Oracle Posts Upbeat Q1 Earnings, But Sales Miss Estimates

Oracle Corporation ORCL reported better-than-expected earnings for its fiscal first quarter, but the company's sales missed analysts' expectations. The Redwood City, California-based company posted quarterly net income of $1.75 billion, or $0.40 per share, compared to $2.18 billion, or $0.48 per share, in the year-ago quarter. Excluding items, the company's non-GAAP earnings came in at $0.53 per share. Its total revenue declined 2 percent to $8.45 billion in U.S. dollars, while revenue rose 7 percent in constant currency. Analysts were expecting earnings of $0.52 per share on revenue of $8.53 billion. The average estimate among 66 Estimize users was for earnings of $0.53 per share and revenue of $8.50 billion. Total cloud revenue gained 29 percent in U.S. dollars to $611 million, while cloud software as a service and platform as a service revenue rose 34 percent in U.S. dollars to $451 million. Total on-premise software revenue dropped 4 percent in U.S. dollars to $5.8 billion in the latest quarter. Total hardware revenue slipped 3 percent in U.S. dollars to $1.1 billion, while total services revenue rose 1 percent in U.S. dollars to $862 million. Oracle's operating income came in at $2.7 billion for the latest quarter, while operating margin came in at 31 percent. "Our traditional on-premise software business plus our new cloud business grew at a combined rate of 6% in constant currency," said Oracle CEO, Safra Catz. "This growth is being driven by new SaaS and PaaS annual recurring cloud subscription contracts which almost tripled in the quarter. As our cloud business scales-up, we plan to double our SaaS and PaaS cloud margins over the next two years -- starting from 40% this just completed Q1, to approximately 60% this coming Q4, and then on up to 80% two years from now. Rapidly growing cloud revenue combined with a doubling of cloud margins will have a huge impact on EPS growth going forward." The company's board declared a quarterly cash dividend of $0.15 per share of outstanding common stock. Oracle shares slipped 0.57 percent to $38.05 in the after-hours trading session.