One of the most competitive, publicized, and future-facing in the market revolves around data, and what to do with it. One acronym that has been put out there is MAD, or Machine Learning, Artificial Intelligence, and Data Infrastructure. This industry revolves around storing, accessing, and analyzing the endless amount of data that is now being generated by nearly all entities around the world. Due to the sheer size and relatively young age of the industry, there are not many public companies that exist, but the ones that target this industry are fierce competitors.
For this analysis, I will use the twelve companies outlined in a recently published Houlihan Lokey insight report on the industry. They cover just a tiny fraction of the entire market, but are keenly focused MAD. Remember, names like Amazon’s AWS (AMZN), Microsoft’s Azure (MSFT), and Google’s Cloud (GOOG) are all major entities in the field as well, but the investments are far broader in scope. However, Oracle (NYSE:ORCL) now fits the bill as the best investment for wide exposure to the industry.
While there are certainly merits to diversification of your investments, this article will instead focus directly on the industry. Feel free to discuss your other favorite public, or still private, companies in the comments. I, for one, am waiting for the MariaDB IPO (POND). Anyway, the companies are as follows, in ascending EV/2022E Sales multiple:
Sumo Logic (SUMO)
As you can see, the list of companies are all quite different in terms of size, valuation, growth, and capabilities. Some are focused on the data side of the equation, while others focus on the analytics and visualization. However, Oracle is one of the most diversified entities across the sector with capabilities in providing data management services, integrated software suites (so users can access the many other companies in the industry), search analytics, and nearly every area. The image below highlights just simple coverage of the complex industry, and I highlighted the companies this research will address.
While we could spend weeks discussing the qualitative intricacies of every company and how they have the potential for further value, we can see there are some patterns that are noticeable from financial statements. Recently, valuations in the industry were primarily determined by revenue growth and outlook, although the effect is lessening in 2022. As in the two charts below, we can see that ultra-growth peer Snowflake continues to hold on to the highest EV/Sales multiple, but 40% revenue growth rate Alteryx is closing in on the same valuation as Oracle who is expected to have 10% growth in 2022.
The data is clear, investors are now applying increased valuation to companies with high profitability as economic uncertainty weighs on the outlook of unprofitable companies. This change in valuation leadership, led by Oracle, is one of the key factors that allow Oracle to remain the best choice moving into far weaker economic conditions over the coming quarters or years. However, it is important to note that other fairly profitable firms such as Teradata, Palantir, Splunk, or Informatica, may seem to offer a better growth to value proposition, but I will highlight how that may be a mistake to rely on.
The tradeoff between growth and profitability is a difficult area to tread, and management in the past have had to choose either one or the other. Then, starting the mid-part of the 2010s, investors began using a new metric to value companies: the Rule of 40. I am sure my readers are familiar with this modern metric, but I will provide a summary by the consultants Bain:
The Rule of 40—the principle that a software company’s combined growth rate and profit margin should exceed 40%—has gained momentum as a high-level gauge of performance for software businesses in accurate years, especially in the realms of venture capital and growth equity. Increasingly, software industry executives are embracing the Rule of 40 as an important metric to help measure the trade-offs of balancing growth and profitability.
Management at software firms are now able to prove to investors that there is some value in low profitability, as long as growth is elevated enough. Although, growth rates can change in a flash and lead to sharp declines in valuation. At the same time, slow growers like Oracle can also meet the rule but offer far less volatility.
The two charts below highlight the power of the Rule of 40 when measured for our select group of companies. When valuing the group from only a revenue growth to value standpoint, Oracle looks extremely weak, but when looking from the Rule of 40, Oracle is the clear winner. Perhaps a bargain for the price. The only other companies meeting the Rule of 40 are Snowflake, Alteryx, and Palantir, so we will now narrow our focus moving forward.
The above charts are quite interesting because they allow investors to easily assess relative valuations. In the case of Snowflake, they may beat the Rule of 40, but fail to provide a reason to support a 4- to 5-fold increase in valuation compared to the other peers who meet the Rule of 40. This is important because apart from business growth, valuation will play an important role in the future returns. As Snowflake is not yet profitable, any slowdown in growth will cause them to no longer pass the rule, and this is quite possible as shown in data provided by Bain.
As stated, it is hard for a company to revive growth to high levels, and it is unknown whether Snowflake can increase profitability in-turn. Therefore, I believe that while Snowflake does dominate the industry, offers a compelling package and opportunity, and is growing at a supremely fast rate, the current valuation leaves little room for weak economic conditions.
For Oracle, the Rule of 40 has provided significant returns for investors even as growth is nearly flat over the past decade. Slow and steady wins the race, and Oracle is slightly less expensive right now than their historical average valuation. As such, the opportunity is clear, despite continued worries about growth or competition. For others such as Alteryx and Palantir, the story is a bit less clear as AYX faces volatile growth and Palantir faces intense scrutiny by the market. However, both of their opportunities may be greater than Snow due to the current valuations.
To conclude, I will highlight the primary reason why Oracle may continue their dominance moving forward: profitability is the key to mature growth. There are multiple issues that excess profitability can solve, including R&D spending, bolt-on acquisitions, and investing in shareholder returns. Some accurate examples include the development of MySQL to out-compete Amazon Redshift/Aurora and Snowflake, while at the same time being integrated into AWS. Also, there was the acquisition of Cerner to expand further into healthcare data services.
After that there is still plenty of money being put into dividends and share buybacks, one of the reasons for the strong price performance over the past decade, regardless of revenue growth. Will Snowflake be able to survive the same weakness? Just look at the price chart of Splunk to see what high revenue growth (30%+ per year CAGR), but perpetually falling valuation can result for shareholders.
As the market continues to expect pain moving forward, I believe that extremely profitable Oracle will be able to survive. More speculative and overvalued names such as Snowflake may have inertia, but will face severe drops in valuation if growth slows down slightly. As such, I suppose investors will fare better accumulating Oracle over time, and if the weight in your portfolio gets high enough, use your profits to take a gamble on a speculative name, but when the opportunity looks far more favorable than right now.
Depending on how things turn out over the next few months, perhaps speculative names are beat up enough to find some value, but keeping money in a more safe option like Oracle until then may be best. I hope this article highlights the opportunity, but the decisions remain with you.
Thanks for reading. Feel free to share your insights below.
Safra Catz is feeling feisty, and for good reason. Over the past few years, the Oracle CEO has engineered an impressive turnaround at the enterprise software giant, which has bet the future of the company on cloud computing.
As we outlined in a Barron’s cover story in February 2021, Oracle (ticker: ORCL) is using the cloud to drive new growth in the company’s application and database software businesses, while also moving to take on the three giants in the public cloud— Amazon.com (AMZN) Amazon Web Services, or AWS, Microsoft (MSFT) Azure, and Alphabet (GOOGL) Google Cloud. Oracle is getting traction on all fronts, and it’s driving growth rates the company hasn’t seen in more than a decade.
DUBAI, United Arab Emirates—Petrofac, one of the world’s leading energy services providers, has implemented Oracle Fusion Cloud Applications Suite to enhance its operations and support the company’s ongoing expansion. Oracle Fusion Cloud Enterprise Resource Planning (ERP), Oracle Fusion Cloud Enterprise Management Planning (EPM), and Oracle Fusion Cloud Human Capital Management (HCM) will help Petrofac integrate core business processes across its global operations, generate real-time insights, and better support its growing workforce. Petrofac has implemented Oracle ERP Cloud for its Asset Solutions business unit with deployment underway for the company’s Engineering and Construction business unit.
With offices in 29 countries, Petrofac’s portfolio spans the design, construction, maintenance and optimisation of oil, gas, petrochemical, new and renewable energy infrastructure. Petrofac needed to automate and streamline its key business processes across all verticals, manage resources more effectively, and better align the business behind its expansion plans.
“In an evolving market environment, we needed more adaptability and resilience while continuing to innovate and serve our customers,” said George Eapen, Group Chief Information Officer, Petrofac. “Oracle Fusion Applications gives us real-time access to critical data, enabling us to increase efficiency, manage and reduce risk, build an adaptable and resilient supply chain, and Improve our employee experience.”
With Oracle Fusion Applications, Petrofac can connect operational data across its HR, sales, finance, and procurement functions to Improve management insights, accelerate decision-making, and realize a faster time to value. Moving business processes to Oracle Fusion Applications will also help the company eliminate manual processes, enhance supplier communications, boost transparency, and create a single user experience and data model.
“The energy sector is experiencing change at a rapid pace as advancements in technology pave the way for the future of clean energy,” said Leopoldo Boado Lama, senior vice president, Business Applications, ECEMEA, Oracle. “By leveraging Oracle Fusion Applications, Petrofac can gain valuable business insights and accurately forecast revenues to make better decisions, while gaining a competitive advantage with the latest innovations and emerging technologies.”
Over 11,000 organizations turn to Oracle Cloud ERP and Oracle Cloud HCM applications to run their businesses. Oracle Cloud ERP offers a comprehensive set of enterprise finance and operations capabilities, including financials, accounting hub, procurement, project management, enterprise performance management, risk management, subscription management, and supply chain management & manufacturing. Oracle Cloud HCM delivers market leading capabilities for human resources, talent management, workforce management, payroll, and the award winning employee experience platform, Oracle ME. Oracle Fusion Applications’ self-updating platform provides customers with the industry’s most advanced technologies every 90 days, giving organizations the ability to build, innovate, automate, adapt, and leverage new business opportunities on-demand.
The Oracle Fusion Applications implementation with Petrofac is being managed by Oracle Consulting.
Oracle offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. For more information about Oracle (NYSE: ORCL), please visit us at oracle.com
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Senior Director, Corporate Communications, Middle East & Africa
Offering helps organizations with accelerated, risk averse transformations by providing access to Oracle products, implement and support for a predictable monthly fee
NEW YORK, Oct. 10, 2022 /PRNewswire/ -- Deloitte today announced the launch of its Oracle MyCloud ERP offering that can help fast growth and private clients accelerate business transformation enabled by Oracle's modern integrated SaaS Cloud platform. Backed by Deloitte's proprietary industry accelerators and methodologies, the offering helps organizations to get up and running quickly on an Oracle Cloud platform while eliminating the barriers of talent constraints and high upfront costs, which are often associated with ERP implementations. The bundled subscription offering allows organizations to access Oracle Cloud products as well as Deloitte implementation and support services for a consistent monthly fee. This enables companies that are focused on growth to manage their cash flows and to continue to allocate their limited time and resources toward expansive activities.
"We are pleased to have the opportunity to use Deloitte intellectual property and knowledge to serve growth and private clients as they scale and drive their businesses forward. This offering demonstrates our commitment to this market and our desire to assist the leaders of tomorrow," said John Steele, U.S. Oracle offering leader and principal, Deloitte Consulting LLP.
For those interested in exploring Cloud ERP™ further, the starting place is a TruNorth Assessment. A quick, collaborative and effective approach that takes approximately three weeks. Deloitte helps prospects to envision the desired future state, identify transformation opportunities, and develop strategies and roadmaps for the journey.
Experience Deloitte's MyCloud firsthand
Deloitte is pleased to be the Global Sponsor of Oracle CloudWorld in Las Vegas, Oct. 17-20, 2022. This new global conference will bring people together to share ideas, develop in-demand skills and learn about cloud infrastructure and applications. Connect with Deloitte professionals at the CloudWorld Hub and attend a theatre presentation on MyCloud ERP enabled by Oracle Cloud.
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world's most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today's marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte's approximately 415,000 people worldwide connect for impact at www.deloitte.com.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.
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SOURCE Deloitte Consulting LLP
Officials pose for a photograph.
To enhance and effectiveness of government financial work systems besides achieving the sustainability of financial resources and developing them efficiently and effectively using the latest smart technology systems, the Department of Finance, Ajman signed an agreement with Raya Gulf.
The private firm will develop the resources management system being employed by the government of Ajman and transition them to Oracle cloud applications.
This aligns with the department’s efforts to achieve the emirate’s strategic objectives of raising the efficiency and effectiveness of government financial work systems as well as achieving the sustainability of financial resources and developing them efficiently and effectively using the latest smart technology systems.
This agreement also consolidates the commitment of Ajman’s Department of Finance to adopt innovative technologies to support the emirate’s digital transformation and Improve its operations and services, in line with the vision and directives of Ajman’s wise leadership.
The transition to cloud applications enables the integration of supply chain, finance, and human resources procedures on one unified platform in accordance with the best global standards and systems applied in this field. It also allows users to manage all the relevant data and transactions clearly, efficiently and flexibly within a short time.
The department had also signed an agreement in June with Oracle, which specialises in cloud applications and electronic infrastructures, to establish the mentioned cloud management system.
Sahar Al Tunaiji, director of the financial applications section at the Department of Finance, indicated that the department is consistently working to provide innovative, proactive services to meet the needs of customers from government agencies and exceed their expectations. The department seeks to do so by employing the latest technologies in the field of business management, facilitating the provision of services and simplifying procedures as much as possible to Improve the quality and efficiency of the offered services.
Abdul Ghaffar Al Khaja, director of government accounts at the Department of Finance, said: “We are working at the department to build and equip an infrastructure that would meet our strategic objectives and enable us to develop our technological capabilities to ensure the sustainability of operations and institutional performance. As such, we are keen to establish partnerships with specialised agencies to develop our services, enhance the customer experience, and meet the requirements of all stakeholders.
Ahmed Saeed Hassan, director of Raya Information Technology Company, said: “We are proud of our partnership with Ajman’s Department of Finance, and we are pleased to harness our technological expertise in service of its cloud strategy. The cloud-based management system will enhance the department’s digital transition and Improve daily work performance. We will ensure to employ all our capabilities to carry out our mission to the fullest and look forward to a fruitful and long-term partnership that will serve the department’s ambitions and future plans.”
Successful implementations completed for major healthcare networks
ALPHARETTA, Ga., Oct. 4, 2022 /CNW Telbec/ - Alithya Group inc. (TSX: ALYA) (NASDAQ: ALYA) ("Alithya") proudly announces the successful completion of seven Oracle Cloud Human Capital Management (HCM) project go lives this year, reflecting the continued strong performance of the company's dedicated Oracle practice. The seven completed implementations focused on the digital transformation of critical processes including payroll, performance, and other core human resources solutions, laying the foundations for future growth and efficiency.
Alithya's reputation as a trusted advisor for the implementation of Oracle Cloud solutions that connect and transform organizations continues to grow, with more than 3,500 Oracle ERP, EPM, HCM, SCM, and Analytics projects completed to date for more than 1,200 customers. Alithya's Oracle Cloud HCM implementation team relies on deep HR experience to guide clients on their journeys to Improve human resources, talent and workforce management, payroll, and HCM analytics processes.
Quote by Mike Feldman, Senior Vice President, Oracle Practice at Alithya:
"The completion of seven Oracle Cloud HCM projects so far in this calendar year is a significant achievement, particularly in a challenging economic climate. These implementations, as well as numerous Oracle Cloud ERP and EPM implementations, reflect the level of trust that our clients place in Alithya's unparalleled Oracle expertise in enterprise business application deployment."
Alithya is a trusted North American leader in strategy and digital transformation, employing a dedicated and highly skilled workforce of 3,900 professionals in Canada, the United States and internationally. Alithya's strategy is based on a plan of accelerated organic growth and complementary acquisitions to create a global leader. The company's integrated offer is based on four pillars of expertise: business strategies, enterprise cloud solutions, application services, and data and analytics.
About the Alithya Oracle Practice
Combining implementation and advisory services, Alithya's dedicated Oracle Practice helps customers manage their organizations more efficiently by connecting financial, operational, human resource, and supply chain planning across all business levels. Alithya has been a certified Oracle Partner for 25 years, and the Practice is supported by more than 300 certified consultants and multiple Oracle ACEs. Alithya also contributes in an advisory role to the Oracle Product Development team. In 2022, Alithya was named an Oracle Partner of the Year finalist for the Game Changer Award for ERP/EPM Service Delivery.
To learn more about Alithya, visit www.alithya.com.
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SAN DIEGO, Oct. 12, 2022 /PRNewswire/ -- As the veil between worlds thins during this time of year, we get unprecedented access to the unseen realm. But most people don't realize that there is also access granted to something else— the unseen realm WITHIN. The Halloween season is the best time of year for self-development and discovering the limitations in the subconscious mind. But how does one capitalize on this auspicious time for their own deep personal transformation and growth?
The launch of a new oracle deck, Journey into the Underworld, is the answer! This beautifully designed, high-quality, 40-card deck acts like a personal guide to help you see where you are stuck and the 300-page guidebook teaches you how to transform your blocks with meditations, rituals, journal prompts, and insights.
Creator Alexandria Moran explains, "Most oracle decks can only show you the problem, but they can't help you figure out how to fix it. That frustrated me, so I created a deck and guidebook to create real change. This deck gives you the full roadmap towards transformation."
Using the ancient Babylonian concept of the "Underworld" as a symbol for the most hidden parts of the Self, each card compassionately guides you through the three phases of subconscious healing: The Descent (creating awareness of the block), the Reclamation (claiming personal responsibility as to why the block is there) and the Return (integrating a new way of being without the block). This three-part process is particularly successful during this time of year when we can't help but look within.
Outside of traditional therapy, there are very few resources available to do this kind of work on one's own. "Shadow Work" ( the process of exploring the subconscious) — can seem just as mysterious and unknown as the subconscious mind to most people. This deck is a revolutionary step toward empowering you to take ownership of your own healing process as you look at your subconscious lies, pain, habits, and traumas that keep you in a rut.
Whether you're someone who is looking to start their healing journey or you want to ignite a deeper sense of self-discovery, working with the Journey Into the Underworld deck and guidebook during this Halloween time can open portals to true miracles. Try it risk free! The brand offers a 30-day money-back guarantee if you don't love it.
For a limited time only, this deck and course can be purchased online at journeyintotheunderworld.com for a reduced price.
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SOURCE Alexandria Moran