Oracle released its third-quarter financial results after the close of the stock market on March 17. Total revenue for the three-month period that ended Feb. 28 was $9.3 billion, unchanged from the same fiscal quarter a year ago. Oracle argued, though, that the reason for the lack of growth was the strengthening of the U.S. dollar in comparison to foreign currencies -- without the change in the value of the dollar, it said, revenue would have been up 6% year-to-year.
Software and cloud revenue went up by 1%, reaching $7.2 billion. With constant currency, Oracle said that would have amounted to an increase of 7%. Cloud software-as-a-service (SaaS) and platform-as-a-service (PaaS) revenue grew to $372 million in Q3, an increase of 30% that would have been 34% at constant currency levels. Hardware systems revenue went down by 2%, to $1.3 billion. However, with constant currency, the hardware business would have increased by 5%.
As they've done after previous quarters, Oracle executives focused sharply on the cloud in their comments about the latest results. During a conference call, Mark Hurd, one of the company's co-CEOs, called Q3 "a great cloud quarter for Oracle," according to a transcript posted online by TheStreet. Hurd said Oracle signed nearly $200 million worth of new SaaS and PaaS contracts during the third quarter, as measured in annual recurring revenue. He expects to up that number to $300 million in Q4, $50 million higher than previous estimates.
Larry Ellison, Oracle's executive chairman and CTO, said the company is poised to rack up more than $1 billion in new SaaS and PaaS sales over the course of the 2015 calendar year. Ellison added that cloud rival Salesforce.com expects the same amount of new business, but he predicted that Oracle will surpass it on sales.
"It's going to be close, but I think we're going to sell more in the cloud than they do this year," Ellison said during the conference call. Previously, he had forecast that Oracle would top Salesforce on SaaS and PaaS sales during its next fiscal year, ending in May 2016. But based on current business levels, he said he "was way too cautious and conservative" in making that prediction.
With its Q3 results pegged to generally accepted accounting principles (GAAP), Oracle said operating income was $3.4 billion, down 5% from last year's third quarter but up 4% at constant currency levels. GAAP net income was down 3%, to $2.5 billion. With constant currency, though, it would have been up 7%.
Safra Catz, Oracle's other co-CEO, said in a statement that the vendor "beat the midpoint of my constant-currency guidance on every single financial metric this past quarter. Once you normalize for exchange rates, it was a very strong growth quarter for us."
Catz said during the conference call that, looking ahead, she expects total revenue to increase between 1% and 6% year-to-year in Oracle's fourth quarter, assuming currency levels remain constant. She forecast 2% to 6% growth in software and cloud revenue, and said hardware revenue is expected to come in somewhere between a 2% decline and an 8% increase.
In its Q3 financial report, Oracle placed a great deal of stress on comparing numbers in constant currency versus the changing value of the dollar. Constant currency shows Oracle's financial results without the interference of things outside its control, such as the fate of the dollar. However, the world in which Oracle and everyone else has to live is one where the value of different currencies does fluctuate.