Oracle reports sales dip as enterprise software spend slows

The outlook is led by clients in the hospitality and retail sectors suffering huge hits due to the ongoing pandemic.
17 June 2020

Oracle revenue decline due to pandemic-induced factors. Source: AFP

  • Oracle has reported revenue declines, led by pandemic-induced order delays
  • The software company predicts a 1% gain to a 1% decline year-over-year, ending in August
  • A surge in cloud infrastructure is expected as companies seek solutions to establish teleworking conditions 

Software giant Oracle revealed stagnant revenue in the current quarter as clients from the hospitality and retail sectors suffer from a massive hit due to the ongoing pandemic. 

“As the quarter progressed, we saw a drop-off in deals, especially in the industries most affected by the pandemic,” CEO Safra Catz said on a conference call on Tuesday.

Catz added sales would fall in a range of 1% gain to a 1% decline year-over-year during this period, coming to an end in August. Based on data compiled by Bloomberg, the midpoint of no revenue is in line with analyst estimations. 

The legacy software company has been fighting to remake itself as an internet-based company, better positioning themselves against key players like Amazon, Microsoft, and others who are already ahead in the cloud-driven market. 

Oracle saw its cloud license and on-premise license sales fall by 22%, down to US$1.96 billion in the period ended May 31, indicating a lower number of sales. Since the company’s software for managing organizational data, corporate finances, employees, and customers require extensive setup time and power, many companies have ceased pursuing new products amid the pandemic. 

Instead, the software giant has witnessed a transition in organizational behavior with the majority of companies were grappling to help their employees adapt to teleworking. 

An analyst at Neuberger Berman and long-term Oracle investor, Hari Srinivasan, told Bloomberg“We were expecting a decline because although Oracle’s products are important for enterprises, that’s not where the spending is. Most companies are spending on getting employees working from home and the cloud.”

This is reflected in the company’s revenue from cloud-based accounting and financial planning solutions, as an increase of 32% was noted in the quarter from a year earlier. Software for managing employees experienced a climb of 27% as well.

Without a doubt, most companies are focused on getting cloud-based solutions that will enable employees to work from home. 

The practice of remote working is more pervasive as we see tech titans such as Twitter, Facebook offering permanent work from home policies, and even highly regulated industries like banking had to shift with teleworking practices to curb the pandemic spread. 

Companies are prioritizing solutions that can help work forces settle in for the normality of teleworking, marking a new dawn for organizations across industries to adapt and thrive using cloud-based solutions. 

In a bid to meet the needs of the current climate and to keep pace with their cloud competitors, Oracle has leveraged the affordability of its cloud infrastructure to its advantage. The software giant secured a win when they sealed deals with emerging video conferencing companies ⁠— Zoom and 8×8. With these new cloud businesses, Oracle is supporting millions of online calls on Zoom and 8×8 daily.