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Oracle beats analyst estimates in Q1 despite license revenues slump
Oracle has just posted its first quarter financial results, and although it beat expectations with profits and revenues slightly higher than analyst estimates, the figures will do little to ease shareholder’s fears about the company’s future prospects for growth.
On Wednesday, Oracle announced first quarter revenues of $8.4 billion, two percent down from the same period in 2014, when revenues topped $8.5 billion. Earnings per share amounted to $0.53, just beating analysts’ estimates of $0.52. Oracle was quick to point the blame at the strong U.S. dollar and currency exchange rates, saying these had hit revenues more than expected.
As a result, Oracle’s stock price fell by 1.54 percent in after-hours trading.
Oracle’s co-CEOs Mark Hurd and Safra Catz were quick to play up the positives from Oracle’s latest quarter, pointing to the steady growth in its cloud businesses. Revenues for Oracle’s cloud SaaS and PaaS offerings were up 34 percent to $451 million, while cloud IaaS revenues were up 16 percent to $160 million.
“We feel very good about the progress of our cloud transition and clearly customers are migrating to the cloud,” said Catz in the call, adding that Oracle is expecting further cloud growth later this year as cash spent on building cloud infrastructure comes off the books and more customers shift to cloud services.
Of course, the growth in Oracle’s cloud means that other parts of its business came up short. The company’s main cash cow, software licenses, updates and product support, saw revenues drop by one percent to $4.69 billion.
Elsewhere in Oracle’s business, revenues from new software licenses declined by 16 percent, while total hardware revenues slipped by 3 percent, and hardware support revenues fell by 5 percent. Meanwhile, on-premise software revenues saw a four percent decline.
Oracle posted a net income of $1.74 billion for the quarter, a huge 20 percent less than the $2.1 billion net income it posted in last year’s second quarter. Part of that was due to the three percent increase in operating expenses to $5.79 billion.
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