Database leader Oracle Corp. is the world’s second largest software company in the multi-billion dollar software development market with revenues in excess of $38 billion and a market capitalization over $180 billion. The company competes with other large cap software development companies such as SAP, IBM and Microsoft and also with pure-play cloud companies such as Salesforce.com.
Oracle provides both on-premise and on-demand deployments of enterprise-grade software applications covering the ERP, CRM, SCM, BI and HCM domains. Last fiscal year (ended May 2014), Oracle reported software and software support revenues of over $29 billion. Additionally, gross margins in FY14 for its software division stood at 95.8% making it an extremely important and highly profitable division for the company. New software license sales stood at $11 billion in FY14 while software license update and support revenues held a larger share, posting over $18 billion in revenues.
Below, we take a brief look at various key trends that are shaping the performance of Oracle’s software division. We have a Trefis price estimate of $48 for Oracle compared to its current market price of $41.