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Oracle PaaS and SaaS sales bright points of Q4

Oracle PaaS and SaaS sales are up in Oracle's 2015 fourth quarter financial report. Total revenue and earnings per share are lower than analysts predicted.

Oracle recently released its 2015 fourth quarter earnings report with disappointing results. Oracle was quick to stress that their numbers were affected by the strength of the dollar versus other global currencies. Total Q4 revenues stood at $10.7 billion, (down 5%) -- though with constant currency, they actually would have been up 3%. Oracle earned $0.78 per share on that $10.7 billion. This is less than was predicted from analysts polled by Thomson Reuters, who had anticipated earnings of $0.86 per share on revenue of $10.92 billion. Furthermore, earnings were down 14% from their last fourth quarter report.

Hardware system revenues were $1.4 million (down 4%) and software and cloud revenues at the end of Q4 were $8.4 billion (down 6%). In spite of this, Oracle co-CEO Safra Catz in The Street's transcript of Oracle's Q4 report conference call said, "We are delighted with our results, with the most important thing being that we dramatically overachieved in the cloud." She justified this statement by turning to Oracle's platform as a service (PaaS) and software as a service (SaaS) revenue, which was the high point of Oracle's fourth quarter results. Oracle sold $426 million of new SaaS and Paas annually recurring cloud-subscription revenue, despite having predicted only $300 million in SaaS and PaaS sales.

CTO and executive chairman Larry Ellison, in The Street's transcript of Oracle's Q4 report conference call, claimed the $426 million as a record amount of PaaS and SaaS sales for any cloud services company in a single quarter. Ellison said that the SaaS growth was due to the "rapid acceptance of our new generation of Fusion applications." Oracle now has 1,000 Fusion ERP customers.

Ellison credited the increase in PaaS sales to "the demand for Oracle databases and Java middleware as a service." Oracle customers now have the ability to quickly and easily move Oracle databases and Java applications to the cloud which, according to Ellison, has increased interest in those products dramatically. He added that the reason PaaS business was doing better than the SaaS business is because of the cloud connection.

According to Catz, the cloud plays a major role in both the high and low points of this year's fourth quarter report. "This shift [to the cloud] has the effect of lowering near-term earnings per share," said Catz in The Street's transcript, "but over time will increase it significantly."

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