Oracle Corp (NYSE: ORCL) reported fiscal 2022 first-quarter earnings that surpassed analysts’ estimates. However, revenue missed Wall Street forecasts against the backdrop of rising competition in the cloud computing business. Notably, all major business divisions missed analysts’ estimates. Following the results, the stock lost 2.81% or $2.50 to close at $86.39. Notably, since the start of this year, Oracle shares have gained 37%.
The Redwood City, California-based company, reported first-quarter revenues of $9.728 billion, an increase of 3.80% from $9.367 billion in the similar quarter of fiscal 2021. Analysts polled by Refinitiv had anticipated the business software provider to report revenues of $9.77 billion for the quarter.
For the quarter ended August 31st, 2021, the IT solution provider posted earnings of $2.457, or $0.86 per share, compared with $2.251 billion, or $0.72 a share, in the quarter ended August 31st, 2020.
Excluding stock-based compensation, amortization of intangible assets, acquisition-related expenses, and restructuring charges, among others, the 1Q21 non-GAAP net income was $2.944 billion, or $1.03 per share, up from $2.882 billion, or $0.93 a share, in 1Q20.
Analysts surveyed by Refinitiv had expected the company to post earnings of $0.97 per share.
Segment-wise,
- Cloud services and license support revenues increased 6% y-o-y to $7.371 billion but missed the StreetAccount consensus estimate of $7.41 billion.
- Cloud license and on-premise license revenues were $813 million, down 8% on a y-o-y basis. The reported figures failed to meet the $859.7 million consensus.
- Hardware revenues fell by 6% y-o-y to $763 million. The StreetAccount estimate was $778.5 million.
- Services revenues were $781 million, up 8% from last year.
The first-quarter GAAP operating income was $3.40 billion, an increase of 7% from last year. Also, Q1 GAAP operating margin was 35%. Non-GAAP operating income and operating margin were $4.30 billion and 45%, respectively.
The company boosted its capital outlay to over $1 billion, a sharp rise from the $436 million set aside in the corresponding quarter last year. Interestingly, cloud frameworks and cloud apps account for 25% of overall revenue.
Looking ahead, the company anticipates fiscal 2022 second-quarter earnings of between $1.09 and $1.13 per share on revenue growth of 3% to 5%. Analysts surveyed by Refinitiv anticipate earnings of $1.08 per share on revenues of $10.25 billion, translating to about 5% y-o-y growth (revenue).
The mixed quarterly results and slightly weak performance of cloud computing and hardware division are expected to keep the stock range-bound with a slight bearish bias in the short term.
Technically, the stock is descending after failing to break the resistance at 90. The next support is anticipated only near 80. Additionally, the MACD indicator reading has turned negative. Therefore, we are anticipating the stock to remain in a downtrend in the short term.
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