Oracle surprised analysts on Tuesday when it provided less insight than usual into its growing cloud business in its quarterly earnings statement, and now some analysts are raising concerns.
Cloud represents a growth opportunity for Oracle, which gets much of its revenue by selling software that's meant to run in companies' data centers. The situation is similar at other enterprise software companies, like IBM and Microsoft.
Oracle faces formidable competitors in the cloud — including Amazon, Google and Salesforce — and in the past few quarters, the public has been able to see how fast Oracle's cloud business is growing in different markets. That will be harder to do now, as Oracle stopped specifying revenue for important segments like cloud platform as a service and infrastructure as a service, along with cloud software as a service.
"While we continue to believe the cloud transition is progressing and will be positive for results, we believe that this change frankly does not help investors or the story," Bernstein analysts led by Mark Moerdler wrote in a note to clients on Wednesday. "Software is moving to the cloud, and without explicit, easy to understand, non-changing data, it is going to be difficult for investors to correctly appraise the more valuable recurring Cloud businesses."
Executives did say that Oracle produced $1.7 billion in total cloud revenue in its fiscal fourth quarter. But Stifel analysts led by Brad Reback said in a Tuesday note that they simply couldn't figure out how much software, infrastructure and platform as a service — known as SaaS, IaaS and PaaS — contributed.
"While Oracle's stable maintenance base is a cash cow, we believe the company is rapidly losing share in the most interesting areas (PaaS/IaaS) of infrastructure software," they wrote.
But then again, it's hard to know for sure, because the numbers aren't public anymore.
That reduction was a factor in Piper Jaffray analysts led by Alex Zukin lowering their target multiple for Oracle in their Wednesday note. And Evercore analysts led by Kirk Materne on Wednesday pointed to the move to obscure the SaaS business when they lowered their price target on Oracle stock from $57 to $53.
Taken together, the changes "attempt to shift the narrative away from the cloud," JMP analysts Patrick Walravens and Mathew Spencer said in their Wednesday note.
Oracle traded 7 percent lower on Wednesday.
