Oracle (ORCL) earnings Q3 2021

Oracle CEO Safra Catz will deliver a keynote address during Oracle OpenWorld 2019 on September 17, 2019 in San Francisco, California. Oracle CEO Safra Catz started the second day of Oracle OpenWorld 2019 with a keynote address. The annual conference runs until September 19th.

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Oracle shares fell 6% in expanded trading on Wednesday after the enterprise software maker announced a below-expectations quarterly earnings forecast and announced it would increase its quarterly dividend from 24 cents per share to 32 cents per share.

This is how the company did it:

  • Merits: Adjusted for $ 1.16 per share versus $ 1.11 per share as analysts expected, Refinitiv said.
  • Revenue: According to Refinitiv, $ 10.09 billion versus $ 10.07 billion as analysts expected.

Safra Catz, CEO of Oracle, told analysts on a conference call that she expects adjusted earnings per share of $ 1.20 to $ 1.24 and revenue growth of 5 to 7% for the fourth quarter of fiscal year. Analysts surveyed by Refinitiv had expected adjusted earnings per share of $ 1.28 and revenue growth of 4%.

Oracle’s revenue rose 3% on an annualized basis for the third quarter of its fiscal year ended February 28, according to a statement. Sales rose by almost 2% in the previous quarter.

Oracle’s top line of business, cloud services and license support, achieved revenue of $ 7.25 billion, up 5% year over year and slightly less than the FactSet consensus estimate of $ 7.28 billion.

Oracle’s cloud licensing and local licensing revenues were $ 1.28 billion, up 4% and more than the FactSet consensus of $ 1.21 billion. The company reported hardware sales of $ 820 million, down 4% and just below the FactSet consensus of $ 843 million.

Catz said the company has seen infrastructure cloud services valued at over $ 2 billion on a yearly basis and will be investing in the current quarter to prepare for a surge in cloud consumption and revenue in the next fiscal year.

Larry Ellison, Oracle’s co-founder, chairman, and chief technology officer, said the company will generate profits from database software in fiscal year 2022, which begins in June.

“I’m not really ready to reveal our plans, which is why I think there will be a sudden spike, but we expect database growth to be very, very rapid next year,” he said. Databases remain an important source of income for Oracle.

In the third quarter of fiscal year, Oracle announced the availability of version 21c of its database software as a cloud service and introduced a portable, rugged server to run cloud workloads.

Last week, Barclays analysts, led by Raimo Lenschow, raised their rating on Oracle stock to the equivalent of buy from the equivalent of hold, believing cloud revenue growth would accelerate. “We anticipate stocks will re-price especially as investor appetites for value names and cash flow growth stories continue to improve in a higher return environment due to the pandemic,” they write.

Excluding the after-business movement, Oracle stock has risen about 12% since the beginning of 2021, while the S&P 500 index has risen 4% over the same period. The stock was up in February as some investors considered the growth potential of cloud services. In the third quarter of fiscal year, Oracle’s investments increased 25% to $ 1.42 billion, while Microsoft, one of Oracle’s cloud competitors, saw investments of $ 5.4 billion in the fourth quarter, an increase of 20%.

Oracle last increased its dividend in 2019 when it rose 26% compared to the 33% increase announced on Wednesday.

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