Oracle Shares Fly Higher On Upbeat Quarterly Profit And Revenue

Oracle earnings

Oracle Corp. (NYSE: ORCL) reported its fiscal 2019 fourth-quarter results after markets closed on Wednesday. The database giant beat on both top and bottom lines, thanks to rapid growth in its Fusion and NetSuite cloud applications.

The Redwood City, Calif.-based firm trimmed its workforce earlier this year to balance its resources, as it aims to take on competitors such as Inc. (NASDAQ: AMZN), Inc. (NASDAQ: CRM), and Microsoft Corp. (NASDAQ: MSFT).

Shares of the company jumped more than 6% in after-hours trading following the results. The stock, which ended the regular session down 0.40%, has soared 17% this year.

ORCL Earnings & Outlook

Net income in the quarter ended May 31, 2019 was $3.74 billion, or $1.07 per share, up from $3.28 billion, or $0.79 per share, in the same period last year.

Adjusted for one-times items, earnings came to $1.16 per share. Analysts were expecting Oracle to report adjusted earnings of $1.07 per share, based on figures compiled by Refinitiv.

The company posted revenue of $11.14 billion, an increase of 1% from $11.01 billion in the same period a year ago. On average, analysts polled by Refinitiv had forecast revenue of $10.93 billion in the quarter.

Oracle’s cloud license and on-premise license unit posted revenue of $2.5 billion, well ahead of $2.32 billion analyst consensus. Services and license support segment brought in revenues of $6.8 billion, slightly surpassing analysts’ expectation of $6.76 billion.

Oracle CEO Comments

“In Q4, our non-GAAP operating income grew 7% in constant currency—which drove EPS well above the high end of my guidance,” said Oracle CEO, Safra Catz. “Our high-margin Fusion and NetSuite cloud applications businesses are growing rapidly, while we downsize our low-margin legacy hardware business. The net result of this shift away from commodity hardware to cloud applications was a Q4 non-GAAP operating margin of 47%, the highest we’ve seen in five years.”

“Our Fusion ERP and HCM cloud applications suite revenues grew 32% in FY19,” said Oracle CEO, Mark Hurd. “Our NetSuite ERP cloud applications revenues also grew 32% this year. These strong results extend Oracle’s already commanding lead in worldwide Cloud ERP. Our cloud applications businesses are growing faster than our competitors. That said, let me call your attention to the following approved statement from industry analyst IDC.”

Oracle Corp Profile

Oracle sells a wide range of enterprise IT solutions, including databases, middleware, applications, and hardware.

While software licenses, support, and maintenance continue to represent roughly 70% of revenue, the firm is undergoing a mix shift toward cloud-based subscriptions that should necessitate continued heavy investment in the business model transition.

Oracle offers software-as-a-service, platform-as-a-service, and infrastructure-as-a-service offerings. Legacy offerings include Oracle Database software and Oracle Fusion Middleware.