On Wednesday, The ORACLE-BASE blog, which is a non-affiliated blog written by an Oracle Corporation (NYSE:ORCL) industry guru for the past 17 years, posted that the Oracle 12cR2 (12.2) database is now available on-premise. Recall Oracle first introduced the general availability of the 12c database on 7/1/2013, which boasts of a number of advancements over the prior Oracle database (11g) including multi-tenancy and in-memory architectures. However, many organizations typically wait until version 2 of a new database comes to market, in order for the product to be hardened and more fully mature. Oracle did just that this past November, when the 12cR2 database was made generally available, however, only on the Oracle Cloud.
As the blog points out, users can now download 12cR2 for Linux x86-64, Oracle Solaris (SPARC systems, 64-bit), and Oracle Solaris (x86 systems, 64-bit) configurations. While Stifel is unaware of any Oracle press release officially announcing the news, the firm does not necessarily expect to see one given Oracle's cloud push along with its intentional staging of new database functionality in cloud, followed by on-prem availability trailing by several months.
Stifel views this as an incremental development, given the relative immaturity of the cloud database market along with Oracle's massive on-premise installed base who may not be ready to shift the cloud but may want to take advantage of the latest and greatest that 12cR2 offers. That said, the firm does not expect this on-prem release to have a noticeable impact on overall license growth rates which it expects to remain in the double digit decline range.
More broadly, Stifel continues to believe Oracle remains in transition and acknowledge sentiment remains quite mixed, especially around the impact of the shift to the cloud to the top-line, margins, and cap-ex as well as uncertainty around the database more broadly. That said, Stifel believes current valuation (13x CY18E EV/FCF; 7% FCF yield) reflects this and think the stock can see modest multiple expansion in coming quarters as Oracle delivers on its top-line/margin targets, sees increasing traction with PaaS, and investors gain more clarity on the trajectory of cap-ex and FCF growth.
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