Oracle (ORCL 45.85, +2.80) has spiked 6.5% in pre-market after beating earnings expectations and raising its quarterly dividend 27.0% to $0.19 per share.
The software giant reported above-consensus third quarter earnings of $0.69 per share on a 2.9% year-over-year increase in revenue to $9.27 billion, which was just ahead of market expectations.
Oracle's revenue growth rate was the strongest since the company's sales grew 3.5% during the second quarter of 2014. The company's ongoing shift towards cloud-based offerings has proceeded well with Cloud Software as a Service and Platform as a Service revenues growing 85.0% year-over-year to $1.10 billion.
The strong growth in the company's cloud business helped SaaS and PaaS gross margin surge to 65.0% from 51.0% one year ago. The company noted that its third quarter sales of SaaS and PaaS exceeded those of Salesforce.com (CRM 83.75, +0.27).
With the cloud platform firing on all cylinders, Oracle is now looking to boost the adoption of its Infrastructure as a Service business, which claims to be faster and cheaper than Amazon Web Services. However, this business is still a small contributor to overall revenue. During the third quarter, Infrastructure as a Service revenue grew 17.0% to $178 million, accounting for 2.0% of total revenue. Total cloud revenues including Infrastructure as a Service increased 62.0% to $1.20 billion.
Looking ahead, the company expects to generate fourth quarter revenue between $10.48 billion and $10.82 billion, which is roughly in line with current market expectations. Oracle expects earnings between $0.78 and $0.82 per share, which is ahead of analysts' estimates.