Oracle CTO Ellison: Watch Out Salesforce, We're On Track To Be A $1 Billion Cloud Vendor

Oracle CTO (and former CEO) Larry Ellison once famously trashed the term "cloud computing" as redundant and vague, but now he sounds like he's had a big change of heart.

On Oracle's fiscal second quarter earnings call Wednesday, Ellison said his company booked $170 million in new SaaS and PaaS subscriptions during the quarter, and expects that figure to jump to $250 million by the end of its fiscal year next May.

In Oracle's 2016 fiscal year, which starts next June, the Redwood Shores, Calif.-based vendor is on track to sell "well in excess" of $1 billion in new, annual cloud subscriptions, according to Ellison.

"As our cloud business gets bigger, our growth rate is going up," Ellison said on the call.

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This could pose problems for cloud rivals like and Workday, which aren't growing nearly as fast as Oracle, said Ellison. "We're catching up with them, and catching up very quickly," he said on the call.

[Related: Cisco Jumps Into Big Data Software, Chambers Says Its Tech Is Best For Businesses]

During Oracle's second quarter ended Nov. 30, cloud revenue grew 47 percent year-over-year. For its current quarter, which ends Feb. 28, Oracle is expecting cloud IaaS revenue to grow 29 percent to 33 percent, and SaaS and PaaS revenue to grow 30 percent to 34 percent.

Based on current growth rates, Oracle is well positioned to take over the top spot from in the SaaS market, said Ellison.

"Salesforce is slowing down ... we're growing faster and have a lot more products, and we have a larger install base to sell into," Ellison said during a Q&A session with financial analysts on the call. "We're going to be by far the leading SaaS vendor in the cloud."

One Oracle partner told CRN he's confused about Ellison's cloud projections because most of his customers aren't interested in Oracle's SaaS and PaaS offerings, at least at this stage.

If Oracle is to reach the $1 billion target, it's going to have to dramatically alter its compensation plan to reward its core sales force for selling cloud, which isn't currently the case, the source said.

One reason Oracle is so optimistic is because its customers are often buying SaaS, PaaS and IaaS together in deals.

Oracle co-CEO Mark Hurd said Oracle had 860 new SaaS customers during the quarter, and 230 of them subscribed to more than one of its ERP, sales and marketing, and human resources apps.

Hurd said it was also a breakout quarter for Oracle's PaaS business, which launched in September and now has 150 customers, 34 of which bought multiple PaaS services.

Oracle thinks PaaS will be as big, or bigger, than its SaaS business, Ellison said. Oracle is pushing PaaS more than IaaS because that's where it has the most differentiation from competitors, offering things like database tuning, backup and security, he added.

For Oracle's second quarter, revenue grew 3 percent year-over-year to $9.6 billion and net income was $250 million, roughly flat compared to last year's quarter.

Excluding items, Oracle reported earnings of 69 cents per share, one cent more than Wall Street analysts' consensus.

Oracle shares rose nearly 5 percent to $43.15 in Thursday after-hours trading.