Oracle expands repurchase plan, raises dividends by 33% as earnings increase

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Oracle

equities are falling, although the enterprise software company has reported better-than-expected financial results, while announcing an expanded share buyback program and a 33% increase in dividends.

Revenue for the third fiscal quarter ended February 28 was $ 10.09 billion, an increase of 3% over the previous year, in line with the company’s forecast of 2% to 4% growth, and slightly ahead of the Street consensus by $ 10.07 billion. Adjusted earnings were $ 1.16 per share, an increase of 20% and ahead of the company’s earnings forecast of $ 1.09 to $ 1.13 per share.

In accordance with generally accepted accounting principles, operating income was $ 3.9 billion, an increase of 10%. Non-GAAP, or adjusted, operating revenue was $ 4.8 billion, also an increase of 10%. GAAP net income was $ 5 billion, or $ 1.68 per share, including a $ 2.3 billion tax benefit from the transfer of certain assets between subsidiaries.

Oracle also announced a $ 20 billion expansion in its share buyback program and raised its quarterly dividend rate from 24 cents to 32 cents. The change gives the stock a return of about 1.8%.

Oracle said it continues to see strong growth in sales of cloud-based applications, with Fusion ERP (financial software for large companies) increasing 30% and NetSuite ERP (for smaller companies) increasing 24%. General subscription revenue increased by 5%. Oracle’s subscription sales revenue now accounts for 72% of overall revenue.

The company also said it has seen more than 100% growth in its Oracle cloud infrastructure business, which competes with public cloud leaders.

Amazon.com

(AMZN),

Microsoft

(MSFT) and Alphabet (GOOG).

“We are opening new regions as fast as we can to support our rapidly growing billion dollar infrastructure business,” said Oracle President and Founder Larry Ellison in a statement. “On the application front, analysts continue to rank Oracle as number one in cloud ERP.” He said that Oracle signed contracts totaling hundreds of millions of dollars to move several other large companies from SAP ERP to Oracle Fusion.

The company said revenue from “cloud service and license support” increased 5% in the quarter to $ 7.25 billion, while revenue from “cloud license and on-premises license”, the company’s traditional business, was US $ 1.28 billion, an increase of 4%. Revenue in the hardware business was $ 820 million, down 4%, while services were $ 737 million, down 5%.

In a call with investors on Wednesday afternoon, CEO Safra Catz said the company expects revenues for the May quarter to rise between 5% and 7%, or between 1% and 3% in constant currency.

She said that Oracle expects non-GAAP quarterly earnings of $ 1.28 to $ 1.32 per share, or between $ 1.20 and $ 1.24 per share in constant currency. The Wall Street consensus was $ 1.20 a share. Catz said the company expects to spend aggressively in the quarter to expand its Oracle Cloud capacity in preparation for the strong demand expected in fiscal year 2022.

At a remarkable moment, Ellison read a list of more than 100 companies that, he said, moved some or all of their financial application businesses from SAP ERP software to Oracle Fusion ERP, including

First Solar,

Cemex,

Western Digital,

and many others.

At the end of the trading session, Oracle shares fell 6% to $ 67.80. The stock has outperformed the market in recent weeks. Even with the weakness of Wednesday afternoon, the stock has risen about 10% since a recent Barron’s cover story about the company.

Write to Eric J. Savitz at [email protected]