Oracle (ORCL) Q1 2024 Earnings Report

oracle Shares fell 9% in extended trading on Monday after the database software maker reported lower-than-expected sales and revenue guidance.

Here’s how the company did it:

• Merits: $1.19 per share, adjusted, versus $1.15 per share as analysts expected, according to LSEG.
• Revenue: $12.45 billion versus $12.47 billion as analysts expected, according to LSEG.

As for guidance, Oracle called for fiscal second-quarter adjusted net income of $1.30 to $1.34 per share and revenue growth of 5% to 7%. Analysts surveyed by LSEG had forecast adjusted earnings per share of $1.33 and revenue of $13.28 billion, representing revenue growth of 8%.

Oracle’s revenue rose 9% year-over-year in its fiscal first quarter ended Aug. 31, according to a study opinion. Net income rose to $2.42 billion, or 86 cents per share, compared with $1.55 billion, or 56 cents per share, in the year-ago quarter.

In June 2022, Oracle completed its $28.2 billion acquisition of electronic health records software company Cerner, and now Oracle is in Cerner’s “accelerated transition” to the cloud, slowing its revenue growth, Safra Catz said , CEO of Oracle, on a conference call with analysts.

“This transition creates some near-term headwinds to Cerner’s growth rate as customers move from licensed purchases, which are recognized in advance, to cloud subscriptions, which are recognized on a pro-rata basis,” she said.

Oracle’s cloud services and license support segment reported revenue of $9.55 billion, up 13% year-over-year and above the StreetAccount consensus of $9.44 billion. But the cloud licenses and on-premise licenses segment posted revenue of $809 million, down 10% and below StreetAccount’s consensus of $892.7 million.

Hardware revenue was down 6% year-over-year at $714 million. Analysts polled by StreetAccount expected $739.6 million.

Cloud infrastructure revenue totaled $1.5 billion, increasing 66% compared to 76% in the prior quarter. Oracle remains smaller than Amazon, Google And Microsoft in the category.

“To date, AI development companies have signed contracts to purchase capacity on Oracle’s Gen2 Cloud worth more than $4 billion. “This is double what we booked at the end of the fourth quarter,” Larry Ellison, company chairman and chief technology officer, was quoted as saying in the statement.

During the quarter, Oracle announced new solutions Database hardwareMicros Point-of-sale workplaces And Artificial intelligence functions in its Fusion Cloud Human Capital Management software. Ellison said during the conference call with analysts that xAI, Tesla CEO Elon Musk’s recently announced AI startup, would use Oracle’s cloud services. Ellison invested in Tesla Shares and held a board seat at the electric car manufacturer until August 2022.

Excluding Monday’s after-hours move, Oracle shares are up 55% so far this year, while the S&P 500 is up about 17% over the same period.

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