Shares or Oracle Corp. (ORCL: NYSE – $54.85) were trading about 3% lower after the enterprise-software giant posted mixed results for its second fiscal quarter. For the period ended Nov. 30, the company’ revenue totaled $9.61 billion, up 1% year-over-year, a little shy of Wall Street estimates at $9.65 billion. Management had projected revenue growth of 1% to 3%. Adjusted profit was $0.90 a share, a bit above both the company’s guidance range of $0.87 to $0.89 and analyst consensus of $0.88. Cloud-services and license-support revenue was $6.8 billion, up 3% year over year. Cloud-license and on-premise license revenue was $1.1 billion, down 7%. Hardware revenue was down 2%, while service revenue was down 1%. The company had another strong quarter in the Fusion and NetSuite cloud applications businesses with Fusion Enterprise Resource Planning (ERP) revenues growing 37% and NetSuite ERP revenues growing 29%. The consistent rapid growth in the now multi-billion-dollar ERP segment of Oracles’ cloud applications business has enabled the company to deliver a double-digit earnings per share growth rate over the past few years. Management also reiterated its target of delivering a double-digit per-share earnings growth rate this fiscal year. The consensus on Wall Street is for $3.88 per share vs. $3.45 in fiscal 2019.
Oracle should have a fair degree of success moving its database customers to the cloud, given its long-standing relationships and the operating cost/performance its systems offer. Meanwhile revenue, net income and cash flow are likely to advance moderately over time as the transition progresses, with per-share figures benefiting from stock purchases. At their recent price, ORCL shares may interest patient conservative accounts.