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Oracle Earnings Top Forecasts; Revenues Miss

 ORCL Oracle Corp. (NYSE: ORCL – $39.11) said revenues fell just shy of expectations in its fiscal second quarter while earnings barely topped estimates. Revenue came in a $9.04 billion in the period, topping last year’s tally, but missing forecasts for $9.11 billion. Earnings were reported at $0.61 a share, down from $0.63 during the same quarter last year, but topping expectations by a penny. The company said that the effect of a stronger US dollar and devaluation in Egypt’s currency hurt earnings. Without the impact of currency exchange losses, earnings would have been 2 cents higher. Still, revenue from the company’s cloud business continue to grow. Total cloud revenue came in at $1.1 billion, led by software-as-a-service and platform-as-a-service, whose revenues totaled $878 million, up 81% year-over-year. Oracle Chief Executive Safra Catz said “With cloud overtaking new software license revenue, we expect our business to once again exhibit the sustained pattern we delivered over the previous decade with the license business; increasing revenue that results in EPS and cash growth that grow even faster.”

       The company also maintained its quarterly cash dividend of $0.15 per share and indicated that it expects total third quarter revenue to grow 3%-to-5%. Earnings per share are expected to be between $0.61 and $0.64 per share during the third fiscal quarter according to the company, but analysts are anticipating earnings at the high-end of guidance at $0.64 per share on total revenue of $9.23 billion. Oracle should prosper as the secular move to cloud architecture and computing unfolds. Accordingly, these shares should provide respectable risk-adjusted returns for patient accounts.


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