Oracle missed first-quarter earnings estimates as the healthy growth of its cloud business wasn’t enough to offset the continuing decline of its traditional software licensing.

The company on Thursday reported non-GAAP earnings per share of $0.55, three cents below the Wall Street consensus. Revenue rose 2% to $8.6 billion, but analysts had expected revenue would hit $8.7 billion.

Oracle has been moving aggressively to expand its cloud-based business software offerings, agreeing in July to acquire cloud pioneer NetSuite for about $9.3 billion. For the first quarter, total cloud revenue rose 59% to $969 million, spurred by 77% revenue growth in cloud software as a service and platform as a service.

“This year we are on track to sell more than $2 billion of SaaS and PaaS annually recurring revenue,” Oracle CEO, Mark Hurd said in a news release. “We believe this will be the second year in a row that Oracle has sold more SaaS and PaaS than any cloud services provider.”

“In the first quarter alone, we added more than 750 new SaaS customers including 344 new SaaS Fusion ERP customers – that’s more ERP customers than Workday has sold in the history of their company,” he added, referring to one of Oracle’s competitors.

But software licenses still account for most of Oracle’s revenue and are a higher-margin business than cloud subscription sales. The company posted only a 2% first-quarter increase in revenue from existing licenses and support and an 11% decrease in licenses for new software, a $1.03 billion business.

“It’s very difficult to create an upside scenario when you transition to the cloud,” Stifel Nicolaus & Co. analyst Brad Reback told The Wall Street Journal, noting that Oracle has now missed earnings estimates in three of the past nine quarters.

For the second quarter, the company said it expected adjusted earnings of 59 cents to 62 cents per share and revenue growth of up to 3 percent. Analysts were forecasting adjusted earnings of 65 cents per share and revenue of $9.26 billion, according to Thomson Reuters I/B/E/S.

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