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Oracle CEO Mark Hurd On The Acquisition Of NetSuite & Revenue Growth

Oracle CEO Mark Hurd tells Fox Business Network that he expects his company to “grow faster than 2018 and in 2020 I expect the company to grow faster than 2019”

Mark Hurd
Image source: Fox Business News Video Screenshot

In an interview on FOX Business Network’s (FBN) Mornings with Maria (6-9AM/ET), Oracle CEO Mark Hurd told anchor Maria Bartiromo, “I expect 2019 will grow, the company will grow faster than 2018 and in 2020 I expect the company to grow faster than 2019.**Below are highlights from the interview

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Mark Hurd on Oracle previously missing estimates in reported revenue and how he expects the company to grow:

“I don’t know that we have missed estimates, but we haven’t grown as fast as I think people to your point would like, and that’s really because we changed our company. We’ve done a couple things that are probably not all that popular in the sense that we’ve significantly increased our R&D. And we’ve also taken the decision to exit some of our older businesses and invest in the new businesses. Oracle probably over the last two or three years has grown about 3 percent, 3 and change, that’s a constant currency number.  And there’s no business in the company growing at that rate. So what we do is have businesses growing like your ERP back office cloud business growing 70 percent, we have our NetSuite business growing 30 percent, autonomous database is going to grow a gazillion percent. Now at the same time, businesses like our hardware business that we’ve sort of not de-emphasized, we’re very focused on our extradited business, but some of the businesses we acquired in years back were not. Those businesses are climbing 25 and 30. And so the company is a combination of the businesses we’re growing are getting bigger, and the businesses that are shrinking are getting smaller. So as a result, I expect 2019 will grow, the company will grow faster than 2018 and in 2020 I expect the company to grow faster than 2019.”

On the acquisition of NetSuite and revenue growth:

“I mean we’ve invested a lot in the applications market.  We’ve invested in big and small segments of the market, big customers and small customers. We acquired NetSuite, gosh, I don’t know, probably about 2.5 years ago now. And it’s really been an amazing success, to your point there’s, you know, I don’t know, less than 10,000, but roughly that number of customers here for our event. It is very exciting. When we bought NetSuite, Maria, the company was growing about 15, 16 percent in revenue.  We’ve invested a lot in R&D.  We’ve invested a lot in tailoring the application for more industries. We’ve added salespeople. And it’s resulted in just incredible growth, starting really about a year ago, so about a year into the acquisition we began to really grow our bookings and that’s now translated to revenue. So last quarter we reported revenue that was almost double the revenue growth we had coming into the acquisition.”

On the applications market and the companies that are moving from on premise to cloud:

“There’s a couple phenomenon going on at the same time, the applications market is about $125 billion per year, that’s spent primarily on applications.  And you’re exactly right, most of it today is spent on premise applications. That market changes though pretty significantly as it moves to cloud, because as it moves to cloud, the subscription you pay for the cloud includes not only the application, but it includes all the hardware, if you will, the servers, the storage, and so it becomes a bigger market just by the very nature of the migration of the application to SaaS. Now inside that $125 billion, about $70 billion, $75 billion is back office, that would be described as, you know, things like general ledger, accounting and supply chain and procurement and H.R., and the other 25 to 30 percent is front office, more like sales automation and marketing automation. NetSuite is played in the sort of mid-market, smaller customer size of that back office market, and it’s had explosive growth.  And so when you ask who’s moving, it’s really everybody from the biggest guys, whether those be as big as an AT&T on extreme, I could go through many others, to your smallest start up.”

On the database business and the autonomous database:

“I’m very excited about the database business.  The reason you get all of this excitement about the apps business is we’ve been at it longer with this next NexGen product.  And we’re winning.  And it shows up in the numbers, it shows up in the analysts’ reports. And so, people talk about that a lot. In the database business, we’ve released a new product called the autonomous database.  And the autonomous database, how would I give you a good example of that?  It would be like now somebody doing all the work for you. All of that latency, all of that risk of security and concern goes away in one move. And the database is now automatically tuned.  There are millions of database administrators out there tuning Oracle databases as we speak.  The autonomous database will self-tune. This is an iterative process. This is not a onetime gain. This is all driven by artificial intelligence.”

On the economic state of the world and whether customers have the ability or desire to spend money:

“I think the U.S. is good.  I think the U.S. has been solid for a while.  I think the thing we opened up with NetSuite is a great example of the U.S. economy.  Most of NetSuite is sold into small and medium business.  Mostly companies that are domestic and their growth is outstanding.  They are investing. And so, we see strength in the U.S.  We see sort of the same picture you’re describing in Europe.  I think the good news for us is that’s the picture we have seen for a while.  It really isn’t new news to us.  And we see some pretty exciting stuff in Latin America. So, yes we see a little bit different picture of the world depending on terms of where we go.  But we see the U.S. stronger than what we’ve seen in the last few years.  Europe roughly the same, pockets of Asia and Latin America that are quite positive.”

On buying back stock in the company:

“Well we produce a lot of cash as you know, we’ve had choices we have actually increased our dividend while we’ve been buying back stock. And we love the price of our stock at this level.”

On what he is expecting for the economic year:

“I’m still not negative, I’m very positive of the U.S.  I think there are things we could do to make this more and more difficult, but I think when you look at the fundamentals of the U.S., at least to me, they look pretty darn solid. My view of Europe is Europe took a slow path out of this, and they’re getting the results you would expect out of it.  I don’t see a major change in Europe to the negative.”