Archivo de la categoría: Financial Results

Amazon, AWS, Datacentre, Financial Results, News & Analysis, Q3 2015

AWS profitability quadruples as revenue surges 78%

amazon awsAmazon Web Services’ revenue grew by 78% year over year to $2.1 billion in the third quarter of 2015 and its operating profit more than quadrupled to $521 million. Its high profits – attributed to 500 new inventions and eight price cuts – contributed to earnings which surpassed analyst expectations and created a surge in parent company Amazon’s stock price.

The high growth rate in AWS profitability could be accounted for by last year’s low margins caused by a competitive price cuts on AWS services.

Meanwhile parent company Amazon reported an overall third-quarter operating profit of $406 million on $25.4 billion of sales. Amazon CFO Brian Olsavsky answered criticism that AWS is keeping the company profitable and that, in the face of cloud competition, it may have to cut prices again to ensure further growth.

“I will point out that this quarter showed a lot of innovation, a lot of new products and features and a lot of investment,” Amazon CFO Brian Olsavsky told analysts. “Globally we are investing very heavily in our Prime platform. We’ve launched multiple devices including e-readers, tablets priced under $50, Echo dash buttons, so there’s a lot of investment going on, and there will continue to be, especially related to prime. Innovation and investment will continue and can be lumpy over time.”

The pace of innovation in AWS and the scale of its business has allowed it to do the ‘heavy lifting for Amazon’ said one Wall Street blogger.

By constantly re-inventing itself AWS has been able to cut its prices eight times since April 2014, said Phil Hardin, Amazon director of investor relations, in an analyst conference calls. “The company rolled out 539 new features and services in the past year alone, many of which have been designed so that its customers can access enterprise-grade services for a fraction of what they would traditionally cost on-premise,” said Hardin.

Corporate, Enterprise IT, Financial Results, IBM, News & Analysis, Quarterlies

IBM cloud service revenue up despite 14th quarterly revenue decline

IBM2IBM has posted an unexpectedly large drop in revenue and cut its full-year profit forecast, blaming the strong US dollar for dampening demand from China and emerging markets. Though cloud, big data, mobile and other strategic markets are growing, their rise is not enough to arrest a long term trend of decline.

IBM, which gets more than half its business from overseas, says it has been affected as the dollar is currently 17% up on its standing against a basket of currencies compared to this time last year.

Chinese sales were particularly affected, with fewer big deals being registered. As a consequence revenue from China fell 17%, IBM’s chief financial officer Martin Schroeter told analysts. Sales in Brazil, Russia, India and China combined were down 30%.

The company’s total revenue fell 13.9% to $19.28 billion in the quarter, below analysts’ average forecast of $19.62 billion.

It was the 14th quarter in a row that IBM has posted a reduction in revenue. As IBM divests itself of low-margin businesses it has failed to make up the shortfall, yet, through cloud computing, according to analysts.

“This is another example of the massive headwinds that traditional tech stalwarts are seeing in this ever-changing environment, as more customers move to the cloud,” said FBR Capital Markets analyst Daniel Ives.

According to IBM CFO Martin Schroeter, weakness in IBM’s consulting and storage businesses account for the revenue shortfall, rather than the performance of its cloud services.

“I would characterize it as the consulting and systems integration business moving away from these large, packaged applications and the storage business moving to flash and to the cloud,” Schroeter told Reuters in an interview.

Revenue from IBM’s ‘strategic imperatives’, cloud and mobile computing, data analytics, social and security software, rose 17 per cent in the third quarter ending on Sept 30th.

IBM’s net income from continuing operations fell to $2.96 billion, or $3.02 per share, from $3.46 billion, or $3.46 per share, a year earlier.

At the close of trading yesterday (Monday) IBM’s shares had fallen 7 per cent this year.

Financial Results, HP, Meg Whitman, News & Analysis

HP suffers across the board as Enterprise Group flatlines

HP had a tough Q3 2015

HP had a tough Q3 2015

HP reported heavy losses when it revealed its third quarter 2015 financial results this week, with the enterprise IT giant raking in net revenues of $25.3bn, down 8 per cent year on year.

PC revenues were down 13 per cent year on year, printing revenue down 9 per cent and software down 6 per cent. In cloud, it’s as-a-service business was down 4 per cent.

The company’s enterprise services group also took a big tumble, with revenues dropping 11 per cent, infrastructure technology outsourcing declining 11 per cent, and application and business services revenues dropping 7 per cent.

The results were well below analyst expectations.

“HP delivered results in the third quarter that reflect very strong performance in our Enterprise Group and substantial progress in turning around Enterprise Services,” said Meg Whitman, chairman, president and chief executive officer, HP. “I am very pleased that we have continued to deliver the results we said we would, while remaining on track to execute one of the largest and most complex separations ever undertaken.”

In a call with analysts this week Whitman tried to allay any fears of its stated strategic direction – the company is on track to split up later this year – and said it saw growth in key pockets of SaaS solutions, but that this growth was offset by weaker big data and IT management revenues.

“We remained focused on aligning our portfolio to the Hewlett-Packard Enterprise strategy and driving software-led integrated solutions across EG and ES while addressing the challenges around the market shift to SaaS and internal execution challenges,” she said.

“We’ve also refined our go-to-market over a longer period of time. And part of the challenge we had prior to me was the fact that we changed our go-to-market so many times. Every CEO had a different idea about how to go to market. We just locked on one and we’re driving it.”

“There might be things we can do to optimize, but we’ve got a strategy and we’re driving it. And I think that’s given the sales force and customers a lot of confidence. And we’ve all been out with a lot of customers. The first couple years was more internally focused. We’ve been out with customers. I would say our customer and partner confidence is at an all-time high. And the backlog, by the way, going into fourth quarter is the highest backlog I’ve had since I’ve been at the company. So all signs are good, but we remain on constant alert,” she added.

AWS, Financial Results, Google, IBM, Microsoft, News & Analysis

AWS rakes in $1.8bn in Q2 as ‘big four’ corner half the cloud services market

AWS is bringing in nearly $2bn in quarterly revenues

AWS is bringing in nearly $2bn in quarterly revenues

AWS revenue for the second quarter of this year topped $1.82bn, an increase of about 81 per cent year on year. The results come as other major IT service providers revealed strong cloud growth for the quarter.

Last quarter, the first time it pulled the curtain back on its cloud business, Amazon revealed AWS raked in $1.57bn in revenue. Operating income for Q2 increased 407 per cent to $391m.

Commenting on the results Amazon chief executive Jeff Bezos said “[we] continued to double down on our fastest growing geography — India, launched 350 significant AWS features and services so far this year, ahead of last year’s pace, introduced AWS Educate, and entered into agreements for new solar and wind farms — enough to exceed our 2016 goal of 40 per cent renewable energy.”

Speaking to analysts this week Amazon’s chief financial officer Brian Olsavsky said the company is also getting more competitive on cost as it continues to optimise its services.

“We had over 350 significant new features and services and we believe that’s what resonates with customers. While pricing is certainly a factor we don’t believe it’s always the primary factor; in fact what we hear from our customers is that the ability to move faster and more agility is what they value,” he explained.

But he deflected questions about the capital intensity of the AWS business – which represent about 80 per cent of its overall capex.

Synergy Research Q2 Cloud Market Estimates“We do realise it’s a capital-intensive business and we have modelling that shows it’s going to be a very good business for us and that’s what we aim for as long-term return on invested capital and free cash flow. So, we’re certainly cognizant of the capital part of the calculation,” he said.

Amazon revealed the results as other large incumbents pulled back the curtain on their cloud performance. The second quarter saw Microsoft grow its cloud revenues 88 per cent and IBM 60 per cent.

But the results suggest some of the smaller cloud providers are being left in the dust. According to John Dinsdale, chief analyst and research director at Synergy Research Group, quarterly cloud infrastructure service revenues (including IaaS, PaaS and private & hybrid cloud) are now approaching the $6bn, while trailing twelve-month revenues hitting close to $20bn. Synergy estimates AWS, Microsoft, IBM and Google (the ‘big four’) control well over half of the worldwide cloud infrastructure service market.

“The cloud infrastructure services market is quite clearly bifurcating with a widening gap between the big four cloud providers and the rest of the service provider community,” Dinsdale explained. “Developing the necessary global hyperscale datacentre infrastructure along with the required marketing and operations support is simply beyond the reach of all but a very small number of players. This is not going to change.”

The good news for smaller and medium-sized cloud providers, he said, is that there does remain a wealth of opportunity for them to specialise in a particular niche industry or geography. At the moment the firm reckons North America accounts for over half of the worldwide cloud services market, followed by the EMEA and APAC regions.

Financial Results, Larry Ellison, News & Analysis, Oracle, Quarterlies, quarterly results, Safra Catz, Salesforce

Oracle Q4 cloud revenues grow 29%, down 5% overall

Larry Ellison said the company's cloud revenue will eclipse Salesforce's revenue this year

Larry Ellison said the company’s cloud revenue will eclipse Salesforce’s revenue this year

Oracle Corporation has announced its 2015 fiscal Q4 quarterly earnings, unveiling impressive growth for its PaaS and SaaS business, which is up 29% on last year. The company posted overall revenue of $10.7 billion however, down 5% year on year.

After a bullish announcement of its Q3 results in March, where Oracle boss Larry Ellison publicly called out rival Salesforce, the software giant posted Software and Cloud business revenues at $8.4bn, down 6% year on year, while its SaaS and PaaS revenues came in at $416m.

Announcing the decline in revenues, Oracle was hasty to point the finger at the fluctuating strength of the US dollar against international exchange rates; it claimed total revenues would have been up 3%, software and cloud revenues up 2% and SaaS and PaaS growth 35% instead of 29% year on year, blaming the strengthening of the U.S. dollar.

Oracle CEO Safra Catz is expecting the growth of its SaaS and PaaS revenues to kick up a notch in fiscal year 2016.

“We sold an astonishing $426 million of new SaaS and PaaS annually recurring cloud subscription revenue in Q4,” he said. “We expect our rapidly increasing cloud sales to quickly translate into significantly more revenue and profits for Oracle Corporation.” For example, SaaS and PaaS revenues grew at a 34% constant currency rate in our just completed Q4, but we expect that revenue growth rate to jump to around 60% in constant currency this new fiscal year.”

In highlighting his firm’s ambition for the coming fiscal year, Ellison again took the chance to name-check one of Oracle’s main competitors.

“We expect to book between $1.5 and $2.0 billion of new SaaS and PaaS business this fiscal year,” he said. “That means Oracle would sell more new SaaS and PaaS business than salesforce.com plans to sell in their current fiscal year – the only remaining question is how much more. Oracle’s planned SaaS and PaaS revenue growth is around 60% in constant currency; salesforce.com has a planned growth rate of around 20%. When you contrast those growth rates it becomes clear that Oracle is on its way to becoming the world’s largest enterprise cloud company.”

Financial Results, Marc Benioff, News & Analysis, Salesforce

Salesforce bags $1.5bn in Q1 2016, on track for $6bn annual run rate

Benioff reaffirmed the company's goal of reaching $10bn in annual revenues

Benioff reaffirmed the company’s goal of reaching $10bn in annual revenues

CRM giant Salesforce announced another record quarter this week as it took home over£1.5bn in revenue for Q1 2016, up from £1.44bn the previous quarter. The company claims it is on track to become the first pure-play enterprise cloud company to surpass the $6bn annual run rate mark.

At £1.51bn for the quarter revenue is up 23 per cent year-on-year and the company also reported deferred revenue of $3.06bn, up 31 per cent year-on-year.

Salesforce also raised its fiscal year 2016revenue guidance to £6.55bn, up from £6.52, and said it is on track to be the first pure-play enterprise cloud company to surpass the £6bn annual run rate mark. Full fiscal year 2015 revenue was $5.37bn.

“Salesforce has surpassed the $6 billion annual revenue run rate faster than any other enterprise software company, and our current outlook puts us on track to reach a $7 billion revenue run rate later this year,” said Marc Benioff, chairman and chief executive officer, Salesforce.

“Our goal is to be the fastest to reach $10 billion in annual revenue,” Benioff said, echoing his call-to-arms from the previous two quarters.

Salesforce has recently been the subject of a series of rumours suggesting its potential acquisition by another enterprise technology firm, although Salesforce has repeatedly denied commenting on the speculation. If the rumours are true it’s almost certain another record fiscal quarter would send the asking price to even greater, eye-watering heights.

Cisco, Deutsche Telekom, Financial Results, John Chambers, Kelly Kramer, News & Analysis, telstra

Cisco Q3: Enterprise shines while service provider biz struggles

Cisco said it enterprise business is looking strong but service provider segment still sees challenges

Cisco said it enterprise business is looking strong but service provider segment still sees challenges

Cisco reported third quarter 2015 revenues of $12.1bn this week, just over 5 per cent what it raked in during the same quarter last year. In a call with analysts this week Cisco execs said the company sees continued growth in its enterprise segment, but its service provider business continue to struggle.

Revenue for the first nine months of fiscal 2015 was $36.3bn, up from $34.8bn for the first nine months of fiscal 2014.

Kelly Kramer, Cisco executive vice president and chief financial officer said the company saw a good balance across its portfolio, with its enterprise segment looking fairly strong, much like the previous quarter.

UCS revenues for the quarter were $3bn, which is sequentially flat but a 30 per cent year-on-year increase, and the company said its seeing growth in its converged infrastructure offerings (those co-developed with VCE and IBM). Its cloud revenues grew 11 per cent year-on-year, mostly on growth in its conferencing cloud software.

In a call with analysts this week Cisco chairman and chief executive John Chambers said the company is seeing better performance in its enterprise segment than its server provider business – hindered in part by an industry-wide slowdown in spending seen over the past few quarters now.

“In enterprise, the shift to selling outcomes, not products, is resulting in larger opportunities and dramatic increases in pipeline. In US enterprise, for example, the value of our pipeline of deals over $1 million increased approximately 60 per cent year-over-year, with the average deal size up over 30 per cent,” he said.

“We are managing continued challenges in our service provider business, which declined 7 per cent, as global service provider capex remained under pressure and industry consolidation continues. We believe the organisational changes we have made in our global service provider organisation are working, and we are very focused on growing our share of wallet.”

“We are managing continued challenges in our service provider business, which declined 7%, as global service provider CapEx remained under pressure and industry consolidation continues. We believe the organizational changes we have made in our global service provider organization are working, and we are very focused on growing our share of wallet”

Chambers also said Cisco’s intercloud strategy announced last year will kick into “phase 2” shortly, and while he declined to specifically outline what that entails he did shed some light on the programme’s challenges in its bid get other service providers on board with it.

“The pieces that we were missing was how do you go into this new environment where each of these “public clouds in clouds” are separate? And you have to be on different vendors or different companies’ tech to have the ability to go into it. So what we’re looking at first is an architecture and it cements our relationships in service providers. And then it really comes through to how you monetise it over time.”

“This will just take time to monetize, but the effect we see indirectly is already huge when you talk about a Deutsche Telekom or a Telstra and our relationships with those,” he added.

Amy Hood, Financial Results, Microsoft, News & Analysis, Satya Nadella

Microsoft doubles cloud revenue in Q3

Nadella said Microsoft is well on its way to becoming a cloud-first, mobile-first company

Nadella said Microsoft is well on its way to becoming a cloud-first, mobile-first company

Microsoft pulled in $21.7bn in revenues for the three months ending March 31, 2015, up 6 per cent year on year. But the company said its commercial cloud revenue more than doubled in the past quarter alone.

Microsoft reported mixed success in its devices segment (Surface revenues increased 44 per cent; phone revenues decreased, with volumes this quarter shifting from 10.5 to 8.6 million units sold) and Windows OEM revenues declined.

But he company reported commercial cloud revenue grew 106 per cent (111 per cent in constant currency), driven by Office 365, Azure and Dynamics CRM Online. Microsoft claims its cloud services now have an annualized revenue run rate of $6.3bn.

Office 365 and Azure accounts for a great deal of that growth according to Satya Nadella, Microsoft’s chief exec. Office 365 consumer subscribers increased to over 12.4 million, up 35 per cent sequentially

“We have 50 trillion objects stored in Azure, a three times growth year-over-year in storage transactions, and more than five trillion in March alone. And Azure websites are growing with nearly half a million sites hosted,” Nadella said during a call with analysts and journalists this week.

“It’s clear that we are well on our way to transforming our products and businesses across all of Microsoft. The early signs are evident in how our customers are using our products.”

“Our momentum in the cloud is a highlight. Increasingly, customers are choosing Microsoft cloud services to transform their own businesses, going beyond just moving existing workloads to the cloud. These results showcase our ability to transform and perform simultaneously.”

However, Office commercial products and services revenue declined 2 per cent.

“Enterprise penetration is accelerating with over half of all agreements signed during the quarter including cloud services,” added Amy Hood, the company’s chief financial officer.

Financial Results, News & Analysis, Open Source, OpenShift, OpenStack, Red Hat

Red Hat says OpenStack, OpenShift deals trebled year-on-year

Red Hat enjoyed a solid fiscal year, with OpenStack and OpenShift

Red Hat enjoyed a solid fiscal year, with OpenStack and OpenShift

Red Hat revealed its fourth quarter 2015 financial this week, reporting revenue of $464m, up 16 per cent year-on-year. The firm also said deals involving OpenStack and OpenShift-based offerings tripled when compared to the fourth quarter 2014.

For the full fiscal year total revenue hit $1.79bn, up 17 per cent on the previous year, and the Linux incumbent reported subscription revenue for the quarter reached $405m, up 15 per cent year-on-year.

“We continued to experience strong demand for our open, hybrid cloud technologies, as evidenced by increased cross-selling in our top 30 deals which were all over $2 million for the first time,” stated Jim Whitehurst, president and chief executive officer of Red Hat. “Customers value the consistency and flexibility as they run their applications using Red Hat solutions across a variety of deployment models, including public and private clouds, to modernize and transform their IT infrastructure.”

In a call with analysts this week Whitehurst also said its OpenStack and OpenShift offerings, as well as Ceph – the storage system provider it acquired last year – are starting to show signs of market acceptance.

“Half of our OpenStack wins are six figure OpenStack wins in the quarter had Ceph as a component. So fully strong affinity between OpenStack and Ceph and our ability to be a credible provider of both, I think helps us do well in both. So we’re seeing a lot of benefit there.”

“The number of times the top 30 deal included OpenStack or OpenShift this quarter tripled from Q4 a year ago. Interestingly, one technology customer expanded their existing OpenShift deal this quarter and we now have our first $10 million plus open shift customer,” he said. “OpenShift has been performing well with customers and momentum is growing.”

OpenShift is currently pitted in a battle for mindshare against Cloud Foundry, another open source platform as a service. Cloud Foundry seems to have gained the lion’s share of vendor buy-in, but Paul Cormier, Red Hat’s executive vice president, products and technology said OpenShift wins over Cloud Foundry when it comes to standards.

“One of the biggest differences is that cloud foundry from the various vendors is it’s very difficult in implementation. So getting applications that are compatible across those different vendors on Cloud Foundry will be challenging for one thing,” he said, adding that OpenShift relies on more tried-and-tested technology standards.

Red Hat enjoyed a solid fourth quarter and fiscal 2015, and it will be interesting to see how the incumbent attempts to keep that positive momentum going. Professional services may be one viable avenue. The company recently created a consulting division that combines technology expertise and consulting resources the firm acquired over the years.