Oracle Profit Rose As Cloud Sales Grew -- Earnings Review

By Austen HuffordFeaturesDow Jones Newswires

Oracle Corp. reported financial results for its fiscal second quarter after the close of trading Thursday.

Shares fell 4.4% in post-market trading.

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Here's what you need to know:

EARNINGS: Oracle beat analysts' expectations for adjusted earnings per share, bringing in 70 cents. Those surveyed by S&P Global Market Intelligence had expected Oracle to report adjusted profit of 68 cents a share for the quarter that ended in November.

REVENUE: Oracle brought in $9.62 billion in revenue, up 6.5% from the same quarter a year before. Oracle posted adjusted revenue of $9.63 billion, higher than the $9.57 billion that analysts had expected.

NOTABLES:

GLOOMY GUIDANCE: Three months ago, Oracle provided weaker-than-expected guidance for its cloud-computing business, forecasting cloud revenue to increase 39% to 43% in the second quarter. On Thursday the company said cloud revenue increased 44%. Cloud revenue now makes up 16% of total sales, compared with 12% in the same quarter last year.

CHEERY CHAT: In a prepared statement, Oracle executives were upbeat about the company's cloud growth. Oracle co-Chief Executive Safra Catz said the company's cloud business would "grow and strengthen over the coming quarters." Co-CEO Mark Hurd said its back-office software-as-a-service offerings would extend their lead over competition as they expect to sell $2 billion in new enterprise software-as-a-service application subscriptions over the next four quarters. Still, RBC Capital Markets analyst Ross MacMillan has cited a survey by the firm that found "many Oracle customers that do not use Oracle Cloud services today are unlikely to do so in the future," which could challenge the growth narrative.

CLOUD, WHAT CLOUD?: Oracle continues to generate the biggest share of its revenue from legacy licensing and support contracts for software customers run in their own data centers. In the second quarter, total on-premise software sales accounted for 65% of Oracle's total revenue, compared with 68% in the same quarter last year. An additional 10% of revenue comes from hardware.

BUYBACKS: The company said it had increased the authorization for share buybacks by $12 billion. In March 2016 it has increased the authorization by $10 billion. The company left its dividend steady at 19 cents.

--Jay Greene contributed to this article.

Write to Austen Hufford at Austen.Hufford@wsj.com and Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

December 14, 2017 17:29 ET (22:29 GMT)