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SaaS and PaaS up, total revenue down in Oracle Q1 report

In its 2016 first quarter fiscal report, Oracle shows off increases in PaaS and SaaS revenues and licenses, and downplays its drop in total revenue.

Oracle announced its first quarter results for fiscal year 2016 on Wednesday. Total revenues were $8.4 billion, down 2% from Q1 last year.

According to Thomson Reuters, analysts were expecting $8.53 billion in revenue. During last year's first quarter, Oracle posted revenue of $8.6 billion. However, the loss of revenue was not a complete surprise, as it matches the prediction of a small drop in first quarter revenue by Thomson Reuters StarMine data.

The area with the greatest growth was software as a service (SaaS) and platform as a service (PaaS), coming to $451 million and increasing 35% over Q1 last year. Cloud revenue as a whole was also on the rise, totaling $611 million, which was an increase of 29%.

Mainstay technology doesn't perform as well

However, the areas that had been Oracle's traditional strengths -- on-premises software and hardware -- did not fare as well. Total on-premises software revenue was $5.8 billion, down 4%, and total hardware revenue was $1.1 billion, down 3%.

As with last quarter, Oracle focused on its cloud SaaS and PaaS products. Safra Catz, co-CEO of Oracle, explained that SaaS and PaaS annual recurring cloud subscription contracts have almost tripled in Q1 2016. She credited the combined growth of both the software and cloud businesses to the growth of recurring SaaS and PaaS subscriptions.

While it appears that Oracle's cloud and cloud services revenue is growing, it's not enough to cancel out the low numbers coming from Oracle's traditional mainstays, on-premises software and hardware. Cloud SaaS made up only 4% of the company's total quarterly revenue, down from 5% in FY 2015. Total cloud revenue made up only 5%, down from 7% last year.

In contrast, total on-premise software revenues made up 71% of the quarterly revenue, and total hardware revenue came to 14%.

Next Steps

Take a look at Oracle's fourth quarter report from 2015

Learn more about Oracle's financial report for the first quarter of 2016

Dig Deeper on Oracle on demand and SaaS

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Is the good news about Oracle's SaaS and PaaS growth -- and its overall cloud growth -- enough to keep you optimistic?
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