Oracle Q3, 2020-21: Revenue growth of 3% backdrop to Ellison attack on SAP

Oracle Corporation has announced third-quarter 2020-21 revenue of $10.1bn, up 3% on the same quarter last year. The supplier declared an operating profit of $3.9bn, up 10% on last year.

CEO Safra Catz said in the earnings release: “We continued to extend our huge lead in the cloud ERP market as Fusion ERP grew 30% and NetSuite ERP grew 24%.”

Larry Ellison, chairman and CTO, added: “Oracle’s Gen2 Cloud Infrastructure business added customers, and grew revenue at a rate in excess of 100%.

“On the applications front, analysts continue to rank Oracle the clear number one in cloud ERP, and this quarter, Oracle signed contracts totalling hundreds of millions of dollars to migrate several more large companies from SAP ERP to Oracle Fusion ERP.”

In the financial analyst call linked to the earnings release, Ellison went into more detail about Oracle’s customer wins from SAP. As transcribed by financial results website Seeking Alpha, he presented a list of “over 100 companies and government agencies that have already moved from SAP ERP to Fusion ERP, or are currently in the process of doing so”.

Among the companies Ellison listed on the call were UK company “G4S plc security services firm, the world’s largest security company by revenue, complete replacement of SAP R/3 with Oracle ERP and Oracle HCM” and “West Sussex County Council, a complete SAP replacement with Oracle ERP, Oracle HCM and Oracle EPM. ERP now, HCM, EPM is Oracle Enterprise Performance Management, complete wall-to-wall Oracle at West Sussex County Council, no more SAP”.

He also cited Birmingham City Council, “complete SAP replacement using Oracle ERP, Oracle HCM. They are the biggest city council in the UK”. 

In UK financial services, Ellison listed “NatWest Group, NatWest Group includes NatWest, ABN AMRO, Royal Bank of Scotland, Ulster Bank and more. They had a combination of Oracle ERP and SAP ERP. They’re replacing out all of the SAP ERP and standardising on Oracle Fusion in the cloud”.

On the call, and in response to an analyst question, Ellison stated the customary Oracle case for why it believes it is ahead of SAP in cloud ERP: “SAP chose not to rewrite their ERP products. Instead, they made a bunch of acquisitions. They bought Concur, they bought Ariba, they bought SuccessFactors. But we rewrote everything for the cloud. SAP instead, embedded their own database called Hana and focused on this new database and never really rewrote their ERP code for the cloud. SAP really is more responsible for our leadership position than we are.”

Elsewhere in the results, the supplier said its Oracle Gen2 Cloud Infrastructure, including its “Autonomous Database” revenue, was up more than 100% year on year.

Cloud services and licence support revenues were $7.252bn, compared with $6.93bn in fiscal year 2019-20, an increase of 4.6%.

Some 53.8% of its Q3 revenue was from the Americas, 29.5% from EMEA and 16.7% from the Asia-Pacific Japan region. SAP’s revenue is more geographically even, with the Americas at 41%, EMEA in the lead at 44%, and Asia-Pacific Japan 15%, according to its full-year 2020 filing with the US Securities and Exchange Commission.

In the release, Oracle cited some “technical innovations”, including its “Oracle Roving Edge Infrastructure” and Oracle Database 21c, said to have more than 200 new features.