Oracle Corp. (NYSE:ORCL)
Historical Stock Chart
2 Months : From May 2019 to Jul 2019
By Asa Fitch
Oracle Corp. reported stronger-than-expected sales and beat profit targets for its latest quarter as the business-software giant's fast-growing new businesses offset declining old ones.
Oracle, a more than 40-year-old pioneer in business database management, has struggled to keep up with competitors as its customers put more of their data online and do more of their business using cloud computing instead of their own machines.
Microsoft Corp., Amazon.com Inc. and Salesforce.com Inc. are all seeing rapid growth in sales of cloud services and software.
Earlier this month, Salesforce said revenue rose by 24% in its latest quarter.
Oracle said on Wednesday that fiscal-fourth-quarter revenue increased about 1% from the year earlier to $11.14 billion, surpassing the $10.93 billion that analysts polled by FactSet predicted.
That growth, which followed two consecutive quarters of declines, sprang from product offerings like a database that performs updates and plugs security holes automatically, Co-Chief Executive Safra Catz told analysts.
"Our overall customer base is growing, and that growth is starting to accelerate," she said.
Oracle's business of licensing software grew by 12% year-over-year to $2.52 billion in the quarter. Cloud services and license support, the company's largest unit, was up 0.5% to $6.79 billion. Hardware revenue fell 11% to $1.12 billion.
Rebecca Wettemann, the vice president of research at Boston-based analysis firm Nucleus Research, said the company was having success in selling business and financial-management tools like NetSuite, which Oracle bought in 2016. However, she added that the bright spots were offset by a cloud-computing business that lagged behind some competitors and older software that may be difficult to sustain going forward.
"Some of our businesses are not, if you will, hot, but the good news is the hot businesses are now bigger than the not-so-hot businesses, and that's determining our future," Oracle founder and chief technology officer Larry Ellison said.
Ms. Catz said the company was expecting revenue for the current quarter to be flat to up by 2%. She said she expected revenue for the company's current fiscal year, which began this month, to exceed the 3% increase for the previous year.
The company's adjusted profit margin of 47% in the quarter that ended May 31 was the highest level it has recorded in five years, Ms. Catz said.
The positive trend for revenue, however, did nothing to dispel the notion that Oracle is still behind in its quest to become a major cloud-computing competitor, said Brad Reback, an analyst at Stifel Nicolaus & Co.
"Most of the [earnings] beat came from the license business, and I would stress the legacy license business, with the cloud business being just in line" with expectations, he said.
Shares of Oracle closed at $52.68 on Wednesday and were down slightly after hours.
Profit rose to $3.74 billion, or $1.07 cents a share, for the quarter, up from $3.28 billion, or 79 cents a share last year. After adjustments, Oracle reported a profit of $1.16 a share, 9 cents better than Wall Street targets.
Write to Asa Fitch at email@example.com
(END) Dow Jones Newswires
June 19, 2019 23:31 ET (03:31 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.