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Oracle Launches Retail Merchandising Solution Over the Cloud

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Oracle Corporation (ORCL - Free Report) has recently announced the availability of its Oracle Retail Merchandising Solutions over its cloud platform – Oracle Cloud.

The offerings are targeted at helping the retailers drive growth through optimizing mobility, improving customer engagement and enhancing user experience, thereby paving the way for a scalable and flexible business environment.

However, the announcement failed to cheer the investors and the stock declined 0.86% on Tuesday.

We note that, shares of Oracle have underperformed the Zacks Computer – Software industry over the last one year. While the industry gained 21.1%, the stock increased only 8.4%.

The underperformance of the stock could be attributed to the short-term headwinds resulting from the transition to the cloud from its on-premise licensing business model. However, the company’s prospects seem to be looking up and we expect the stock to rebound in the rest of 2017.

Oracle Gaining Traction in SaaS

During the last reported quarter, Oracle’s top-line growth benefited from the ongoing cloud-based momentum. Total cloud revenues (13.6% of total revenue) soared 70.7% to $1.26 billion in the reported quarter.

Cloud software-as-a-service (SaaS) and platform-as-a-service (PaaS) revenues increased a significant 84.6% year over year to $1.08 billion, which was within the management’s guided range of 82–86%.

Oracle continues to gain traction on its cloud endeavors. Specifically, the company’s offerings in SaaS and PaaS have gained significant momentum in the past few quarters, which improves its competitive position.

The company is gradually shifting its focus on a subscription-based business model from its earlier licensing based business model. This is because it offers the scope to have a recurring revenue stream which augurs well for the company in the long run.

Per an IDC report, the SaaS market is expected to surge over $112.8 billion by 2019, which is currently growing at a CAGR of 18.3%. Given the gargantuan growth prospects the sector has to offer, competition is intensifying.

Currently, the enterprise SaaS landscape is being dominated by salesforce.com (CRM - Free Report) , followed by Microsoft (MSFT - Free Report) , Adobe (ADBE - Free Report) and SAP SE. However, with Oracle’s gradual transition from licensing to the cloud, the company looks poised to take on the competition head on and carve a niche in the space in the coming years. 

Zacks Rank

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

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