Oracle has reported a drop in its revenues and profit for the fiscal third quarter due to strong US dollar.

Revenues for the quarter dropped 3% to $9.01bn, compared to $9.33bn in the year-ago period.

Net income declined to $2.14bn, or $0.50 per share, from $2.50bn, or $0.56 per share, last year.

The company has been investing heavily in its Internet-based software business in the past few years in order to grab market share from rivals like Salesforce.com and Workday.

Oracle is also facing competition from Microsoft, which recently announced that its database software will be available for the Linux platform starting from mid-2017.

Cloud software as a service (SaaS) and platform as a service (PaaS) revenues increased 57% to $583m, accounting for 6% of total revenue for the quarter.

Oracle added 942 new SaaS customers in the quarter, including several who switched from Workday.

Total cloud revenues rose 40% to $735m and total on-premise software revenues dropped 4% to $6.3bn.

Total hardware revenues fell 13% to $1.1 billion and total services revenues were $793 million, down 7% in US dollars.

The company’s cloud SaaS and PaaS revenue growth rate accelerated to 61% in constant currency in the quarter.

Oracle CEO Safra Catz said: "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%. These two factors will ignite substantial EPS and cash flow growth over Oracle’s next few quarters."

Oracle chairman and CTO Larry Ellison said: "In absolute dollar terms, Oracle is already selling more enterprise SaaS and PaaS new cloud revenue than any other company in the world — including Salesforce.com.

"We are growing much faster than Salesforce.com. We also have many more SaaS products than Salesforce.com."

The company’s board authorised the repurchase of up to an additional $10bn of common stock under its existing share repurchase programme in future quarters.

Last month, Oracle acquired Ravello Systems for a reported $500m in a bid to further strengthen its cloud business.

Ravello Systems, which is based in Israel, provides nested virtualisation and software-defined networking SaaS.