Oracle's 1st-Quarter Results Surpass Expectations

Oracle Corp. (NYSE:ORCL) released its first-quarter results for fiscal 2021 after the market closed on Sept. 10. The software company posted strong results, surpassing earnings and revenue expectations on the back of robust growth in the cloud business.

By the numbers

The database giant registered adjusted earnings per share of 93 cents, which edged past analysts' expectations of 86 cents. Revenue of $9.37 billion grew 2% on a year-over-year basis and surpassed projections of $9.19 billion.

Reflecting on the company's performance, CEO Safra Catz said:

"Q1 was fantastic with total revenue beating guidance by more than $150 million, and non-GAAP earnings per share beating guidance by $0.07. Our cloud applications businesses continued their rapid revenue growth with Fusion ERP up 33% and NetSuite ERP up 23%. We now have 7,300 Fusion ERP customers and 23,000 NetSuite ERP customers in the Oracle Cloud. Our infrastructure businesses are also growing rapidly as revenue from Zoom more than doubled from Q4 last year to Q1 in this year. I have a high level of confidence that our revenue will accelerate as we move on past COVID-19."

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Segment performance

Cloud service and license support, which makes up roughly 75% of total revenue, surged 2% year over year to $6.95 billion. Analysts had called for revenue of $6.93 billion.

Likewise, cloud license and on-premise license sales grew 9% to $886 million. While hardware revenue dropped marginally to $814 million in the reported quarter, service revenue dipped 8% to $720 million.

Key developments

At the end of April, Oracle announced a partnership with web conferencing tool Zoom Video Communications (NASDAQ:ZM). Zoom was in need of additional cloud capacity to manage the sudden surge in demand for its services. There was an unexpected spike of daily meeting participants to nearly 300 million. The company, therefore, opted for Oracle Cloud Infrastructure because of its superior cloud security and features, including scalability and reliability.

In addition, the company has been in talks to purchase TikTok's U.S., Canada, Australia and New Zealand operations from ByteDance, which is a Chinese multinational internet technology company. Microsoft (NASDAQ:MSFT) is eyeing the TikTok deal as well.

Financial forecast

For the second quarter of fiscal 2021, the company anticipates adjusted earnings per share between $0.98 and $1.02. Change in revenue is expected to fall within the 1% to 3% range.

Disclosure: I do not hold any positions in the stocks mentioned.

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