Editor’s note: Oracle recently became a major player in the Research Triangle with its purchase of Morrisville-based Tekelec. Elizabeth Hedstrom Henlin is an analyst with Technology Business Research. Se analyzes Oracle’s earnings report earlier this week.
HAMPTON, N.H. – Third quarter 2013 revenue gains underscore the importance of Oracle’s (Nasdaq: ORCL) consistent go-to-market execution to sustain revenue growth across the second half of the year.
Multiple quarters of sales territory alignment and incentive changes are starting to deliver results for Oracle, as the company delivered revenue growth across software that reached high single-digits for the first time since CY4Q12.
Software revenue grew 6.5% year-to-year in GAAP results, with 5% year-to-year growth in license sales and 7.5% year-to-year growth in software maintenance. While hardware systems support rose 3.1% year-to-year, single-digit year-to-year revenue declines in professional services and hardware systems products kept Oracle’s total revenue growth to 2.3% year-to-year in GAAP results.
License growth in the Americas (9% year-to-year growth) outpaced the comparable regional run rates (3% year-to-year growth), illustrating the successful ramping up of Americas sales staff around high-interest products, including cloud.
Oracle remains positioned to sustain growth through increased share of wallet revenue gains in its install base despite customer spending showing signs of renewed constraints. With Oracle’s software business remaining the bulk of Oracle’s current profitability and growth, maintaining the stability of current sales structures and execution will be essential in returning Oracle to consistent growth across the balance of CY13.
Business Intelligence, Industry Applications Are Assets Oracle Will Monetize in 2H13
The depth of Oracle’s applications portfolio, particularly in business intelligence and industries, positions the vendor to use acquired technologies and product launches to sustain reinvigorated software growth in core applications businesses in 4Q13. Oracle will use its vertical credibility, realized through its Global Business Units, as a lever to increase business value conversations across its customer base.
TBR believes that Oracle, like competitors IBM and SAP, is set to monetize business intelligence by creating value for customers in existing software installations that encompass applications and databases. Oracle’s business intelligence portfolio spans tools, applications, platforms, and into data warehousing — creating a suite of offerings able to cater to mature and lagging adopters of business intelligence.
We project that the recent general availability of Oracle Database 12C and the firm’s rising focus on in-memory technologies will drive a second wave of share of wallet revenue growth for Oracle in CY14.
By reframing sales and marketing in the start of the year to focus on the business value inherent in upgrading to Oracle Database 12C, Oracle will accelerate sales and defend its install base from competitive attack by vendors such as SAP with its SAP Business Suite and SAP HANA offerings.
(C) TBR
