Aided by the robust performance of cloud frameworks and cloud-powered applications, Oracle Corp (NYSE: ORCL) reported better-than-anticipated fiscal 2023 second-quarter earnings and revenues. However, the information technology giant issued a slightly weaker-than-anticipated Q3 earnings outlook. The share price of Oracle ended Tuesday’s trading session at $80.56, almost flat from its prior close.
Redwood City, California-based Oracle reported second-quarter revenues of $12.28 billion, an increase of 18% from $10.36 billion in the similar quarter last year. The revenue includes $1.50 billion generated by software firm Cerner, which Oracle took over in June by paying $28 billion. Notably, Oracle’s CEO Safra Catz, stated that the integration of Cerner with the parent company is yet to be completed. Also, the company pointed out that its second-quarter revenue was $200 million above its outlook range.
For the second quarter that ended November 30, 2022, the company posted a net income of $1.741 billion, or $0.63 per share, compared with a net loss of $1.247 billion, or $0.46 per share, in the quarter that ended November 30, 2021. The loss recorded in 2Q 2022 was primarily due to a settlement done to the deceased Mark Hurd, who earlier served as co-CEO along with Catz.
Excluding stock-based compensation, amortization of intangible assets, acquisition-related expenses, and restructuring costs, Oracle recorded 2Q 2023 non-GAAP earnings of $3.312 billion, or $1.21 per share, almost unchanged from non-GAAP earnings of $3.380 billion, or $1.21 per share, in 2Q 2022.
The company stated that its adjusted earnings would have been $1.31 per share without the negative effect of currency conversion rates. Oracle posted an increase in the operating margin to 41% from 39% in the previous quarter.
On average, analysts surveyed by Refinitiv had anticipated that Oracle would report earnings of $1.18 per share on revenues of $12.05 billion.
Commenting on the quarterly results, Oracle CEO Safra Catz stated, “That strong overall revenue growth was powered by our infrastructure and applications cloud businesses, which grew 59% and 45%, respectively, in constant currency. [..] — each and every one of our strategic businesses delivered solid revenue growth in the quarter.”
Segment wise,
- Cloud services and license support revenues grew by 14% y-o-y to $8.60 billion surpassing StreetAccount’s forecast of $8.56 billion. Specifically, cloud infrastructure revenue jumped 53% to $1 billion.
- Cloud license and on-premise license revenues were $1.435 billion, an increase of 16% from last year. StreetAccount’s consensus called for revenues of $1.24 billion.
- Hardware revenues were $850 million, up 11% on a y-o-y basis.
- Services revenues surged 74% y-o-y to $1.392 billion.
Looking ahead, Oracle expects 3Q 2023 revenue growth of between 17% and 19% and non-GAAP earnings in the range of $1.17 to $1.21 per share. Analysts surveyed by Refinitiv anticipate the company to report revenues of $12.34 billion, translating to 17.30% growth, and non-GAAP earnings of $1.24 per share.
Oracle stated that it intends to record $65 billion in revenue, including revenues generated by Cerner, in FY 2026 and an adjusted operating margin of 45%.
The quarterly earnings beat, coupled with a slightly weaker Q3 earnings outlook, is expected to keep the share price of Oracle range bound in the short term.
The historical price chart indicates that the share price of Oracle is appreciating after testing the support at 70. The next resistance is anticipated only near 95. Additionally, the stock is trading above its 50-day moving average while the MACD indicator is showing a positive reading. Therefore, we anticipate the share price of Oracle to increase further in the next few trading sessions.
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