Oracle Delivers Strong First Quarter Results
Oracle Corp. (NYSE: ORCL – $52.79) announced fiscal 2018 first quarter results, with total revenues up 7% from the prior year to $9.2 billion, above consensus of $9 billion. Cloud plus On-Premise Software revenues were up 9% to $7.4 billion; cloud Software as a Service (SaaS) revenues were up 62% to $1.1 billion; cloud Platform as a Service (PaaS) plus Infrastructure as a Service (IaaS) revenues were up 28% to $400 million; and total cloud revenues were up 51% to $1.5 billion. Adjusted earnings per share advanced 12% to $0.62 from the prior year’s $0.55 and two cents better than Street expectations on a 41% operating profit margin. The Redwood City, California-based company reported operating cash flow on a trailing twelve-month basis was up 8% to $14.8 billion.
“The sustained hyper-growth in our multi-billion dollar cloud business continues to drive Oracle’s overall revenue and earnings higher and higher,” said co-CEO, Safra Catz. Co-CEO Mark Hurd went on to say “ERP (Enterprise Resource Planning) is our largest and most important cloud applications business. We now have about 5,000 Fusion ERP customers plus 12,000 NetSuite ERP customers in the Oracle Cloud.” Oracle has also benefited from the fact that its legacy software business hasn’t declined as quickly as analysts had expected. Sales of its traditional on-premise software products, which are installed and run at a customer’s location, accounted for 65% of the company’s business in the latest period, bringing in $5.92 billion, a 1.6% increase from the year-ago period.
Oracle could earn $3.00 per share this fiscal year, putting a valuation on the current stock price of 17.6, which is very reasonable given the company’s growth potential. The shares – at new all-time highs – also provide investors with a growing dividend yielding 1.45% and can be retained in a well-diversified conservative portfolio for further long-term price appreciation.