Oracle cloud sales boom but at what price?

Oracle plane However Oracle’s co-chief executive Safra Catz warned fiscal 2016 will be “a trough year for profitability as we move to the cloud.”

Oracle’s total revenues were down by 6% to $9.0 billion with the sales of ‘cloud plus on-premise software’ down 4% to $7.0 billion. Meanwhile, total cloud revenue has gone up in the last quarter by 26% (in US dollars) and Oracle made $649 million on pure cloud software. The two most successful categories of cloud software for Oracle have been SaaS and PaaS which accounted for $484 million, a rise of 34%. Cloud infrastructure as a service (IaaS) revenue was $165 million, a rise of 7%.

Expect the SaaS and PaaS revenue to grow by 50% in Q3 and 60% in Q4, said Catz. According to Oracle it won 100 Fusion Human Capital Management system contracts and over 300 Fusion Enterprise resource planning deals in the last quarter. Oracle said it is on target to sell and book more than $1.5 billion of new SaaS and PaaS business this fiscal year.

“We now have more than 1,500 ERP customers in the cloud, that’s at least ten times more ERP customers than Workday,” said Oracle’s other joint CEO, Mark Hurd. “It was a very strong growth quarter for our cloud business, with SaaS and PaaS bookings up 75% in constant currency and billings up 68% in U.S. dollars.”

Not everyone in Wall Street is convinced however. “While the company is showing some signs of cloud success, the meat and potatoes legacy database and app business is under major secular pressure,” FBR Capital Markets analyst Daniel Ives told MarketWatch.

Oracle’s Board of Directors declared a quarterly cash dividend of $0.15 per share of outstanding common stock.