Oracle Corp. (ORCL, Financial) released its second-quarter financial results on December 12 after the market closed. The company posted mixed quarterly results, underperforming revenue expectations but surpassing earnings expectations thanks to robust growth in the cloud business.
By the numbers
The database giant registered second-quarter earnings per share of 90 cents, up 12% year-over-year. Wall Street had projected earnings of 88 cents per share. Revenue during the same period stood at $9.61 billion. Revenue grew 1% year-over-year but did not live up to Wall Street’s expectation of $9.65 billion. Reflecting on the quarter’s performance, Oracle’s CEO Safra Catz commented:
"We had another strong quarter in our Fusion and NetSuite cloud applications businesses with Fusion ERP revenues growing 37% and NetSuite ERP revenues growing 29%. This consistent rapid growth in the now multibillion dollar ERP segment of our cloud applications business has enabled Oracle to deliver a double-digit EPS growth rate year-after-year. I fully expect we will do that again this year."
While GAAP operating income climbed 3% to $3.2 billion in the reported quarter, GAAP operating margin was 33%.
Segment results
Cloud service and licence support, which makes up roughly 75% of total revenue, experienced 3% year-over-year growth to $6.81 billion in the reported quarter. Within this segment, Oracle’s autonomous database cloud revenue rose in excess of 100% in the reported quarter.
On the flip side, Oracle’s cloud licence and on-premise licence sales plunged 7% to $1.13 billion, while Hardware revenue came in at $871 million (down 2%) and service revenue dropped 1% to $806 million.
Key highlights from the quarter
During the quarter, Oracle teamed up with VMware Inc. (VMW) to permit customers to run VMware services on Oracle cloud infrastructure. Additionally, the company recently purchased cloud-native customer loyalty solution CrowdTwist to provide personalized customer experiences. CrowdTwist provides over 100 innovative engagement paths and offers rapid time-to-value to marketers for building a holistic view of customers.
The company also said it would not appoint a second CEO to work along with Safra Catz following the death of Oracle’s co-CEO Mark Hurd in October.
Financial forecast
For the next quarter, analysts project net income of $3.2 billion and earnings of 97 cents per share on $9.8 billion in revenue.
For the 2020 fiscal year, Catz anticipates that revenue will grow at a faster rate in constant currency as compared to the previous fiscal year, and that the company will witness double-digit earnings growth.
Disclosure: I do not hold any positions in the stocks mentioned.
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