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Oracle (ORCL) Opens First Cloud Region in Spain With Telefonica

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Oracle (ORCL - Free Report) has opened its first Oracle Cloud Infrastructure (OCI) region in Spain and the seventh in the European Union to help meet the demand for enterprise cloud services from local businesses and public institutions.

The multinational's strategy is to reach customers exactly where they are located, allowing them to keep data and services where they need them. Users can deploy Oracle Cloud entirely within their data centers with Dedicated Region and ExdataCloud@Customer, allowing them to implement local cloud services with public cloud-based management.

The Madrid OCI will offer over 100 services, including the converged database capabilities of Oracle MySQL HeatWave and Oracle Autonomous Database, to give organizations in Spain the ability to improve IT and operational efficiency while building and deploying cloud-native applications.

Telefonica will be providing infrastructure services for Oracle’s Madrid cloud region. The agreement with Telefónica is part of a broader alliance between the two companies to offer cloud services worldwide. Together they will offer PaaS (Platform as a Service) and applications to their clients. OCI services will be included in Telefonica Tech’s portfolio of managed cloud services.

Other launch partners for the new region include supermarket chain Dia Group, financial services group BBVA, Capgemini, Grupo Eulen and Barcelona Health Hub, among others.

The new OCI region joins Milan, Frankfurt, Amsterdam, Zurich, Marseille and Stockholm, offering a wide range of cloud services to enable companies to modernize their applications, better innovate with data and analytics and migrate workloads to the data giant’s cloud.

The company reiterated its target of powering all its global cloud regions with 100% renewable energy by 2025, adding that the new Madrid region is already running on 100% renewables. It also confirmed that new sovereign cloud regions for the EU in Spain and Germany would follow in 2023.

Is Oracle's Cloud Strategy Headed in the Right Direction?

Oracle is striving hard to strengthen its position in the lucrative cloud space. Oracle shares have declined 12.8% in the year-to-date period compared with the Zacks Computer - Software industry’s decline of 22.9%.

Oracle is benefiting from the ongoing momentum across its cloud business, driven by the strong uptake of Oracle Cloud Infrastructure services and Autonomous Database offerings. The solid adoption of cloud-based applications, comprising NetSuite Enterprise Resource Planning (ERP), Fusion ERP and Fusion Human Capital Management (HCM), bodes well. Solid demand for the Oracle Dedicated Region Cloud@Customer is anticipated to drive the top line.

In first-quarter 2023, Oracle's total quarterly revenues were up 18% year over year, largely due to a 14% increase in cloud services and license support subscriptions. Total cloud services and license revenues for the quarter hit $8.4 billion — driven by Oracle Fusion Cloud, Oracle Autonomous Database and OCI Gen 2.

This Zacks Rank #3 (Hold) company completed the nearly $30 billion acquisition of Cerner, an electronic health record provider, in June. Cerner contributed $1.4 billion to Oracle's total first-quarter fiscal 2023 revenues. Oracle will continue to see earnings growth from that acquisition in the coming quarters as it fully integrates Cerner's technology and develops an all-new suite of healthcare cloud services. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Partnerships with Accenture, Microsoft (MSFT - Free Report) and VMware (VMW - Free Report) are helping Oracle win new clientele. The company’s share buybacks and dividend policy are noteworthy.

Last quarter, Microsoft and Oracle delivered a high-speed interconnection between Azure and Oracle's cloud to give Azure customers direct access to Oracle databases.

Multi-cloud interoperability is a major contributor to the growth of Oracle Database and Oracle's MySQL HeatWave database. In the first quarter, Oracle expanded its relationship with Microsoft by providing all versions of Oracle Database directly to Azure users. Microsoft users can directly access every Oracle Database version, including Oracle Exadata Cloud Service and Oracle Autonomous Database, directly from Azure.

Amazon (AMZN - Free Report) cloud customers can also directly access Oracle's MySQL HeatWave database running in AWS. This enables AWS users to run transaction processing, real-time analytics and machine learning on the single unified MySQL service.

Oracle’s partnership with VMware for Oracle Cloud VMware Solution has been gaining prominence, which is expected to have aided customer growth in the to-be-reported quarter. The solution has gained popularity among leading enterprises in retail, telecommunication, finance and banking, manufacturing, government and others.

The company’s higher spending on product enhancements, especially on the cloud platform, amid increasing competition is likely to limit margin expansion in the near term.

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