2019 has seen Oracle downshift and downsize away from its legacy hardware business to focus on its higher-margin subscription cloud applications, such as NetSuite and Fusion. The ongoing process has had a net impressive impact on its Q4 results, with earnings of $3.7 billion and the highest non-GAAP operating margin in five years of 47%.
A strategic alliance with Microsoft has also helped bring its cloud services and licence support revenue to $6.8 billion, with on-premise sales of $2.5 billion. The deal with Microsoft, in response to demand from customers who want to continue running both platforms when they move to the cloud, recently expanded to the UK, meaning that London is now in one of the two zones where Oracle and Microsoft customers can move applications to the cloud down a single pipe. Oracle has also announced a deal with key cloud technology player VMWare, making it easier for organisations using VMWare to move to Oracle’s cloud services.
Cloud forerunners may cite Oracle’s conversion as a belated one, but Oracle has major plans in the cloud space, announcing a 15-month plan to open a new cloud region every 23 days, resulting in a total of 36 Oracle cloud infrastructure regions by the end of next year. To put this in perspective, one of the leading cloud service providers AWS is in 22 regions. They’re not stopping at infrastructure growth either, with a range of new services launching, including the introduction of a new free tier giving users a limited version of its Autonomous Database, an AI-powered digital voice assistant, and the first OS in the cloud to deliver automated patching and updates without any human intervention. The free tier is a clear move by Oracle to sign up the large number of organisations yet to move to the cloud, as well as attract the next generation of developers to build on the Oracle cloud, using its global academy programme to promote the new free services.
With such a solid transitionary 2019, analysts are predicting Oracle’s 2020 revenue to be in excess of $40 billion.