(Bloomberg) – Oracle Corp. reported sales growth and gave a perspective for the current period that fell short of some projections, even announcing gains in market share. The shares fell about 6% in the trading period.
The world’s second-largest software maker said on Wednesday that revenue increased 3% in the third fiscal quarter, in line with analysts’ estimates. On a constant currency basis, sales were flat, losing the company’s projections. The revenue forecast for the current period indicates that a faster rate of growth is not on the way, said Anurag Rana, an analyst at Bloomberg Intelligence.
“I think investors may be disappointed with the 1% -3% sales growth orientation in constant currency in the next quarter, which is a slight improvement over the current quarter, but not substantial,” he said. “While SAP’s wins in the cloud have been impressive, total revenue is not accelerating at a significant pace.”
Executive President Larry Ellison and Executive Director Safra Catz have been trying to increase sales by turning to cloud-based software for services. Oracle said sales of its Fusion application for corporate finance management increased by 30% in the period – a slower growth rate than the 33% reported in the second fiscal quarter. NetSuite’s financial software revenue, aimed at small and medium-sized businesses, grew 24%, after a 21% gain in the previous period.
Ellison devoted much of a conference call following the announcement of the results of an attack on rival SAP SE, listing companies that migrated all or part of Oracle to the German software company’s products. He registered more than 100 SAP customers who made the move and said there are more. Oracle’s emphasis on new software and cloud services has not yet spurred the kind of revenue growth expected by investors, who sent shares up 30% last month, to a record close to $ 72.12 at the close of Wednesday -market.
Small and medium-sized companies and companies in the sectors most affected by the Covid-19 pandemic have resumed spending, according to a note from analysts at Cowen & Co., citing interviews with corporate sources. Still, Oracle lagged behind cloud computing and its services that compete with Amazon.com Inc. and Microsoft Corp. lag behind in market share.
“The enterprise software market is doing well,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co., which owns shares in Oracle, before the results were released. “But for Oracle, it’s all about the cloud. It’s about how to do this migration and Larry took a long time to do that. “
In the period ended in May, Oracle said the profit, excluding some items, would be $ 1.28 to $ 1.32 per share. Analysts, on average, estimate $ 1.28, according to data compiled by Bloomberg. Revenue will rise by 5% to 7% in US dollars, which would exceed analysts’ projections for a 4% growth. Without the help of currency fluctuations, the increase in sales will be 1% to 3%, Oracle said.
In the third fiscal quarter ended February 28, sales rose to $ 10.1 billion, the Redwood Shores, Calif.-Based company said in a statement. Reported revenue met the average of analysts’ estimates. Profit, excluding some items, was $ 1.16 per share. Analysts projected $ 1.11.
The results marked the third consecutive quarter of revenue growth year on year, after two consecutive fiscal years of declining sales.
Revenue from cloud services and license support increased 5% to $ 7.25 billion, falling short of analysts’ estimates. This metric includes sales of hosting customer data in the cloud, but a large part is generated by maintenance fees for traditional software maintained on corporate customer servers.
Sales of cloud licenses and on-premises licenses increased by 4% to $ 1.28 billion. Analysts had expected $ 1.21 billion.
Oracle also announced that its board has approved a $ 20 billion increase in share repurchases.
(Updates with prediction starting in the first paragraph.)
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