According to a Gartner report, by the year 2016, a majority of the enterprise IT spending will be on cloud offerings. Researcher IDC projects the current worldwide cloud services spend at $9.6 billion. The market is projected to grow 25% annually over the next five years. Most tech giants have recently been focusing their efforts on diversifying from hardware sales to software and cloud services. Oracle (Nasdaq: ORCL) is one such player who seems to be succeeding in its efforts to transform itself to a SaaS and cloud computing software focused organization.
Oracle’s second quarter revenues grew 2% over the year to $9.28 billion, ahead of the Street’s projections of $9.18 billion. EPS fell 1% over the year to $0.69, but was ahead of the Street’s projected earnings of $0.67 for the quarter.
By segment, revenues from hardware systems were flat at $1.3 billion. Oracle’s push into the cloud computing and SaaS market helped drive software revenue growth. During the quarter, booking for their cloud services grew an impressive 35%. Revenues for the software segment grew 4% to $6.9 billion. Services revenues fell 6% to $1.1 billion.
For the current quarter, Oracle expects revenues to grow 2%-6% over the year with EPS of $0.68-$0.72. The market was looking for revenue growth of 4% with EPS of $0.70.
Oracle’s Digital Marketing Offerings
Forrester estimates digital marketing spend in the U.S. to grow 18% annually to $43.3 billion by the year 2016. The fast growing market has already attracted a lot of interested buyers. Earlier last year, Oracle had acquired Eloqua, another online marketing solutions provider for an estimated $935 million. Soon, Salesforce.com announced the $2.6 billion acquisition of ExactTarget. To counter Salesforce’s move, Oracle last month announced plans to acquire marketing software company, Responsys.
Responsys offers SaaS based services to help organizations manage marketing campaigns by coordinating email, mobile, display, and social advertising. Their offerings help their customers automate, customize and coordinate internet based marketing campaigns on a large scale. Responsys has a customer base of over 450 companies including names like LinkedIn, Nordstrom, and Southwest Airlines. The deal is valued at $1.5 billion. SAP was among the final bidders.
Oracle plans to integrate Responsys’ offerings with their Eloqua Marketing Cloud service. They believe that the acquisition will help the marketing organizations deliver improved customer experiences across marketing interactions and throughout the customer lifecycle from a single platform. The acquisition is pending regulatory approval.
Earlier last quarter, Oracle had also acquired marketing content vendor, Compendium for an undisclosed sum. Compendium was a cloud based services provider who focused on creating and optimizing delivery of marketing content across channels. Oracle also plans to integrate Compendium’s content marketing tool into their Marketing Cloud.
Oracle’s stock is trading at $37.98 with a market capitalization of $170.81 billion. It touched a year high of $38.22 earlier last week.