Oracle Corp (NYSE: ORCL) reported mixed fiscal 2023 first quarter results. While adjusted earnings missed estimates, revenues met Wall Street expectations. Revenues grew by 17.70% on a year-over-year basis in the first quarter, aided by an impressive contribution from recently acquired software firm Cerner. The third largest software firm in the world by revenues and market capitalization issued weaker second-quarter guidance. The stock of Oracle closed at $76.04, down 1.35% or $1.04 from its prior close.
The Redwood City, California-based company, reported first-quarter revenues of $11.45 billion, compared with $9.73 billion in the comparable quarter last year.
Notably, Cerner, which was acquired for $28 billion, contributed $1.40 billion to Oracle’s revenues.
Oracle CEO Safra Catz said, “[…] This is the first quarter we owned Cerner, and they just delivered the best revenue quarter in their history.”
For the quarter that ended August 31, 2022, Oracle posted a net income of $1.55 billion, or $0.56 per share, a 37% decline from $2.46 billion, or $0.86 a share, in the quarter that ended August 31, 2021.
Excluding stock-based compensation, amortization of intangible assets, acquisition-related expenses, and restructuring charges, among others, the company recorded 1Q 2023 non-GAAP income of $2.828 billion, or $1.03 per share, down 4% from $2.944 billion, or $1.03 per share, in 1Q 2022. The company pointed out that its adjusted earnings would have been $0.08 per share higher, devoid of the negative impact of currency conversion rates.
Analysts surveyed by Refinitiv anticipated Oracle to report adjusted earnings of $1.07 on revenues of $11.45 billion for Q1 2023.
Segment wise,
- Cloud services and license support revenues grew by 14% y-o-y to $8.42 billion and surpassed StreetAccount’s estimate of $8.27 billion. Notably, cloud infrastructure revenues surged 52% to $900 million.
- Cloud license and on-premise license revenues were $904 million, an increase of 11% from last year.
- Hardware revenues remained flat at $763 million.
- Services revenues were $1.361 billion, up 74% on a y-o-y basis.
At the end of the first quarter, short-term deferred revenues were $10.50 billion.
Looking forward, the company expects second-quarter non-GAAP earnings in the range of between $1.16 and $1.20 per share. Furthermore, Oracle projects 2Q 2023 revenues to grow by 15% to 17% on an annual basis. Analysts surveyed by Refinitiv anticipate the company to post non-GAAP earnings of $1.27 per share on revenues of $12.17 billion, implying growth of about 18%.
The mixed quarterly results and weak second-quarter outlook is expected to keep the stock of Oracle range bound with a slight bearish bias in the short term.
The historical price chart indicates that the stock of Oracle is declining after facing resistance at 78. The next major support is anticipated only near 72. Additionally, the stock is trading below its 50-day moving average while the ultimate oscillator is making lower highs. Therefore, we anticipate the stock to remain in a downtrend in the days ahead.
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