[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / September 16, 2016 / Active Wall St. announces its post-earnings coverage on Oracle Corporation (NYSE: ORCL). The company posted its Fiscal first Quarter 2016 (Q1 FY17) results on September 15th, 2016. The company's cloud-computing business posted another strong sales quarter; however this was offset by steep declines in its conventional software-licensing business. Register with us now for your free membership at: http://www.activewallst.com/register/.
Today, AWS is promoting its earnings coverage on ORCL; touching on stocks like NetSuite Inc. (NYSE: N) and T. Rowe Price Group Inc. (NASDAQ: TROW). Get our free coverage by signing up to:
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Earnings Reviewed
For the period ended on August 31st, 2016, Oracle reported net income of $1.83 billion, or $0.43 per share, compared with $1.75 billion, or $0.40 per share, in the year ago period. Excluding stock-based compensation and other items, the company's earnings came in at $0.55 per share, below analysts' expectation of $0.58 per share. Oracle's Q1 FY17 revenue was $8.6 billion, up 2% in US dollars and up 3% in constant currency; falling short of estimates of $8.7 billion.
Cloud Soars
In Q1 FY17, Oracle's total cloud revenues, including infrastructure as a service (IaaS), were $969 million, up 59% in U.S. dollars and up 61% in constant currency. As the company records overseas sales in foreign currencies, the strong US dollar meant that cloud sales would have grown 61% had it been measured a constant-currency basis. For Q1 FY17, Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $798 million, up 77% in U.S. dollars and up 79% in constant currency. Cloud plus On-Premise Software revenues were $6.8 billion, up 5% in U.S. dollars and up 6% in constant currency.
Oracle added more than 750 new customers to its key cloud software-as-a-service line, co-CEO Mark Hurd said in the statement.
Oracle is trying to gain a foothold in the strategic and increasing competitive cloud enterprise segment, facing competition from the likes of Microsoft, IBM, and Amazon among others.
"This year we are on track to sell more than $2 billion of SaaS and PaaS annually recurring revenue. We believe this will be the second year in a row that Oracle has sold more SaaS and PaaS than any cloud services provider," Mark Hurd stated.
At its annual Oracle OpenWorld conference in San Francisco, scheduled to kick off on September 18th, 2016, Oracle will unveil its second-generation cloud infrastructure product. In a statement within the company's earnings release, co-founder and Chairman Ellison claimed Oracle's IaaS will have twice the computing and memory of Amazon Web Services, the market leader, as well as four times its storage at 80% of the cost.
Traditional Decline
Although Oracle's cloud performance was exemplary, its traditional software license revenue dropped 11% in Q1 FY17 to $1.03 billion, while its hardware revenue declined 12%, to $996 million. License update and product support revenue, which is driven by past software deals, rose 2%, to $4.79 billion, but other services revenue fell 6% to $808 million.
Net Suite Acquisition
Oracle, while revamping its products, is looking for new opportunities to strengthen its foothold in the cloud market. In July 2016, the company announced the acquisition of NetSuite Inc. for $9.3 billion. The company noted in the conference call that the deal has cleared antitrust reviews everywhere except the US "where our waiting period expires at the end of September".
However, the deal may take some time to come to fruition as NetSuite's largest institutional shareholder, T. Rowe Price Group Inc. on September 07th, 2016, said it would oppose the current $109 per share deal, citing conflicts of interest in the deal among its concerns. As per regulatory filings, Mr. Ellison along with his family members held nearly 40% of NetSuite's common shares as of April 2016.
Outlook
For Q2 FY17, Oracle is expecting revenue to be up 0% to 3% in constant currency. Q2 FY17 earnings per share, excluding some items, are forecasted to be in the range of $0.59 per share to $0.62 per share in constant currency. Analysts estimate 2.9% revenue growth and earnings of $0.65 per share. Adjusted sales of Oracle's core cloud products are projected to increase about 67% on y-o-y basis.
Stock Performance
Oracle's share price finished yesterday's trading session at $40.86, up 1.52%. A total volume of 18.75 million shares exchanged hands, which was higher than the 3 months average volume of 12.85 million shares. The stock has advanced 6.13% and 1.36% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the company has gained 13.15%. The stock is trading at a PE ratio of 19.71 and a dividend yield of 1.47%.
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