Oracle Revenues Up 1%, Sending Shares Lower After-Hours

By Anonymous

Oracle Corp. ORCL -0.14% managed to boost revenue during its latest quarter, but the performance may further increase pressure on the company to explain how it plans to win customers over to its cloud-based offerings.

During the three months that ended Aug. 31, Oracle said revenue rose 1% to $9.19 billion, less than the $9.24 billion analysts surveyed by FactSet had predicted.

Oracle has historically developed database software for customers who used the applications in their own data centers.

Now, the Redwood Shores, Calif., company is scrambling to build out its cloud-computing infrastructure and services, to compete with Inc., Microsoft Corp. , Alphabet Inc.’s GOOGL -1.54% Google and other companies. Earlier this year, the company said it would quadruple the number of its largest data centers, a bid to catch up with competitors.

For the latest quarter, earnings at Oracle rose to $2.27 billion, or 57 cents a share, from $2.21 billion, or 52 cents a share, a year earlier. Excluding stock-based compensation and other items, the company reported per-share earnings of 71 cents, beating the average analyst estimate on FactSet of 68 cents.

Shares of Oracle were up slightly to $49.18 on Monday. The stock fell 3.9% in after-hours trading, and was off more than 5% at one point.

On a conference call with analysts Monday, Oracle executive chairman Larry Ellison touted what he said was the company’s top position in ERP, or enterprise resource planning, cloud software.

He also said Oracle may be behind Amazon in terms of cloud infrastructure market share, but said the firm is “way ahead” in terms of cloud-infrastructure technology, which should help it gain market share “very, very rapidly.”

Even though investors are eager to follow Oracle’s cloud-related performance, in June the company stopped breaking out revenue and operating income for its cloud units. Now, those numbers are wrapped up with software license updates and product support.

Oracle said its largest segment, now called cloud services and license support, booked $6.61 billion during the latest quarter, up 3.2% from the same quarter a year ago. That was below analysts’ expectations of $6.68 billion.

Mark Hurd, one of Oracle’s co-chief executives, said the company would have beat its previously offered guidance for the segment, but currency rates changed.

Revenue from its cloud license and on-premise license segment fell 3% to $867 million. The company’s hardware segment and service unit also saw declines, of 4% and 5%, respectively.

Oracle said Monday that its board of directors had increased the authorization for share repurchases by $12 billion. Co-Chief Executive Officer Safra Catz told analysts during Monday’s call Oracle now has $20 billion authorized to spend on share buybacks.

“We’re putting our money where our month is, frankly,” she said.

Through Monday, Oracle shares were up 4% this year. That lags behind the S&P 500 information technology sector index, which was up almost 19% so far this year, according to Thomson Reuters.

Write to Micah Maidenberg at [email protected]