Oracle Corp. yesterday reported strong revenue and earnings results for its most recent quarter, led by impressive growth in both its applications and middleware software businesses.
At the same time, in remarks to financial analysts, Oracle officials said they have concluded that the company will not be able to pull off its previously announced friendly take-over of middleware software vendor BEA Systems.
In its second fiscal quarter, ended Nov. 30, Oracle saw total revenue rise 28% to $5.3 billion . The company's net income, meanwhile, grew by 35% to $1.3 billion compared to $967 million in the same period a year ago.
Oracle Co-President and CFO Safra Catz said the second-quarter results represented the "fastest growth rate in more than a decade" for Oracle. She said the results were largely a product of the company's large software portfolio, which Oracle has been growing through acquisition over the past three years. Oracle's broader software offerings, Catz said, are allowing the company to get involved in more potential deals and to realize larger deals.
Oracle's applications and middleware businesses led the company's second-quarter growth. Applications new license revenue grew by 63% to $553 million compared to $340 million in the like period a year ago. Applications growth was aided by Oracle's acquisition of Hyperion, which contributed $71 million during the quarter, according to Catz.
Oracle's on-demand software business grew by 19.3% to $167 million.
The company's database and middleware new license revenue jumped 28% to $1.1 billion. Middleware revenue in particular was up by 80%, CEO Larry Ellison told financial analysts. Oracle's database business was up 19%.
Ellison said the rapid growth across its product areas allowed Oracle to gain market share during the quarter in applications, database, and middleware.
The strong results also helped Oracle increase its cash reserves;operating cash flow for the 12 months ended Nov. 30 was up by $2.3 billion to $7 billion, and free cash flow for the quarter increased 50%, Catz said.
Oracle's growth was strongest in the Asia-Pacific region, where total revenue grew by 45.6%. Revenue from the Americas grew 18.8%, while sales in Europe/Middle East/Africa rose by 23.8%.
The company's applications business showed strong growth across all geographic regions. Applications new license revenue was up 56.9% in the Americas, 72.3% in Europe/Middle East/Africa, and 65.9% in Asia-Pacific.
Oracle forecast continued strong growth. In the coming quarter, Catz said, Oracle expects overall new license revenue to grow by between 15% and 25%, and total revenue to increase by between 21% and 24% on a GAAP basis.
Besides attributing strong growth to its expanding software product portfolio, Ellison also cited the company's strategy of targeting vertical markets with specific applications. He noted that Oracle has bought or developed applications for large and medium-sized companies in financial services, telecommunications, and retail industries.
Ellison contrasted this with the strategy of Oracle's chief applications rival SAP AG, which, he noted, has made a major push into the small business market with its Business ByDesign on-demand ERP product. Oracle has decided not to follow SAP into that market because it does not fit Oracle's current product line or sales organization, he said.
Separately, Catz said that after engaging in discussions with BEA's bankers and lawyers, "We've concluded that no friendly deal can be done with the current BEA board at a price and terms acceptable to Oracle."
Oracle officials did not elaborate on that statement, so it is not known whether the company intends to drop its $6.7 billion bid for BEA or proceed with an unfriendly takeover bid.