Oracle’s 37% Revenue Growth Exceeds Expectations

Oracle, despite expensive acquisitions and legal headaches during the past 12 months, continues to report the double-whammy of business nirvana: increasing revenue and profits.

The world’s second-largest software maker said late today in its fiscal third-quarter (Q3) report that revenue for the quarter ended 28 February had jumped 37 percent to $8.8 billion (£5.5bn).

Oracle also said its net income rose to $2.1bn (£1.3bn), or 41 cents (25 pence) a share, compared to $1.2bn (£745 million) or 23 cents (14p) a share in the same period a year earlier.

Earnings for the quarter were 54 cents (33.5p) a share, excluding a few one-time items. Wall Street analysts had expected Oracle to report earnings of $8.7bn (£5.4bn), or 50 cents (31p) a share.

Building on existing growth

Oracle built on a highly successful second quarter, in which it reported $8.6bn (£5.3bn) in total revenue, up 47 percent from the previous year, and profits that were up 28 percent.

Oracle also declared a quarterly cash dividend of 6 cents per share of outstanding common stock, up from 5 cents last quarter.

Chief executive and co-founder Larry Ellison cited an upsurge in new business, based largely on much of the Sun Microsystems intellectual property (IP) the company added in January 2010, as a key to its continued profit and revenue growth.

“In Q3 we signed several large hardware and software deals with some of the biggest names in cloud computing,” Ellison said.

“For example, Salesforce.com’s new multi-year contract enables them to continue building virtually all of their cloud services on top of the Oracle database and Oracle middleware. Oracle is the technology that powers the cloud.”

Ellison said that interest in the company’s Java-based Exadata database server – which he has touted as the fastest such server in the world – continues to grow. In December, Ellison said the so-called “pipeline” for new business from Exadata has doubled in the last 11 months to nearly $2bn (£1.2bn) – indicating the amount of potential sales revenue in the coming nine months.

Acquisitions don’t dent bottom line

Oracle’s acquisitions of Sun ($7.4bn) and 10 other companies – including e-commerce software vendor Art Technology Group for $1bn and health-care app maker Phase Forward for $685m – in the last 13 months had not affected the balance sheet adversely.

“We now have a broader portfolio,” co-president Mark Hurd told analysts and media members on a conference call. “We can now offer incremental value in a wide array of product areas. We also have many more opportunities to cross-sell, because we have so many more things that our customers are interested in.

“If you deliver what you promise to deliver, and build a relationship with that customer, you will be rewarded. It’s the old saying: ‘The best place to get a second sale is to go back to the first.'”