Tag Archives: crm

Salesforce.com, Workday Nip At Oracle Here; Microsoft, Amazon There

Enterprise software developers Workday ( WDAY ) and especially profitable Salesforce.com ( CRM ) have gotten this far without any love from software king Oracle ( ORCL ), so a little verbal swagger from Oracle’s executives this week isn’t going to stop them. But Oracle’s 40% growth in cloud software revenue to $735 million in its third quarter, with a promise of more in Q4 , can’t bode well for the smaller rivals. Accelerating cloud sales, mostly for software as a service (SaaS) and platform as a service (PaaS), were Oracle co-CEOs Safra Catz and Mark Hurd’s favorite topics in a post-earnings conference call with analysts Tuesday. Oracle’s cloud growth, while approaching Workday’s recent 43% sales growth rate, has already puffed Oracle’s cloud to more than double Workday’s total revenue of $323 million in Workday’s last quarter. More deceleration seems inevitable from Workday’s triple-digit growth as recently as 2013. As for Salesforce.com, its year over year sales growth has slowed to the 23%-29% range for six straight quarters, following 13 out of the prior 14 quarters of 31% to 38% growth. Analysts polled by Thomson Reuters put it on a 25% sales growth trajectory to $1.89 billion in the current quarter ending in April vs. 23% revenue growth in the year-ago quarter. Still, “competition from leading SaaS vendors such as Salesforce.com, Workday and others creates the risk that new customers will be tougher (for Oracle) to find and existing on-premise customers could move to different vendors when they shift to the cloud,” warned RBC Capital Markets analyst Matthew Hedberg in a research note issued Wednesday. “This was not a quarter to change the competitive concerns,” he summarized. Not to worry, suggests Oracle Executive Chairman Larry Ellison. In the Q3 earnings conference with analysts Tuesday, Ellison said: “Oracle is now selling more new SaaS and PaaS annually recurring cloud revenue than any other company in the world including Salesforce.com. We are growing much faster than Salesforce.com, more than twice as fast, because we sell into a lot more SaaS and PaaS markets than they do. We compete directly with Salesforce.com in every segment of the SaaS customer experience (CE) market including sales, service and marketing.” He went on to say: “But Oracle also competes in huge SaaS markets where Salesforce.com does not compete at all, such as ERP (enterprise resource planning) and HCM (human capital management). It took many years for Oracle to develop the most complete ERP suite in the cloud including Fusion Financials, procurement, supply chain, logistics, manufacturing and much, much more. That long effort is now paying off.” In the conference call, Bank of America Merrill Lynch analyst Kash Rangan, discussing the huge database software bulk of Oracle’s business, addressed Ellison by noting that Amazon ( AMZN ) Web Services “wants to go after your business.” “ Microsoft ( MSFT ) just announced a SQL server running on Linux,” Rangan continued, “and everybody seems to be . . . swapping out your Oracle license for their license. Why are they doing this, Larry? Is it just because the industry views Oracle as this big giant that is less flexible with pricing? Is that right, that the industry feels like they need to take you guys on? How should we be thinking of Oracle’s presence in the database market a few years from now, given these threats?” Ellison replied: “Well, our PaaS business grew at 150% this past quarter. I mean, it’s interesting that Microsoft is now offering SQL Server on Linux. But people want Oracle in the cloud. People have a huge investment in Oracle products. I mean, people are coming after us because we are by far the market leader in database. So, of course, Amazon, (if) they’re going to be in the database business too, is coming after us, and of course (if) Microsoft wants to be bigger in the database business, they have to come after us. We’re the biggest player. “We see our customers — literally millions of applications and millions of users of those applications built on top of the Oracle database — wanting to move those applications into the cloud and we do that very well. Our PaaS service is even easier to use and better than Oracle is on-premises.” Or, as Evercore ISI analyst Kirk Materne put it in his Wednesday research note: “With 310,000 on-premises database customers, the company sees an enormous potential TAM (total addressable market), as database customers continue to shift to the cloud.” Workday stock at midday was trading up about 3% near 72 in afternoon trading in the stock market today , 23% off its 52-week high set May 26 at 93.62 and about halfway back from its dive in January and early February to 49.5% below that high mark. Salesforce stock was flat near 73, just 12% off an all-time high 82.90 set Nov. 19. Oracle was up about 1.7% in afternoon trading Friday near 41, just 9% off its 52-week high of 45.24 touched June 17. Oracle stock carries a relatively weak IBD Composite Rating at 56, partly because of its 6% earnings shrinkage and overall 3% revenue slip to $9.01 billion in Q3 — as that fast growth in the cloud pulls sales and profitability away from its own legacy on-premises lines. That cloud revenue only amounted to 8% of Oracle’s total Q3 sales, up from 6% a year earlier. Workday carries a 50 Composite Rating and Salesforce.com stock an 83.    

Microsoft Stock Gets Thumbs Up From Oppenheimer

Microsoft ( MSFT ) received a vote of confidence Thursday from investment bank Oppenheimer & Co., which assumed coverage of the software giant with an outperform rating. Oppenheimer analyst Timothy Horan set a 12- to 18-month price target of 62 on Microsoft stock. Microsoft shares were up more than 1% to near 55 in midday trading on the stock market today . Microsoft gets a 75 Composite Rating from IBD out of a possible 99; the Composite Rating looks at earnings growth, stock price gains and a raft of other factors. Microsoft “is putting the right strategy in place to be at the forefront of the next generation of computing and to defend and grow market share,” Horan said in a report. “Instead of fighting the inevitable shift to the cloud, Microsoft is fully embracing it.” The company is offering enterprise customers a fully integrated hybrid cloud system that connects on-premise hardware and software with Internet cloud services, he said, adding that Microsoft has a competitive advantage through its large installed base of enterprise customers. “Microsoft controls over 90% of the enterprise office suite and about 75% of the enterprise operating system market,” he said. “As workloads shift to the cloud, we believe Microsoft will be successful in bundling in premium (software- and platform-as-a-service) products, enabling it to defend its market share and expand its total addressable market with new product offerings.” Oppenheimer believes that most information technology functions will shift to cloud services by 2020. Horan believes that Microsoft will be able to reach its goal of $20 billion in cloud revenue by fiscal 2018, up from a current annual run rate of $9.4 billion. Microsoft’s major cloud products include Office 365, Azure and Dynamics CRM Online. It competes in cloud computing with Amazon.com ( AMZN ), Alphabet ’s ( GOOGL ) Google, Salesforce.com ( CRM ) and others. RELATED:  Microsoft Azure Cloud Service Seen Turning Profitable This Year

Oracle Gives Analysts Some Fun Watching Cloud Rising, Stock Too

After the hell that many hotshot software stocks have put investors through this young year, Wall Street analysts got a break. “Listening to Oracle ( ORCL ) conference calls is always a hoot,” said Canaccord Genuity analyst Richard Davis in a research note Wednesday, following Oracle’s late-Tuesday Q3  earnings that beat analyst estimates . “In the 16 years we’ve followed this firm, we can’t remember a quarter when management wasn’t wildly bullish. This quarter was no different, with Trump-like phrases like ‘slaughter,’ ‘better and better,’ ‘game over,’ etc. “The good news for our now almost exactly 3-year-old buy rating is that Oracle’s execution has begun to catch up with its verbiage. Indeed, this was the first quarter in four in which Oracle did not scuffle somewhere — bookings, revenues, earnings or whatever. Investors are still jumpy after the January panic, so this means they are flocking to moneymakers like Oracle.” Oracle stock was up 4% in afternoon trading in the stock market today , near 40, and touched an eight-month high. Rivals  Microsoft ( MSFT ), Salesforce.com ( CRM ) and SAP ( SAP ) were up about 1% Wednesday afternoon. Not that Davis was totally giddy: “Should ORCL decisively penetrate the $40 price level, we will declare victory and seriously consider downgrading the stock from today’s buy to a possible hold.” What’s all the fuss? They can visualize Oracle’s cloud-revenue skyrocketing, while traditional database-software sales shrink. Oracle and its traditional enterprise-software customers have faced a tough conversion, but now Oracle is developing serious momentum with its own cloud and hybrid-cloud growth, shepherding the transition of its customers while absorbing the shrinkage of its still-dominant traditional enterprise sales. Oracle Acceleration Seen “With 310,000 on-premise database customers, the company sees an enormous potential TAM (total addressable market), as database customers continue to shift to the cloud,” said Evercore ISI analyst Kirk Materne in a research note Wednesday. “Management also noted that renewal rates were higher than in previous years.” Materne put annual recurring revenue from cloud software-as-a-service (SaaS) and platform-as-a-service (PaaS) sales up 77% in constant currency in Q3, with billings up 32%, “and importantly, this strength is expected to translate into accelerating revenue growth going forward,” he said. In Q3, Oracle said it added 942 new SaaS customers, more than half of which were Oracle Fusion ERP (enterprise resource planning) software subscribers. SaaS clients now total more than 11,000 with more than 2,000 on Fusion, Materne noted. Oracle sold customer experience (CX) SaaS to 465 new customers and 500 existing ones in Q3. Human capital management software was sold to 213 new customers. Oracle’s ERP Cloud attracted 334 new clients, “175 of which did not have an Oracle on-premise app before,” said Materne, for an installed base exceeding 1,800 clients. Still, for all the excitement of watching Oracle’s cloud revenue fly 40% to $735 million in Q3, that only amounted to 8% of Oracle’s total $9.01 billion in sales for the quarter. Revenue fell 3% from the year-earlier quarter. Traditional software revenue slipped to $6.34 billion from $6.64 billion, as the legacy line slipped to 70% from 71% of total revenue. Likewise, legacy hardware sales slipped to $1.13 billion, or 13% of Q3’s total sales, from $1.29 billion, or 14% a year before. “This is obviously a continuation of execution of their pivot toward the cloud pursuit,” Gartner analyst Charles “Chad” Eschinger told IBD via email. “Top line is better than I expected, even with the transition, especially with the increase in margins, where there have been many curmudgeons.”