Oracle Corporation(NYSE:ORCL)beat the number once again. It always does. However, an astute observer will note that the company failed to truly reignite the flame of top line growth once again. Sure, the company hammered EPS targets (which it has only failed to do once in the past 15 quarters), sales dropped over 6%, falling short of a lowered analyst bar of $10.72 billion. This dive in sales was the worst ORCL has seen since midway through 2015. However, as you may have guessed, the author of this chapter of the Oracle story was COVID-19.
On the call, CEO Catz pointed out that the company’s results were sharply impacted by “postponed”business, with hotels, restaurants, shops, and logistics customers pushing out enterprise software expenses until they get more clarity on what sort of world we are heading into. Presumably, then, we are looking at some pent-up recovery demand on the horizon.
That said, we would also note that ORCL was already grappling with the specter of competition from cloud-based data storage providers such as Amazon (AMZN), Microsoft (MSFT), and Google (GOOG). That’s hardly an unimportant consideration.
In other words, it’s certainly plausible that this story is finding convenient cover in the tall grass of the COVID-19 excuse as its longer-term issues continue. That said, this is a large-cap tech play in a roaring Nasdaq 100 bullish trend. Bears would do well to maintain very sturdy risk protocols because the wind isn’t blowing in their favor at the moment.
Oracle Corporation(NYSE:ORCL) trumpets itself as a company that develops, manufactures, markets,sells, hosts, and supports application, platform, and infrastructure solutions for information technology (IT) environments worldwide.
The company provides services in three primary layers of the cloud: Software as a Service, Platform as a Service, and Infrastructure as a Service. It offers human capital and talent management, enterprise resource planning, customer experience and relationship management, procurement, supply chain management, project portfolio management, business analytics and enterprise performance management,and industry-specific application software, as well as financial management and governance, and risk and compliance applications.
The company also licenses its Oracle Database for storage, retrieval, and manipulation of data;and Oracle Fusion Middle ware software to build, deploy, secure, access, extend,and integrate business applications, as well as automate business processes.
In addition, it provides a range of development tools, identity management, and business analytics software solutions for mobile computing development to address the development needs of businesses; Java, a software development language; and big data solutions.
Further, the company provides Oracle Engineered Systems, servers, storage, industry-specific hardware, and hardware support products, as well as operating systems,virtualization, management, and other hardware-related software.
Additionally, it provides consulting services, including IT strategy alignment, enterprise architecture planning and design, initial software implementation and integration,application development and integration, security assessments, and ongoing software enhancements and upgrade services; and customer support and education services.
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 5% in that time frame. Shares of the stock have powered higher over the past month, rallying roughly 4% in that time on strong overall action.
Our ORCL Earnings Summary:
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Oracle beats by $0.04, misses on revs; note: co guides on call; says some customers postponed some of their purchases
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ReportsQ4 (May) earnings of $1.20 per share, excluding non-recurring items, $0.04better than the S&P Capital IQ Consensus of $1.16; non-GAAP revenues fell6.3% year/year to $10.44 bln vs the $10.72 bln S&P Capital IQ Consensus.
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Cloud services and license support revenues were $6.8 bln, up 1% YoY and 3% inconstant currency.
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Cloud license and on-premise license revenues were $2.0 bln.
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Non-GAAP operating margin was 49%.
Our ORCL Research and Conference Call Notes:
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Co issues guidance for Q1 (Aug), sees EPS of $0.84-0.88, excluding non-recurring items, vs. $0.85 S&P Capital IQ Consensus; sees Q1 (Aug) revs ranging from down 1% to up 1% yr/yr, which we compute as $9.13-9.31 bln vs. $9.12 bln S&P Capital IQ Consensus.
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Co is not providing guidance for full year FY21, but co says it has a high level of confidence that revenue will accelerate as co moves on past COVID-19.
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"Leading the way was our Fusion Cloud ERP Suite that grew 35% in constant currency, and our Fusion Cloud HCM Suite grew 29% in constant currency. Our overall business did remarkably well considering the pandemic, but our results would have been even better except for customers in the hardest-hit industries that we serve such as hospitality, retail, and transportation postponing some of their purchases."
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"Enabling all our on-premise database customers to upgrade and run Oracle's latest and best database technology in their own data center should dramatically accelerate the rate of adoption of the Oracle Autonomous Database...especially by our largest customers including banks and governments that are not currently planning to move their largest and most critical systems to a public cloud."
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Argus downgraded Oracle (ORCL) to Hold from Buy; ORCL shares, like those of most other companies, have been caught up in the corona virus selloff. While management expects revenue to accelerate in FY21, firm does not see Oracle gaining much traction in the current economic environment.
