Oracle Rises as Q3 Results Beat Street, Adds $10 Billion to Share Buyback Program

Shares of the software giant Oracle rose by more than 4 percent in after-hours trading after its third-quarter results were slightly ahead of estimates while revenue was slightly short of estimates because of the effect of currency exchange rates.

Oracle posted per-share earnings of 64 cents versus the 62 cents analysts had expected. Revenue at $9 billion was about $120 million shy of consensus, falling 3 percent, though after backing out the effect from the strong U.S. dollar, the company said revenue would have risen by 1 percent.

Revenue from cloud services — both software as a service and a computing platform as a service — rose 57 percent year on year to reach $583 million, or 61 percent on a constant currency basis. Cloud infrastructure sales at $152 million were down slightly, but would have risen without the effect of currencies.

Sales of old-school on-premise software fell 4 percent to $6.3 billion and would have been flat year on year without the currencies.

In a statement, CEO Safra Catz said the accelerating growth in Oracle’s still relatively new cloud business pushed its gross margin to 51 percent, up from 43 percent in the prior year. The target, she said, is 80 percent. “Our cloud business is now in a hyper-growth phase,” she said.

CEO Mark Hurd said that deferred revenue — essentially money that has been paid in advance for cloud software services that under accounting rules can’t yet be counted as official revenue — in Oracle’s cloud business units is growing faster than other cloud-native rivals Salesforce.com and Workday. He said Oracle landed 942 new customers for its software-as-a-service offerings during the quarter, bringing the total to about 11,000.

Oracle has been touting its cloud-based offerings for a while as customers have shifted their buying habits away from traditional software that is installed on equipment the customer owns. Last quarter, founder and CTO Larry Ellison said the cloud business — software sold as a service as well as a computing platform also sold as a service — was on track to reach a combined $1.5 billion in revenue this fiscal year.

That goal appears to have been reached as of this quarter with one more quarter yet to go: Revenue for software and platform sold as a service was $1.52 billion for the nine-month period ended Feb. 29.

Ellison used the occasion to take further digs at Salesforce.com, a rival regularly cast as the villain in Oracle earnings reports. Oracle, he said in a statement, is on its way to overtaking Salesforce as the largest vendor of software-as-a-service in the world. “We are growing much faster than Salesforce.com, and we also have many more SaaS products than Salesforce.com,” he said.

The company also announced that it has added $10 billion to its current share buyback program.

Shares rose to $40.35 after closing at $38.74 during the regular session.

This article originally appeared on Recode.net.