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Oracle Earnings Blow Past Guidance, but Stock Slips as Investors Take Profits

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Oracle Chairman Larry Ellison.

Justin Sullivan/Getty Images

Oracle

 posted better-than-expected results for its fiscal fourth quarter ended May 31, as the enterprise software company saw strength across its enterprise applications portfolio and continued triple-digit growth for its cloud infrastructure business.

But the stock is trading modestly lower after hours as some investors take profits after a nearly 30% rally in the shares since mid-March. Also pressuring the share are softer-than-expected guidance for the August quarter. Oracle shares (ticker: ORCL) in late trading have slipped 4.8%, to $77.74.

For the quarter, Oracle posted revenue of $11.2 billion, up 8%, or 4% in constant currency—the company’s best quarterly growth rate in a decade. The top line was ahead of the company’s guidance range, which called for 5% to 7% growth, or 1% to 3% in constant currency. 

Non-GAAP profits were $4.5 billion, or $1.54 a share, likewise ahead of the guidance range of $1.28 to $1.32 a share. On a GAAP basis, the company earned $4 billion, or $1.37 a share. Operating cash flow was $15.9 billion, up 21%.

Oracle reported strength across its application portfolio, with 46% revenue growth for Fusion ERP (financial software for large companies), 35% growth for Fusion HCM (HR software for large firms), and 26% growth for NetSuite ERP (financial software for small to midsize businesses). The company said that its cloud infrastructure business, including Oracle Cloud and Autonomous Database software, grew more than 100%.

For the full year, revenue was $40.5 billion, up 4%, or 2% in constant currency. Fiscal-year profits were $14.1 billion, or $4.67 a share; on a GAAP basis, the company earned $13.7 billion, or $4.55 a share.

“Our Q4 performance was absolutely outstanding,” Oracle CEO
Safra Catz
said in a statement. “Our multibillion-dollar Fusion and NetSuite cloud applications businesses saw dramatic increases in their already rapid revenue growth rates.”

In a conference call with investors this afternoon, Catz said the company sees revenue growth for fiscal 2022 to faster than the 2021 level, with constant currency growth in the mid single digits. She also said the company plans to invest in the business at a higher rate to “further accelerate the top line.”

Catz says Oracle sees its cloud business as “fundamentally more profitable than on premise software.” She said the company expects to nearly double cloud capital spending in fiscal 2022 to nearly $4 billion. The extra spending, she says, will be more than justified by expanded margins and increased growth.

For the August quarter, Oracle is projecting revenue growth of 3% to 5%, or 1% to 3% on a constant currency basis. She said non-GAAP profits should range from 94 cents to 98 cents a share, a little below the Street consensus at $1.03 a share, with GAAP profits ranging from 91 to 95 cents.

Catz also said that Oracle bought back $8 billion in common stock in the quarter, increasing the total for the last four quarters to $21 billion.

Write to Eric J. Savitz at [email protected]

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