Oracle Gets Boost From Licensing Software -- WSJ
June 20 2019 - 3:02AM
Dow Jones News
By Asa Fitch
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 20, 2019).
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 asa.fitch@wsj.com
(END) Dow Jones Newswires
June 20, 2019 02:47 ET (06:47 GMT)
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