Oracle Corp. yesterday reported yet another strong quarter, although growth in its applications business — particularly in North America — slowed in the fourth quarter compared with recent periods.
The provider of enterprise applications, database, and middleware software reported revenue of $5.8 billion for the quarter ended May 31, a 20% improvement over the fourth quarter of 2006. Oracle's revenue from new software license sales, at $2.5 billion, rose 17% compared with the same period a year ago. And maintenance revenue grew 21% to $2.3 billion.
The company reported net income for the quarter of $1.6 billion, an increase of 23% over the prior-year period.
For the fiscal year, Oracle reported a 25% rise in revenue to $18 billion. New software license revenue for the year was $5.9 billion, up 20% from fiscal 2006, while maintenance revenue grew 25% to $8.3 billion. For the year, Oracle's net income rose 26% to $4.3 billion.
While Oracle's overall fourth-quarter results were strong, applications revenue — which in recent periods has fueled the company's impressive financial results — grew more slowly than in recent quarters. Revenue from new application licenses, for example, was $726 million for the quarter, up 13% compared with the year-earlier period. And overall application revenue grew by 18% in the quarter to $1.6 billion.
Those growth rates were the slowest Oracle has seen this year in its applications business. Last quarter, for example, Oracle saw a 57% jump in new applications license revenue and a 36% rise in overall applications revenue.
The slowdown in applications revenue growth was most pronounced in North America. There Oracle saw just a 5% year-over-year increase in applications new license revenue. That compares with a 69% year-over-year rise in applications new license revenue in North America in the third quarter of 2007.
Oracle's applications business did better in other parts of the world in the fourth quarter, as revenue from new licenses of applications grew 42% in Europe/Middle East/Africa.
In a conference call with financial analysts Tuesday, Oracle CEO Larry Ellison blamed the slower applications growth rate on the fact that the fourth-quarter revenue figures are being compared with the 2006 fourth quarter, when Oracle's results jumped dramatically. Applications new license revenue during that period, for example, grew 83%, while applications revenue was up 66%.
"We had a blowout quarter a year ago," Ellison said. "We expect North America to grow strongly in the applications business in the first quarter."
Oracle's database and middleware sales were strong enough to offset slowing in its applications business. The company reported 18% growth in overall database and middleware revenue for the quarter to $3.2 billion. New license revenue for database and middleware products also grew by 18% during the quarter to $1.7 billion.
"We were very pleased with how database did in the quarter," said Oracle Co-President Charles Phillips in remarks to financial analysts. Phillips said database options such as enterprise search helped spur growth, as did the shipment of the latest release of Oracle's middleware suite, Fusion Middleware 10G R3. Oracle is expected on July 11 to release the latest version of its database software, version 11G, which should continue to drive database sales, predicted Oracle Co-President and CFO Safra Catz. "We don't think [the database business] has necessarily maxed out," she said.
Oracle's strong quarter enabled the company to continue to accumulate cash, growing its net cash provided by operations from $4.5 billion a year ago to $5.5 billion. Ellison said Oracle will use the cash to continue to purchase its stock and to sustain its acquisition program. Oracle has made 30 acquisitions in the past three years, and five in the fourth quarter alone. "We expect the pace to continue," Ellison said.
Catz, however, rejected analysts' suggestions that, with Oracle's revenue and earnings growth running well ahead of its 20%-per-year target, the company may begin to buy companies that are not immediately accretive to its financial results. "Just because we're way ahead doesn't mean we're going to take a nap here," Catz said.
In other Oracle news this week, the company introduced Demantra 7.1.1, the first version of the demand management software since Demantra was acquired by Oracle a year ago.
The new release integrates tightly with both Oracle's E-Business Suite and JD Edwards EnterpriseOne enterprise applications, sharing the operational data stores of those two products. The integration allows the Demantra software to easily import demand data from Oracle modules such as order entry and to export demand plans to the planning and scheduling systems in the E-Business Suite and JD Edwards EnterpriseOne applications.
Users of the E-Business Suite and JD Edwards EnterpriseOne will have the option of migrating to the Demantra application for demand planning or continuing to use the demand planning systems native to those applications, said Oracle Vice President for Product Strategy Jon Chorley in an interview with Managing Automation.
The company also introduced Oracle Business Intelligence Standard Edition One, a collection of business intelligence tools tailored for small and medium-sized organizations. The package includes interactive dashboards, formatted reporting, ad hoc query and analysis tools, an ETL (extract, transform, load) tool, and the Oracle database. It is priced at $1,000 per user for organizations with five to 50 users.