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Oracle (ORCL) to Report Q2 Earnings: What's in the Offing?

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Oracle ORCL is scheduled to report second-quarter fiscal 2021 results on Dec 10.

For second-quarter fiscal 2021, Oracle anticipates total revenue growth rate on a year-over-year basis in the range of 1-3% at USD and 0-2% at cc.

The Zacks Consensus Estimate for revenues for the fiscal second quarter is pegged at $9.79 billion, indicating growth of 1.8% on a year-over-year basis.

Oracle anticipates non-GAAP earnings per share between 98 cents and $1.02 at USD, and 96 cents and $1 at cc. The Zacks Consensus Estimate for earnings has been stable in the past 30 days at $1, suggesting growth of 11.1% from the year-ago reported figure.

Factors to Note

Oracle’s fiscal second-quarter results are likely to reflect gains from robust demand for its Cloud Infrastructure services, driven by benefits comprising enhanced security and management, higher-performance and cost effectiveness.

Further, growing clout of its Exadata Cloud Service offering to support the surge in demand from on-premise customers may get reflected in the fiscal second-quarter revenues.

Oracle Corporation Price and EPS Surprise

Oracle Corporation Price and EPS Surprise

Oracle Corporation price-eps-surprise | Oracle Corporation Quote

During the quarter under review, Oracle unveiled the new generation of its Exadata Cloud Service, which runs on the Exadata X8M platform, in a bid to aid customers accelerate complex transaction processing and data analytics.

The company also rolled out new tools — Cloud Guard and Maximum Security Zones — to its Oracle Cloud Infrastructure to boost security for customers. Further, the company updated Oracle Unity platform to help B2B (business to business) and B2C (business to consumer) clients to improve customer interaction and bolster revenues.

Moreover, solid uptake of the next-generation autonomous database and Oracle Dedicated Region Cloud, supported by ML and AI capabilities might have benefited the fiscal second-quarter performance.

Also, coronavirus crisis induced rapid uptake of cloud-based applications amid work-from-home and online learning wave may have bolstered adoption. This, in turn, is likely to have contributed to the to-be-reported quarter’s performance.

Notable names including Zoom Video Communications (ZM - Free Report) and 8x8 EGHT, have implemented Oracle Cloud Infrastructure (OCI) services to enhance video meeting solutions in a secure manner amid explosive growth in user base.

During the to-be-reported quarter, Zoom Video and Sprinklr selected Oracle Fusion Cloud Customer Experience suite to provide customers with improved engagement and interaction. The company also clinched a deal from Altair ALTR — a software and cloud solutions provider — for migrating the latter’s high computing performance (HPC) workloads to OCI. Incremental adoption of the company’s offerings might get reflected in the top-line performance in the fiscal second quarter.

The Zacks Consensus Estimate for Cloud services and license support revenues is pegged at $7.058 billion, indicating an improvement of 3.6% on a year-over-year basis.

Growing adoption of cloud-based Fusion HCM, NetSuite ERP and Fusion ERP applications is expected to have continued in the fiscal second quarter, driven by coronavirus crisis-induced demand for cloud-based applications. Notably, Fusion HCM, NetSuite ERP and Fusion ERP businesses were up 22%, 23% and 33%, respectively, in the fiscal first quarter.

Oracle, currently carrying a Zacks Rank #3 (Hold), is also expected to have benefited from adoption of customer engagement platforms. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, increasing expenses on product development, on account of product roll outs and enhancements amid stiff competition in the cloud computing market, might have weighed on the fiscal second-quarter performance.

Besides, decline in IT spending and coronavirus pandemic-induced broader macroeconomic weakness across small and medium sized businesses are likely to have affected the fiscal second-quarter performance.

Notably, the Zacks Consensus Estimate for total hardware revenues in the fiscal second quarter is pegged at $832 million, indicating decline of 4.5% on a year-over-year basis. Meanwhile, the consensus mark for Services revenues stands at $754 million, suggesting slump of 6.5% on a year-over-year basis.

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