While tech stocks have done reasonably well so far this year, not every major company in this field has managed to beat the market. Analyst expectations for Oracle (NYSE: ORCL), one of the largest IT companies in the world, haven’t been great. However, the company ended up surprising Wall Street with better-than-expected financial results for its fiscal first-quarter financial results.
Oracle has long been known as a leading software provider for businesses, including its well-known line of database products. However, Oracle has been falling behind some of its competitors over the past few years, especially since other areas, like cloud computing, have become hot areas for companies operating in this area. Recently, Oracle has done its best to rebuild and rebrand itself, doing its utmost to expand its cloud-business segment to become a major player in this market.
It’s this cloud business segment that has seen significant growth over the past few months. Total sales have grown to $9.4 billion for the quarter, a fair deal higher than the $9.2 billion expected by analysts. Its cloud services business reported revenues of $6.9 billion, up 2.1% from last year. Net income for the quarter came in at $2.3 billion, which is still an improvement from last year in spite of the coronavirus pandemic.
“I believe that the Oracle Cloud offers better Infrastructure-as-a-Service (IaaS) technology than any other cloud vendor. The really good news here is that I’m not the only one who thinks that’s true,” said Oracle’s CTO, Larry Ellison. “Q1 was fantastic with total revenue beating guidance by more than $150 million, and non-GAAP earnings per share beating guidance by $0.07. Our infrastructure businesses are also growing rapidly as revenue from Zoom more than doubled from Q4 last year to Q1 in this year. I have a high level of confidence that our revenue will accelerate as we move on past COVID-19,” added Oracle’s CEO, Safra Catz.
Shares of Oracle are trading up 3.5% in after-hours trading in response to the news. While demand for cloud-related services has shot up now that so many people are working remotely, it hasn’t done much to bolster the company’s stock over the past few months. The stock is trading roughly at the same level it was at in January, having only managing to recover from its February/March dip over the past few months.
Time will tell whether or not Oracle will manage to rebrand itself successfully. Last year, Warren Buffett ended up dumping his stake in the tech giant, being quite uncertain about its future. While Buffett has added a few more tech stocks to his company’s portfolio, Oracle hasn’t been one of them. This could change if the tech giant ends up buying out TikTok, a video-sharing app that’s being sold by ByteDance at the behest of the Trump administration. While there is a fair number of other competing buyers, Oracle could see its stock jump big time if it ends up managing to buy out TikTok in the weeks to come.
Oracle Company Profile
Oracle sells a wide range of enterprise IT solutions, including databases, middleware, applications, and hardware. 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. – Warrior Trading News
