Oracle Corp. (ORCL, Financial) released its third-quarter results for fiscal 2021 after the market closed on March 10. The software company posted strong results, surpassing earnings and revenue expectations on the back of robust growth in the cloud business.
The company's shares fell 2.8% in after-hours trading to $70.20 per share following the earnings announcement.
By the numbers
The database giant registered adjusted earnings per share of $1.16, which edged past analysts' expectations of $1.11 per share. Revenue of $10.09 billion grew 3% on a year-over-year basis and surpassed projections of $10.07 billion.
Reflecting on the company's performance, CEO Safra Catz said:
"We continued to extend our huge lead in the cloud ERP market as Fusion ERP grew 30% and NetSuite ERP grew 24% in Q3. Oracle's rapidly growing highly profitable, multi-billion dollar cloud ERP businesses helped drive subscription revenue up 5% and operating income up 10% in the quarter. Subscription revenue now accounts for 72% of Oracle's total revenues, and this highly-predictable recurring revenue-stream along with expense discipline are enabling double-digit increases in non-GAAP earnings per share."
Segment performance
Cloud service and license support, which makes up roughly 75% of total revenue, surged 5% year over year to $7.25 billion. Analysts had called for revenue of $7.28 billion.
Likewise, cloud license and on-premise license sales grew 4% to $1.28 billion, while hardware revenue came in at $820 million (down 4%) and service revenue dropped 5% to $737 million.
Key developments
Last year, Oracle announced a partnership with web conferencing tool Zoom Video Communications Inc. (ZM, Financial). 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 Corp. (MSFT, Financial) is eyeing the TikTok deal as well.
The company recently 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. During the quarter, the company rolled out Oracle Database 21c, which is a multi-model and multi-workload database engine. It also launched a solid portable server for managing cloud workloads.
Financial targets
For the fourth quarter of fiscal 2021, the company anticipates adjusted earnings per share between $1.20 and $1.24. The change in revenue is expected to fall within the 5% to 7% range.
Disclosure: I do not hold any positions in the stocks mentioned.
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