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Cloud Stocks: A Look at Oracle’s 2018 M&A Activity

Posted on Friday, Mar 29th 2019

Earlier this month, Oracle (NYSE: ORCL) announced its third quarter results. The company outpaced market expectations for the quarter but the slowdown in its revenue growth is worrying. Despite the slowdown, Oracle is close to its 52-week high.  

Oracle’s Financials

Revenue for the third quarter declined 1% over the year to $9.6 billion. Net income increased to $2.7 billion or $0.76 per share and non-GAAP net income was $3.2 billion or $0.87 per share. Analysts were expecting earnings of $0.84 per share on revenues of $9.59 billion.

Cloud Services and License Support revenue was up 1% to $6.7 billion, while Cloud License and On-Premise License revenue was down 4% to $1.3 billion. Hardware revenue was down 8% to $915 million and services revenue was down 1% to $786 million.

Oracle ended the quarter with a cash balance of $14.72 billion.

For the current quarter, total revenues are expected to be flat to down 2% and EPS is expected to be $1.05 to $1.09. Analysts were expecting EPS of $1.05 and a 1% decline in revenue.

Oracle’s Platform Strategy

In October, Oracle launched a Digital Assistant, which is built on the Oracle Cloud Infrastructure. The Oracle Digital Assistant platform helps in building and deploying AI-enhanced digital assistants that help end users when using Oracle applications. It supports no-code development with a web-based, drag-and-drop interface that allows business subject matter experts to build and train digital assistants using visual and declarative tools without the need for specialized development or AI skills.

Last year, Oracle announced the availability of several platform services with built in automation to lower cost, reduce risk, accelerate innovation, and get predictive insights for organizations. These offerings included Oracle Autonomous Data Warehouse Cloud, Oracle Autonomous Analytics Cloud, Oracle Autonomous Integration Cloud, and Oracle Autonomous Visual Builder.

It also followed it up with a new generation of autonomous platform-as-a-service (PaaS) offerings for its Mobile Cloud Enterprise, Data Integration Platform Cloud, Developer Cloud, and API Platform Cloud. These offer self-learning chatbots and automatic Q&A chatbots designed to pull insights from unstructured data.

Last week, Oracle made available an enterprise-grade blockchain platform as part of Everledger’s blockchain-based platform, which is trusted by high-value industries such as diamonds, colored gemstones, fine wine, and art.

Oracle Cloud Platform is a comprehensive, standards-based combination of Oracle and open source technologies to build, deploy, integrate, secure and manage enterprise applications. It is also optimized for hybrid and multi-cloud environments. Oracle Cloud Platform is also available as a subscription-based or a PaaS offering. Oracle Cloud Platform supports numerous open standards such as SQL, HTML5, and REST, open-source solutions such as Kubernetes, Hadoop, and Kafka and a wide variety of programming languages, databases, and integration frameworks.

Oracle’s 2018 Acquisitions

In November, Oracle acquired SD WAN vendor Talari Networks for an undisclosed sum. San Jose-based Talari was founded in 2009 and had raised $53.5 million in funding. Talari’s SD-WAN is used by more than 500 customers in more than 40 countries. The addition of Talari’s technology is expected to complement Oracle’s session border controller (SBC) and network management infrastructure. Its annual revenue is estimated to be $15.8 million. It competed with Aryaka Networks, VeloCloud, and Ecessa Corporation.

In October, Oracle acquired company intelligence platform DataFox for an undisclosed amount. San Francisco-based DataFox was founded in 2013 and had raised $11.8 million in funding. It is expected to enhance Oracle Cloud Applications with an extensive set of AI-derived company-level data and signals. Its annual revenue is estimated to be $6 million. It competed with InsideView, PitchBook Data, and Owler.

In October, Oracle acquired health tech startup goBalto for an undisclosed sum to expand its Health Sciences business unit. goBalto’s study startup services are used at over 90,000 research sites across more than 2,000 studies in over 80 countries, delivering a 30 % reduction in study startup cycle times. San Francisco-based goBalto was founded in 2008 and had raised $37.6 million in funding. Its annual revenue is estimated to be $8 million. It competed with DataTrak Int, TrialScope, and Sylogent.

In September, Oracle acquired Iridize, a leading enterprise cloud platform for employee training and onboarding, for an undisclosed sum. Iridize’s technology was expected to enhance Oracle’s Guided Learning capabilities to increase cloud application adoption and improve the user onboarding experience. Tel Aviv-based Iridize was founded in 2010 and was bootstrapped. Its annual revenue is estimated to be $2.9 million. It competed with WalkMe, Whatfix, and Toonimo.

In May, Oracle acquired machine learning platform DataScience for an undisclosed sum. Oracle expects to offer a single data science platform that will leverage Oracle Cloud Infrastructure service and its SaaS and Paas tools. Culver City-based DataScience was founded in 2014 and has raised $28 million in funding. Its annual revenue is estimated to be $7.8 million. It competed with DataRobot, Dataiku, and Civis Analytics.

In April, Oracle acquired contextual intelligence platform Grapeshot for $400 million to complement Oracle Data Cloud. Grapeshot developed a platform to help ensure “brand safety”. New York-based Vocado was founded in 2006 and had raised $22.4 million in funding. Its annual revenue is estimated to be $35 million. It competed with Peer39, ADmantX, and Integral Development.

In April, Oracle acquired student-centric, cloud-based financial aid solution Vocado for an undisclosed sum. Vocado would be added to Oracle Student Cloud, Oracle’s cloud-based SIS. Los Angeles-based Vocado was founded in 2008 and was bootstrapped. Its annual revenue is estimated to be $4 million. It competed with Regent Education, Education Partners, and CampusLogic.

In April, Oracle acquired SparklineData to augment Oracle PaaS services for enterprise customers transitioning to Big Data solutions. SparklineData had developed SNAP, an Apache Spark native business intelligence platform for complex datasets with sub-second query response times that can be deployed over enterprise data warehouses, data lakes, and IoT analytics. SparklineData’s employees joined the Oracle Big Data Cloud organization and Oracle is expected to roll out a new release of SNAP on the Oracle Cloud in 2019. San-Francisco-based SparklineData was founded in 2014 and was bootstrapped. Terms of the deal were not disclosed

In February, Oracle acquired cloud-based, artificial intelligence-driven cyber security solution Zenedge for an undisclosed sum. Miami-based Zenedge was founded in 2017 and had raised $13.7 million in funding. Its annual revenue was estimated to be $5.1 million and it competed with Cloudflare, Sucuri, and Sharktech. The Zenedge Cybersecurity Suite is now Oracle Dyn Web Application Security, and part of the Dyn GBU secure, intelligent edge services portfolio.

We recently covered Saleforce’s thriving PaaS strategy that has helped developers and entrepreneurs build on ideas to create sustainable high-value businesses. What can Oracle do to up its PaaS game? Oracle’s platform and acquisition strategies show a leaning toward data analytics and AI startups. What other startups could Oracle acquire to reinvigorate its cloud strategy?

Last week, Oracle also disclosed its plans to cut 352 jobs in an attempt to restructure its business and rationalize the workforce to emphasize on cloud-related products. Its stock is currently trading at $53.19 with a market capitalization of $181.7 billion. It hit a 52-week low of $42.40 in December and touched a 52-week high of $54.38 last week.

Photo Credit: May Wong/Flickr.com

This segment is a part in the series : Cloud Stocks

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