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Mayank Marwah
Mayank Marwah
Articles (1058) 

Oracle's 2nd-Quarter Fiscal 2021 Results: Looking Beyond the Numbers

Cloud service and licence support revenue climbed 4% year-over-year

December 11, 2020 | About:

Oracle Corp. (NYSE:ORCL) released its second-quarter results for fiscal 2021 after the market closed on Dec. 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 $1.06, which edged past analysts' expectations of $1 per share. Revenue of $9.80 billion grew 2% on a year-over-year basis and surpassed projections of $9.79 billion.

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

"Our highly profitable multi-billion dollar Fusion and NetSuite Cloud ERP applications businesses grew revenue 33% and 21% respectively in Q2. These two strategic cloud applications businesses are major contributors to Oracle's increased operating earnings and consistent earnings per share growth. We expect this rapid market share and revenue growth trend to continue as both Gartner and IDC rank Oracle's ERP suite number one in the cloud."

Segment performance

Cloud service and license support, which makes up roughly 75% of total revenue, surged 4% year over year to $7.11 billion. Analysts had called for revenue of $7.04 billion.

On the flip side, cloud license and on-premise license sales declined 3% to $1.09 billion, while hardware revenue came in at $844 million (down 3%) and service revenue dropped 7% to $752 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.

During the quarter, Oracle rolled out the next generation of Oracle Exadata Cloud, which helps organizations speed up their most perplexing transaction processing and data analytics projects running in clouds as well as on-premises centers.

Financial targets

For the third quarter of fiscal 2021, the company anticipates adjusted earnings per share between $1.09 and $1.13. Change in revenue is expected to fall within the 2% to 4% range.

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

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About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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