October 26, 2020

Does Oracle Want To Hide Its Weakness In The Cloud By Merging Its Results Iaas, Paas And Saas?

Oracle has reported the results of its quarterly activity in the cloud by adding revenue in SaaS, PaaS, and IaaS, rather than segmenting them as usual. Some see a willingness of the publisher to hide its weakness in hosted services.

Oracle has decided to change the way it communicates to the public, and especially its shareholders, about its financial performance in the cloud. So far, the publisher separated the turnover from this activity into two major components: those from the Saas, on the one hand, and those from PaaS and IaaS, on the other hand. Things have changed since the publication of the accounts for its fourth quarter of 2018. Now, all these revenues are accumulated and things do not stop there. During a conference call last week, Oracle co-CEO Safra Katz explained what her single cloud billing line consists of: “We combined SaaS billing, PaaS and IaaS with those generated by license updates, support for cloud services and license support. In other words, Oracle is not content to no longer segment its revenue in the cloud, it does not even report more specific line services hosted in its accounts.

The Real Share Of The Cloud Dropped In Q4

In the fourth quarter, aggregate billings from all of these businesses increased 8% to 60% of Oracle’s $ 11.3 billion (+ 3%) of total revenue. It did not really impress investors. The price of the Oracle action has indeed unscrewed by 7% after the publication of these figures, however, higher than the expectations of analysts. Perhaps because Oracle’s true cloud aggregation (SaaS, PaaS, and IaaS only) accounts for $ 1.7 billion in revenue, or 15 percent of overall business, compared to 18 percent. in the previous quarter. As everyone knows, Oracle has historically marketed database applications for on-premise deployment. For some time, he sees in the cloud a huge growth opportunity. In fact, the figures of its cloud activity were often well highlighted during its financial communications.

A Change Explained By The Launch Of The BYOL Option

Safra Katz justifies the change in reporting decided by Oracle by the recent introduction of the Bring Your Own License option in the publisher’s pricing model. “BYOL allows users to transfer their existing on-premise licenses to Oracle’s cloud as long as they continue to pay for support related to those licenses,” she explains. This model makes the purchase of new licenses more advantageous, even if they are only intended for use in the cloud. As a result, our license revenue is now a combination of revenue from new cloud licenses and new on-premise licenses. Our revenue from support is also a combination of cloud license support billing and on-premise license support. ”

Is that clear? Not really. The leader explains that because users take a hybrid approach, these revenues can not be segmented more finely and so they are all classified in the cloud box. From there to see in this wobbly argument a will of Oracle to want to hide his weakness in the cloud, there is only one step. Safra Katz denies: “Previously, all these licenses and associated support would have been fully accounted for in our on-premise income, which they are clearly not”.

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