Oracle (ORCL) up 10% after topping sales, earnings estimates
Oracle’s stock soared more than 10% in after-hours trading Thursday as the company beat adjusted earnings and total revenue estimates.
Austin, Texas-based Oracle reported adjusted earnings per share (EPS) of $1.21 while analysts polled by Dow Jones expected adjusted EPS of $1.11.
However, Oracle reported a net loss of $1.25bn (£945m) due mainly to a $924m operating loss related to the judgment in a lawsuit over former Co-CEO Mark Hurd's employment, which came after Hurd joined Oracle from Hewlett Packard in 2010.
The legal cost was a one-time, non-recurring charge, but it affected revenue and free cash flow, said CEO Safra Catz on a conference call with analysts.
Oracle ranks as one of the world’s largest software companies. It sells database software and technology, cloud-engineered systems, and enterprise software products
Revenue rises 6%
For accounting purposes, the latest report period served as the second quarter of Oracle’s 2022 fiscal year.
Total revenue rose 6% to $10.4bn, beating Cowen & Company analyst Derrick Wood’s estimated 4% rise.
In a research note for clients that he provided to Capital.com, Wood said his estimate was in line with Wall Street’s prediction.
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Cloud revenue growth
Oracle’s cloud-based business revenue grew 22% to $2.7bn.
“As a result, we expect cloud revenue (percentage growth) will accelerate further and exit the fiscal year in the mid-20s,” Catz said.
She anticipates that the company’s cloud offerings will generate higher operating margins, which are closely watched by analysts and investors.
“Cloud is fundamentally a more profitable business compared to on-premise (business), and I expect our operating margins this year will be the same (as), or better than, pre-pandemic levels of 44%,” she said.
Infrastructure revenue climbs 5%
Infrastructure revenue on a GAAP basis was up 5% to $4.4bn, she said.
“I expect the infrastructure revenue growth rate will continue to ramp higher through the fiscal year,” Catz said.
Catz said total third-quarter revenue is expected to grow 6% to 8% in constant currency. That estimate surpassed the 5% anticipated by Wood and the Street.
Oracle’s stock is up about 37% since the beginning of the year.
“We think shares can continue to grind higher alongside accelerating cc rev growth through FY22,” Wood wrote. “But we think (foreign-exchange) dynamics do pose some potential near-term headwinds on the stock.”