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Oracle at OpenWorld: Autonomous Database & Cloud in Focus

Zacks Equity Research

Oracle ORCL recently announced a slew of software updates on operating system and automated database at OpenWorld 2019, in an effort to enhance its position in cloud computing market.

The company introduced cloud-based automated OS, Oracle Autonomous Linux. The company claims that the latest OS and Oracle OS Management Service eliminate human error and complexity to empower customers with data security in a cost-effective and time efficient manner. Moreover, the new OS requires no downtime for updates.

These features are expected to aid customers in reduction of total cost of ownership or TCO by 30%-50% over five years compared with other cloud vendors. This is expected to aid adoption from digitally transforming clientele looking to gain from infused AI and ML capabilities of the new OS, which in turn will boost revenues in the days ahead.

Latest Developments Holds Promise

Oracle unveiled new cloud security services including Cloud Guard, Data Safe, and Maximum Security Zones. The latest services enable automation of cloud workloads and protect data from cyber risks.

Notably, the company announced that Oracle Cloud Infrastructure has secured FedRAMP Authorization. It is expected to aid the company in expanding clientele comprising U.S. Government based agencies.

Additionally, the company intends to introduce 20 new Oracle Cloud regions by 2020. The company is also focused on expanding interconnect cloud and government regions in collaboration with Microsoft MSFT Azure, which in turn is anticipated to strengthen its presence in cloud market.

The company also announced availability of Java SE 13 (or JDK 13) integrated with robust capabilities in a bid to provide software developers with an industry standard architecture.

Oracle rolled out new “Always Free” services to enable users capitalize on the robust functionalities, including ML, AI and other developer tools, of Oracle Cloud Infrastructure and Oracle Autonomous Database.

The company also launched Oracle Exadata Database Machine X8M, which is based on remote direct memory access over Converged Ethernet (RoCE) technology and utilizes Intel’s INTC Optane DC Persistent Memory modules. With the new platform, Oracle aims to aid customers to leverage Exadata Cloud in their own data center.

The latest product roll outs are expected to aid the company strengthen competitive position in the cloud market, currently dominated by Amazon’s AMZN AWS.

Robust Adoption Favors Growth Prospects

Oracle’s Autonomous Database supported by AI and ML, is gaining traction. Companies including MESTEC Limited, JASCI Software, SKY Brasil, Viscosity, among others, are benefiting from robust database management capabilities of the latest platform.

Increasing utilization of data analytics and SaaS solutions is expected to boost adoption of Oracle’s new services. In fact, per Gartner, 75% of all databases will be migrated to or deployed on a cloud platform by 2022.

The company is making every effort to enhance functionalities of cloud-based database applications, which is encouraging adoption.

These initiatives are expected to benefit the top line and provide the company an edge in the Database-as-a-Service market. Notably, per Market Research Future as revealed by Reuters, global cloud database market is envisioned to hit $21.66 billion at a CAGR of 46.78% between 2018 and 2023.

Oracle Corporation Revenue (Quarterly)

 

Oracle Corporation Revenue (Quarterly)
Oracle Corporation Revenue (Quarterly)

Oracle Corporation revenue-quarterly | Oracle Corporation Quote

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The recently unveiled enhancements are expected to bolster the customer base further. In the last reported quarter, Oracle added around 500 new Autonomous Database cloud customers. Management expects the count to grow more than twofold in fiscal second quarter. This is expected to be a key catalyst.

However, increasing expenditure on product enhancements is likely to weigh on margin expansion at least in the near term.

Zacks Rank

Currently, Oracle carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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