Video Source: CNBC Television on YouTube
Oracle Corp. (NYSE: ORCL) reported mixed fiscal 2024 first-quarter results. While the non-GAAP earnings beat analysts’ estimates, revenues missed Wall Street expectations by a slight margin. Furthermore, the software behemoth’s revenue growth outlook for the second quarter was lower than expectations. The stock of Oracle ended Tuesday’s trading session at $109.61, down 13.50% or $17.10 from the prior close.
The Austin, Texas-based company reported first-quarter revenue of $12.45 billion, an increase of 8.70% from $11.45 billion in the first quarter of fiscal 2023.
For the quarter ended August 31, 2023, Oracle posted a net income of $2.42 billion, or $0.86 per share, up 56% from $1.55 billion, or $0.56 per share, in the quarter ended August 31, 2022.
Excluding stock-based compensation, amortization of intangible assets, acquisition-related costs, and restructuring expenses, among others, the 1Q 2024 non-GAAP net income was $3.36 billion, or $1.19 per share, compared with a non-GAAP net income of $2.83 billion, or $1.03 per share, in 1Q 2023.
Analysts surveyed by Refinitiv had anticipated Oracle to post Q1 2023 non-GAAP earnings of $1.15 per share on revenues of $12.47 billion.
Oracle Chairman and CTO, Larry Ellison, stated “The largest AI technology companies and the leading AI startups continue to expand their business with Oracle for one simple reason—Oracle’s RDMA interconnected NVIDIA Superclusters train AI models at twice the speed and less than half the cost of other clouds.”
Segment wise:
- Cloud services and license support revenues increased by 13% y-o-y to $9.55 billion and surpassed StreetAccount estimates of $9.44 billion.
- Cloud license and on-premise license revenues were $809 million, a decrease of 10% from last year and lower than StreetAccount estimates of $892.70 million.
- Hardware revenues fell by 6% y-o-y to $714 million. Wall Street estimates called for revenues of $739.60 million.
- Services revenues were $1.38 billion, an increase of 2% on a y-o-y basis.
Notably, revenues from cloud infrastructure, aggregating roughly $1.50 billion, surged 66% year-on-year but eased from 76% in the earlier quarter. Oracle is a relatively smaller player in comparison to Google, Microsoft, and Amazon.
About the cloud business, Ellison conveyed that AI development companies have entered into contracts for the acquisition of over $4 billion in capacity within Oracle’s Gen2 Cloud. This figure represents a doubling of the amount booked after Q4.
The company’s board has approved a quarterly cash dividend of $0.40 per share, payable on October 26, 2023.
Looking forward, Oracle anticipates Q2 revenue growth of between 5% and 7%. The company also projects Q2 non-GAAP net income in the range of $1.30 to $1.34 per share.
Analysts surveyed by LSEG anticipate Oracle to report non-GAAP earnings of $1.33 per share on revenues of $13.28 billion, reflecting 8% annual growth.
The mixed quarterly results and lower-than-anticipated Q2 revenue outlook are expected to keep the stock of Oracle slightly bearish in the short term.
The historical price chart indicates that the stock of Oracle has broken the support level at $112.50. The next major support is anticipated to be near $102.50. Additionally, the currency pair has closed below its 50-day moving average, while the MACD indicator is showing a negative reading. Therefore, we anticipate Oracle’s stock to remain in a downtrend in the near term.
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