IoT and the cloud.

“The opportunity now is to accelerate this momentum and build on our strengths,” said Krzanich. “These actions drive long-term change to further establish Intel as the leader for the smart, connected world. I am confident that we’ll emerge as a more productive company with broader reach and sharper execution.”

During the call Krzanich detailed the company’s restructuring programme, in which the team aim to move away from the perception Intel is a PC company, focusing on the cloud and connected devices markets. The company claims the staff reductions will enable Intel to focus its resources on new priorities

“You take a look at it, 40% of our revenue, 60% of our margin comes from areas other than the PC right now,” said Krzanich. “It’s time to make this transition and push the company over all the way to that strategy and that strategic direction. So that’s why we wanted to do it now.”

Financial Results, hybrid cloud, News & Analysis, Quarterly Earnings, VMware

Leadership restructure has little impact as VMWare reports 5% growth

VMWare campus logoVMWare has reported healthy growth during its Q1 earnings call despite disruptions in the management team over the period.

Revenues for the first quarter were reported at $1.59 billion, an increase of 5% in comparison to the same period in 2015, though license revenues saw a drop of 1% to $572 million. The company now expects second-quarter revenue of $1.66 billion to $1.71 billion, compared with analysts’ average estimate of $1.66 billion.

“Q1 was a good start to 2016, both for results and against our strategic goal of building momentum for our newer growth businesses and in the cloud,” said Patrick Gelsinger, CEO at VMWare. “Our results were in line with our expectations for the period and support our outlook for the full year.”

Over the course of the period, there may have been concerns surrounding changes in the leadership team, and how a restructure would impact the performance of the business on the whole. Carl Eschenbach announced last month he would be leaving his post as VMWare President and COO to join venture capital firm Sequoia Capital as a Partner. CFO Jonathan Chadwick also left the business in January.

Eschenbach joined the firm in 2002 as VP of Sales, was appointed as co-President and COO in 2011 and eventually as the stand-alone President in 2012. During Eschenbach’s time at VMWare, revenues grew from $31 million in 2002, to more than $6 billion in 2015. The changes in leadership would not have appeared to have stifled the company’s performance, as its cloud business units performed healthily over the first quarter.

“We think on the executive side, it really is the combination of being able to attract new players than – I mentioned Rajiv (Rajiv Ramaswami, GM, Networking and Security) we brought in a leader for China, Bernard (Bernard Kwok, Greater China President); we’ve been able to continue to attract talent,” said Gelsinger. “We’ve also had commented on our very strong bench, and – like Maurizio (Maurizio Carli, VP Worldwide Sales), we had brought him over from Europe a year plus ago to prepare for this eventuality, and so we had been grooming and preparing for these transitions.”

The company also reported healthy growth for its cloud business unit, including NSX, VSAN, End-User Computing and vCloud Air Network. The company highlighted standalone vSphere license bookings were less than 35% of total bookings, a figure which was more than 50% two years ago. The team claim this reduction demonstrates the product offering has been successfully diversified.

“Turning to hybrid cloud. Total bookings for vCloud Air Network grew over 25% year-over-year,” said Zane Rowe, CFO at VMWare. “We see significant interest from cloud and service providers around the world wanting to utilize our hybrid cloud technologies. For example, as Pat mentioned earlier, IBM will be delivering a complete SDDC offering based on VMware’s technologies across their expanded footprint of cloud data centres worldwide. vCloud Air also performed well in Q1 with large enterprise customer adoption.”

In terms of long-term strategy, Gelsinger outlined a three-point plan to facilitate VMWare’s growth in the cloud market segment. Firstly, the business will consolidate its position in the private cloud space, a segment which it describes as the ‘foundation of our business’. Secondly, through the vCloud Air service and vCloud Air Network, the company aims to encourage its customers extend their private cloud into the public cloud. And finally, connecting, managing and securing end points across a range of public clouds, including Amazon Web Services and Microsoft Azure.

cognitive computing, Financial Results, Financials, IBM, News & Analysis

IBM reports cloud growth amid 16th quarterly revenue decline

IBMIBM has reported healthy growth for its cloud and strategic imperatives business units, despite witnessing revenue declines for the 16th straight quarter.

The strategic imperatives units, which include the cloud, analytics, mobile, social and security services, delivered $29.8 billion in revenue over the last 12 months, accounting for 37% of total revenues, with cloud accounting for $10.8 billion.

“We delivered $18.7 billion in revenue, $2.3 billion in net income and operating earnings per share of $2.35,” said Martin Schroeter, CFO at IBM. “Importantly, we also made significant investments and took significant actions to accelerate our transformation and move our business into new areas.”

Specifically in Q1, total revenues for the group dropped by 5% to $18.7 billion, the strategic imperatives unit grew 14% to $7 billion, with cloud accounting for $2.6 billion, a 34% year-on-year increase. The company also announced or closed ten acquisitions during the quarter, investing just over $2.5 billion in new businesses including Bluewolf, a Salesforce partner, Truven, a provider of cloud-based healthcare data and The Weather Company’s digital assets.

While the company built its reputation in the traditional IT market segment, sliding revenues and enterprise attention to cloud solutions has enforced a transformation play for the tech giant, which would appear to paying off well.

“We’re continuing to expand our Watson ecosystem and reach,” said Schroeter. “Over the last 12 months, the number of developers using Watson APIs is up over 300% and the number of enterprises we’ve engaged with has doubled. Watson solutions are being built, used, and deployed in more than 45 countries and across 20 different industries.”

Watson would appear to be one of the main focal points for IBM’s new cloud-orientated business model, as the cognitive computing platform has formed the basis of numerous PR campaigns throughout the year, highlighting client wins from pharmaceutical giant Pfizer and the McLaren Honda Formula One team.

“Our enterprise clients are looking to get greater value from their data and IT environment,” said Schroeter. “They’re not just focused on reducing cost and driving efficiency but using data to improve decision-making and outcomes. They’re looking to become digital enterprises that are differentiated by Cognitive. We’re creating Cognitive Solutions that marry digital business with digital intelligence. We’re bringing our industry expertise together with these cognitive solutions and we’re building it all on cloud platforms”

Geographically, the company highlighted business was relatively consistent worldwide, though the Asia-Pacific region did demonstrate growth. EMEA and North America demonstrated slight declines, though there have been improvements from previous quarters, though Latin America continued to prove tough for IBM. The company does have a large business unit in the region, though it quoted volatile economic and political environments in Brazil, as reasoning for declines.

Although the company has not halted the revenue declines which have been a constant for IBM in recent years, the strategic imperatives units would appear to be taking a stronger role in fortunes of the business. IBM has grown its capabilities in numerous developing markers in recent months, including cloud video platforms and user experience, though it does appear to be backing cognitive computing for future growth.

“As we build new businesses in areas like Watson Health and Watson Internet of Things, this requires different skills and to be in different places,” said Schroeter. “I mentioned earlier that over the last year we’ve added over 6000 resources in Watson Health and added over 1000 security experts. These are specialized skills in highly competitive areas. So this is not about reducing our capacity; this is about transforming our workforce.

“So where are we in the transformation? It is continued focus on shifting our investments into those strategic imperatives, it is making sure that the space we’re moving to is higher margin and higher profit opportunity for us and then making sure we’re investing aggressively to keep those businesses growing.”

While IBM is not out of the woods yet, the recent quarterlies did beat analyst predictions and its acquisition activities would appear to be more aggressive than others in the space. The company is seemingly not wasting any time in positioning itself firmly in the cloud space, though it does appear executives are backing the growth of cognitive computing, and Watson’s market penetration in particular, as the catalyst for future success of Big Blue.

Financial Results, hybrid cloud, News & Analysis, Red Hat

Red Hat CEO pins 21% growth on hybrid cloud market

James WhitehurstRed Hat demonstrated healthy growth in its quarterly earnings, with CEO James Whitehurst attributing the success to the growing hybrid cloud market.

The company reported Q4 revenues at $544 million and total revenues for the year at $2.05 billion, both an increase of 21% on the previous year (constant currency). It now claims to be the only open-source company to have breached the $2 billion milestone.

“Our results reflect the fact that enterprises are increasingly adopting hybrid cloud infrastructures and open source technologies, and they are turning to Red Hat as their strategic partner as they do so,” said Whitehurst. “First, the fourth quarter marked our 56th consecutive quarter of revenue growth which contributed to Red Hat’s first year of crossing the $2 billion in total revenue milestone.”

While public cloud has been dominating the headlines in recent weeks, the Red Hat team remain positive that the hybrid cloud market will ultimately deliver on expectations. “Public cloud has been a great resource for us to reach new customers, including small and medium-sized businesses,” said Whitehurst.

“During meetings Frank (Frank Calderoni, CFO) and I have hosted over the quarter, investors have asked whether the public cloud is a positive driver for Red Hat. We firmly believe that it will be a hybrid cloud world, where applications will run across four – all four footprints; physical, virtual, public cloud, and private cloud.

“Our revenue from private IaaS, PaaS and cloud management technologies is growing at nearly twice as fast as our public cloud revenue did when it was at the same size.”

Although it is unsurprising that Red Hat strongly backs the hybrid cloud model, security and data protection concerns in the industry add weight to the position. Despite progress made in the delivery and management of public cloud platforms, recent research has shown that enterprise decision makers are still concerned about the level of security offered in public cloud, but also where the data will reside geographically. Both concerns are seemingly driven hybrid cloud adoption, giving enterprise the full control on how and where company critical data is stored.

Over the last 12 months, Ret Hat has also confirmed a number of partnerships with major players in the public cloud space to increase its footprint. Last year, a partnership was announced with Microsoft where it became a Red Hat Certified Cloud and Service Provider, enabling customers to run their Red Hat Enterprise Linux applications and workloads on Microsoft Azure. In addition the Certified Cloud and Service Provider platform also has relationships with Google and Rackspace. Red Hat claims that these relationships have resulted in more than $100 million revenue, a 90% increase year-on-year.

“In Q4, we further expanded our technology offerings that can be consumed in the cloud. For instance, RHEL on-demand is activated on Azure in February,” said Whitehurst. “OpenShift, our PaaS solution, and our storage technology will be added to the Google cloud. And RHEL OpenStack platform is now available at RackSpace as a managed service.”

Despite increased competition in the market over recent years, Ret Hat has proved to be effective at holding onto customers. The largest 25 contracts that where up for renewal in the last quarter were all renewed and the new deals were 25% higher in the aggregate. The company also claims that 498 of the largest 500 deals over the last five years have also been removed.

“We never want to lose a deal, if we do, we never give up trying to win back the business,” said Calderoni. “This quarter, I am pleased to report that we closed a multi-million-dollar ‘win-back’ of one of those two former top deals.”

The company also estimates that revenues will grow to between $558 million and $566 million for Q1 and between $2.38 billion and $2.420 billion for the financial year.

financial, Financial Results, News & Analysis, Oracle

Oracle records 40% growth in cloud business

OracleOracle announced its quarterly results with revenues at $9 billion, down 3% in comparison to the same period last year, though the cloud business recorded growth of 40%.

The company missed analyst expectations for total revenues, though earning per share was up at $0.64 versus the estimates of $0.62. Oracle played up growth in its cloud business, particularly PaaS and SaaS, where revenues were up 57% to $583 million. Total revenues for the cloud business stand at $735 million, though IaaS earnings were down 2% to $152 million.

“Our Cloud SaaS and PaaS revenue growth rate accelerated to 61% in constant currency in Q3,” said Oracle CEO, Safra Catz. “This dramatic revenue increase drove our non-GAAP SaaS and PaaS gross margins up to 51% in Q3 as compared with 43% in Q2. Our cloud business is now in a hyper-growth phase. Our gross margins are climbing toward our target of 80%.”

Although generally considered in the industry to be playing catch up, Oracle has been demonstrating healthy growth over recent months in comparison to competitors. The company claims that it grew twice as fast as Workday and three times faster than Salesforce.com, with the latter receiving particular attention on the earnings call.

“Oracle is now selling more new SaaS and PaaS annually recurring cloud revenue than any other company in the world including Salesforce.com,” said CTO Larry Ellison “We are growing much faster than Salesforce.com, more than twice as fast. Because we sell into a lot more SaaS and PaaS market than they do. We compete directly with Salesforce.com in every segment of the SaaS customer experience market including sales, service and market.”

Ellison also highlighted the potential for future growth in the SaaS segment, where Oracle operates in markets Salesforce.com doesn’t, in particular enterprise resource planning, ERP, and human capital management, HCM. The company is seemingly adamant in beating Salesforce.com at its own game to become the largest SaaS and PaaS company worldwide.

“Oracle Fusion ERP is the overall market leader in the enterprise cloud ERP market. I should say we have more than 10 times the number of ERP customers than Workday. And ERP has always been a much larger market than CRM. Salesforce.com is missing all of that ERP market opportunity,” said Ellison. “And that in term it should make it easy for Oracle to pass Salesforce.com and become the largest SaaS and PaaS cloud company in the world.”

The company anticipates growth will continue in the next quarter, though analysts anticipate a number of challengers to Oracle’s retained customers over the coming months. With competitors, including AWS and Microsoft, expanding their offering in the database business, the flexibility of Oracle’s proposition and pricing could be called into question.

“People are coming after us, because we are by far the market leader in database. If you’re in the database business, the only one you can come after is us,” said SVP Investor Relations, Ken Bond “So, of course, Amazon, they’re going to be in the database business too is coming after us, and of course Microsoft wants to be bigger in the database business, they have to come after us.”

Box, Financial Results, News & Analysis, Public Cloud

Box thanks enterprise market for healthy earnings

Money financingFile sharing and content management firm Box has released its annual financials demonstrating healthy growth over the fiscal year.

Box’s focus on the enterprise market saw top-line revenues grow 40% year-on-year to $303 million, with the fourth quarter accounting for $85 million, an increase of 36% from the same period 12 months earlier.

“In the fourth quarter, we delivered strong year-over-year revenue growth of 36% and billings growth of 59%,” said Dylan Smith, Box co-founder and CFO. “These top-line results, coupled with our positive cash flow from operations, reflect our progress towards achieving positive free cash flow in the fourth quarter of fiscal year 2017.”

Over the course of 2015, Box grew its strategic partnerships with Microsoft, Salesforce and IBM, as well as launching a number of new products including Box KeySafe. Last month, Box announced three new integrations with Microsoft that enable collaboration across devices and platforms. Box now supports integrations with Microsoft Office Online with real time co-authoring, Office for iOS and Outlook.com.

Building on the industry trends of mobility and security, the partnership also saw the company update its mobility offering, Box for Enterprise Mobility Management, with Microsoft Intune.

“Just as sales reps update pitches while in the field, or construction workers share the latest blueprints with their corporate team, employees access, edit and share content from mobile devices every day,” said Chris Yeh SVP, Product at Box in his blog “Box provides a solution that ensures nothing prohibits these new ways of working when a device is stolen or lost, when unsanctioned mobile apps are downloaded, or when a user attempts to access content on a jailbroken device.”

With a continued focus on the enterprise market, Box expects another strong 12 months with revenue estimated to be in the range of $390 million to $394 million, with Q1 accounting for $88 million to $89 million.