UPDATED 22:53 EDT / JUNE 16 2020

CLOUD

Oracle beats revenue target but misses on profit

Database giant Oracle Corp.’s stock fell in after-hours trading today after it reported fiscal fourth-quarter revenue that missed analysts’ targets.

Not surprisingly, the database and business software giant blamed the shortfall on customers in certain industries affected by COVID-19, such as hospitality and retail, postponing purchases.

Oracle reported a profit before certain costs such as stock compensation of $1.20 per share on revenue of $10.44 billion, down 6% from the same period a year ago. Wall Street had forecast a profit of $1.16 per share on higher revenue of $10.67 billion.

For the full year, Oracle reported a profit of $3.85 per share, up 9% year-over-year, on total revenue of $39.1 billion, down 1%.

Oracle Chief Executive Safra Catz (pictured) said the company beat analysts’ profit target thanks to strong cloud infrastructure and applications sales. In a statement, she said Oracle’s Fusion Cloud Enterprise Resource Planning suite saw 35% growth in constant currency, while its Fusion Cloud Human Capital Management Suite grew by 29% in constant currency.

Oracle now counts more than 7,100 Fusion ERP customers, in addition to 22,000 NetSuite customers, which makes it the biggest cloud ERP player in the world, the company claimed. In a conference call, Oracle co-founder and Chief Technology Officer Larry Ellison said that “more and more customers these days are purchasing HCM as part of overall ERP purchase decisions.”

Catz said Oracle’s business did “remarkably well” considering the impact of the COVID-19 pandemic. She noted that the company saw double-digit constant currency earnings per share growth for the third successive year. Still, she admitted that the company would have done even better if not for customers in the hospitality, retail and transportation industries postponing some of their purchases.

Oracle’s fourth-quarter cloud services and license support revenue came to $6.8 billion, up 1% from a year ago. Cloud license and on-premises license revenue fell 22%, to a little under $2 billion. The company also said Oracle Cloud Infrastructure’s annualized consumption revenue grew by more than 140%. Catz said that shows that OCI is now “a serious part of the infrastructure discussion” among customers.

Ian Campbell, CEO of Nucleus Research, told SiliconANGLE that Oracle’s Fusion Cloud and OCI growth was not unexpected. “We’re not surprised to see increased Cloud and Fusion Cloud HCM Suite revenues,” he said. “These are two areas Nucleus sees delivering significant ROI to customers throughout 2020 and 2021. Despite any slowing in the overall business environment in Q4, Oracle is well-positioned to support its enterprise customers long term.”

Oracle also pulled off a few notable customer wins in the quarter, including the communication software providers 8×8 Inc. and Zoom Video Communications Inc. Ellison said 8×8 began moving some of its key services to OCI in the quarter, and that it was “very surprised by the extent of its performance gains.” That compelled it to move some workloads from Amazon Web Services to Oracle, Ellison said.

“We think we’re going to get the lion’s share of our database installed base moving to our cloud,” Ellison said. “If that’s right, our infrastructure cloud business is gigantic. We have hundreds of thousands of database customers, including all the largest companies and governments on the planet Earth.”

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE that he thought Oracle had shown remarkable resiliency in what is a major quarter for the company, with customers continuing to buy its software-as-a-service products.

“The big product innovation is the arrival of the Autonomous Database at customer sites, bringing the autonomous capabilities of Oracle’s flagship product to customers who aren’t yet ready to move to the cloud,” Mueller said. “In pandemic times like these, CIOs welcome the chance to offload work to vendors that do this kind of stuff for a living, effectively obeying the automation imperative of the enterprise today.”

Photo: Oracle PR/Flickr

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