We saw the strongest Q1 license growth in more than five years and there’s no doubt we’re gaining share across all product lines, chief financial officer Safra Catz said on a conference call.
The company reported a net income for the first fiscal quarter ended August 31 up 29% on the year at $670m, on revenue that was up 30% at $3.59bn.
On a non-GAAP basis, earnings per share was $0.18, beating the analysts consensus estimate by two cents. The revenue beat the analysts’ estimate by $120m, according to a Reuters poll.
License revenue, which gives a good indicator of the health of the business, as it predicts future upgrade, support and upsell opportunities, was also extremely healthy.
Over all Oracle’s businesses, it rose 26% when you factor out currency fluctuations, to $804m, representing 22% of total revenue, Oracle said.
Catz added that database license revenue was up 10% year over year, middleware licenses were up 56% and that applications license revenue, Oracle’s newest and fastest-growth area, was up 80%.
Ever-humble chief executive Larry Ellison took the opportunity to point out that SAP saw its apps license revenue up a more modest 8% in its last-reported quarter, and took the opportunity to give his German rival some advice.
SAP, he said, will lag in industry-focused business applications. Oracle, he said, is growing faster in these vertical markets due in part to its acquisition strategy.
SAP has good industry knowledge in some industries like oil and gas, but they lack industry-specific knowledge and products in most other industries, he said. That’s why they tried to buy Retek, for retail products and retail knowledge.
Oracle has spent about $20bn over the last few years, buying rival software vendors and expanding its portfolio. About $630m was spent on Retek, after a short but vicious bidding war with SAP in early 2005.
Oracle’s acquisition strategy has moved us ahead of SAP in several industries — banking, telecoms, retail and so on, he said. Oracle will continue to acquire industry knowledge and product, and we believe SAP must do the same or SAP will become progressively less competitive in several industries and continue to experience slowing organic growth.
President Charles Phillips said: We counted head-to-head wins over SAP that we can validate of 88 in the quarter.
Looking forward, Phillips said a lot of growth in coming quarters will come from upselling the various customers it has acquired when it bought other companies. Oracle has about 235,000 customers now, he said, and it has analyzed how best to upsell them.
We’ve made the investment in building models and normalizing customer data across acquisitions, he said. We’ve built analytic models for next likely purchases, we’ve analyzed historical purchase patterns, we know what people own, we know what the prereqs are for the next product.
With all this in mind, the company raised its revenue guidance for the coming quarter ahead of what analysts were expecting, sending its share up 13% to a four-year high in after-hours trading.
While Oracle expects non-GAAP EPS in-line with current estimates, at $0.22, it now expects revenue to grow 22% to 24%, compared to the analysts’ estimate of about 17%.
