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Oracle (ORCL) Q3 Earnings and Revenues Surpass Estimates
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Oracle (ORCL - Free Report) reported third-quarter fiscal 2021 non-GAAP earnings of $1.16 per share, beating the Zacks Consensus Estimate by 4.5%. Further, the bottom line was up 20% from the year-ago quarter (up 16% at constant currency or cc). Management had guided non-GAAP earnings per share between $1.09 and $1.30 at USD, and $1.06 and $1.10 at cc.
Moreover, non-GAAP revenues increased 3% (flat at cc) year over year to $10.086 billion, outpacing the Zacks Consensus Estimate by 0.3%. For third-quarter fiscal 2021, Oracle had anticipated total revenue growth rate on a year-over-year basis in the range of 2-4% at USD and 1-3% at cc.
Top Line in Detail
Oracle reported total revenues (on a GAAP basis) of $10.085 billion, up 3% (flat at cc) year over year, primarily led by improvement in cloud business.
Revenues by Offerings
Oracle’s top line benefited from ongoing cloud-based momentum. Cloud services and license support revenues (72% of total revenues) in the reported quarter increased 5% year over year (up 2% at cc) to $7.252 billion.
Break up of Cloud services and license support revenues
Applications revenues (contributed 41% to total cloud services and license support revenues) amounted to $2.952 billion, up 5% year over year (up 3% at cc).
Infrastructure related revenues (59%) were $4.3 billion, up 4% on a year-over-year basis (up 2% at cc).
Oracle Corporation Price, Consensus and EPS Surprise
Meanwhile, Cloud license and on-premise license revenues (13% of total revenues) improved 4% year over year (flat at cc) to $1.276 billion.
Hardware revenues (8% of total revenues) were $820 million, down 4% (down 6% at cc) on a year-over-year basis.
Services revenues (7% of total revenues) declined 5% (down 8% at cc) to $737 million.
Revenues by Geography
Revenues from Americas (representing 53.8% of total revenues) improved 1.1% year over year to $5.424 billion.
Revenues from Europe/Middle East/Africa (29.5%) climbed 5.1% from the year-ago quarter’s figure to $2.981 billion.
Revenues from Asia Pacific (16.7%) advanced 5.1% from the year-ago quarter level to $1.680 billion.
Expanding Clientele Remains Noteworthy
Strategic back-office cloud applications business surged 24% with annualized revenues of $4 billion. Management announced that Fusion HCM, NetSuite ERP and Fusion ERP businesses were up 21%, 22% and 27%, respectively, in the fiscal third quarter.
Markedly, autonomous database consumption revenues improved 55% and annualized consumption revenues for Oracle Cloud Infrastructure (OCI) services soared 123%. Meanwhile, cloud customer consumption revenues grew more than 200%. Also, Autonomous Database revenues soared over 100%.
Additionally, the company is witnessing strong growth in Cloud HCM, which is increasingly being purchased as part of the company’s ERP cloud application suite. Further, the migration of several large-scale SAP customers to Fusion ERP cloud and Fusion HCM remains a tailwind.
Expanding clientele is enabling the company to maintain its leading position in cloud ERP market. Management is optimistic on latest Fusion Cloud ERP deal wins from companies including AJE, Allegis Group, Johnson City, Bed Bath & Beyond , Brightcove (BCOV - Free Report) , Nextiva, and The University of Chicago. Key Fusion Cloud HCM wins include DeKalb County, Deutsche Bahn, Micro Focus, Paladin, and Webhelp.
Moreover, the next-generation autonomous database launched by Oracle, supported by ML, is gaining traction among companies including AxiomSL. In the reported quarter, the company added new Autonomous Database cloud customers. New product introductions, including new OCI managed services, are likely to bolster growth in this category. Markedly, autonomous database in Gen2 public cloud infrastructure is witnessing rapid adoption.
Oracle’s latest Exadata Cloud@Customer service offering is also gaining traction among on-premise customers. Latest wins include Oklahoma State University, Arcos Dorados, and City of Phoenix.
Noteworthy deal win of OCI during the reported quarter includes Pierre & Vacances-Center Parcs Group.
These initiatives are expected to provide the company an edge in the Database-as-a-Service market and reinforce its competitive position against Amazon’s (AMZN - Free Report) Amazon Web Services.
Operating Details
Non-GAAP operating expenses fell 3% year over year (down 4% at cc) to $5.302 billion. As a percentage of non-GAAP revenues, the figure contracted 290 basis points (bps) to 52.6%.
Non-GAAP operating income during the reported quarter was $4.784 billion, up 10% year over year (up 6% at cc).
Non-GAAP operating margin expanded 297 bps (expanded 247 bps at cc) on a year-over-year basis to 47%.
Balance Sheet & Cash Flow
As of Feb 28, 2021, Oracle had cash & cash equivalents, and marketable securities of $35.864 billion, compared with $38.593 billion as of Nov 30, 2020.
Operating cash flow and free cash flow for the 12 months ended Feb 28, 2021 amounted to $14.659 billion and $12.808 billion, respectively.
Share Repurchases & Dividends
Oracle repurchased 68 million shares worth approximately $4 billion during the fiscal third quarter and paid out dividends worth $2.146 billion during the nine months ended Feb 28, 2021.
Over the nine-month period ended Feb 28, 2021, the company has repurchased shares worth $12.958 billion. The company’s board of directors has authorized an additional $20 billion for the repurchase of shares.
Also, on Mar 10, 2021, the company declared a quarterly dividend of 32 cents per share, up 33% over prior dividend payout of 24 cents, payable on Apr 22, 2021, to shareholders as on Apr 8, 2021.
Q4 Guidance
For fourth-quarter fiscal 2021, Oracle anticipates total revenue growth rate on a year-over-year basis in the range of 5-7% at USD and 1-3% at cc. The Zacks Consensus Estimate for revenues is pegged at $10.76 billion, indicating improvement of 3.1% on a year-over-year basis.
Oracle expects non-GAAP earnings per share between $1.28 and $1.32 at USD, and $1.20 and $1.24 at cc. The Zacks Consensus Estimate for the same is pegged at $1.27 per share.
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Oracle (ORCL) Q3 Earnings and Revenues Surpass Estimates
Oracle (ORCL - Free Report) reported third-quarter fiscal 2021 non-GAAP earnings of $1.16 per share, beating the Zacks Consensus Estimate by 4.5%. Further, the bottom line was up 20% from the year-ago quarter (up 16% at constant currency or cc). Management had guided non-GAAP earnings per share between $1.09 and $1.30 at USD, and $1.06 and $1.10 at cc.
Moreover, non-GAAP revenues increased 3% (flat at cc) year over year to $10.086 billion, outpacing the Zacks Consensus Estimate by 0.3%. For third-quarter fiscal 2021, Oracle had anticipated total revenue growth rate on a year-over-year basis in the range of 2-4% at USD and 1-3% at cc.
Top Line in Detail
Oracle reported total revenues (on a GAAP basis) of $10.085 billion, up 3% (flat at cc) year over year, primarily led by improvement in cloud business.
Revenues by Offerings
Oracle’s top line benefited from ongoing cloud-based momentum. Cloud services and license support revenues (72% of total revenues) in the reported quarter increased 5% year over year (up 2% at cc) to $7.252 billion.
Break up of Cloud services and license support revenues
Applications revenues (contributed 41% to total cloud services and license support revenues) amounted to $2.952 billion, up 5% year over year (up 3% at cc).
Infrastructure related revenues (59%) were $4.3 billion, up 4% on a year-over-year basis (up 2% at cc).
Oracle Corporation Price, Consensus and EPS Surprise
Oracle Corporation price-consensus-eps-surprise-chart | Oracle Corporation Quote
Meanwhile, Cloud license and on-premise license revenues (13% of total revenues) improved 4% year over year (flat at cc) to $1.276 billion.
Hardware revenues (8% of total revenues) were $820 million, down 4% (down 6% at cc) on a year-over-year basis.
Services revenues (7% of total revenues) declined 5% (down 8% at cc) to $737 million.
Revenues by Geography
Revenues from Americas (representing 53.8% of total revenues) improved 1.1% year over year to $5.424 billion.
Revenues from Europe/Middle East/Africa (29.5%) climbed 5.1% from the year-ago quarter’s figure to $2.981 billion.
Revenues from Asia Pacific (16.7%) advanced 5.1% from the year-ago quarter level to $1.680 billion.
Expanding Clientele Remains Noteworthy
Strategic back-office cloud applications business surged 24% with annualized revenues of $4 billion. Management announced that Fusion HCM, NetSuite ERP and Fusion ERP businesses were up 21%, 22% and 27%, respectively, in the fiscal third quarter.
Markedly, autonomous database consumption revenues improved 55% and annualized consumption revenues for Oracle Cloud Infrastructure (OCI) services soared 123%. Meanwhile, cloud customer consumption revenues grew more than 200%. Also, Autonomous Database revenues soared over 100%.
Additionally, the company is witnessing strong growth in Cloud HCM, which is increasingly being purchased as part of the company’s ERP cloud application suite. Further, the migration of several large-scale SAP customers to Fusion ERP cloud and Fusion HCM remains a tailwind.
Expanding clientele is enabling the company to maintain its leading position in cloud ERP market. Management is optimistic on latest Fusion Cloud ERP deal wins from companies including AJE, Allegis Group, Johnson City, Bed Bath & Beyond , Brightcove (BCOV - Free Report) , Nextiva, and The University of Chicago. Key Fusion Cloud HCM wins include DeKalb County, Deutsche Bahn, Micro Focus, Paladin, and Webhelp.
Moreover, the next-generation autonomous database launched by Oracle, supported by ML, is gaining traction among companies including AxiomSL. In the reported quarter, the company added new Autonomous Database cloud customers. New product introductions, including new OCI managed services, are likely to bolster growth in this category. Markedly, autonomous database in Gen2 public cloud infrastructure is witnessing rapid adoption.
Oracle’s latest Exadata Cloud@Customer service offering is also gaining traction among on-premise customers. Latest wins include Oklahoma State University, Arcos Dorados, and City of Phoenix.
Noteworthy deal win of OCI during the reported quarter includes Pierre & Vacances-Center Parcs Group.
Oracle, currently carrying a Zacks Rank #3 (Hold), is making every effort to enhance functionalities of cloud-based applications, which is encouraging adoption. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
These initiatives are expected to provide the company an edge in the Database-as-a-Service market and reinforce its competitive position against Amazon’s (AMZN - Free Report) Amazon Web Services.
Operating Details
Non-GAAP operating expenses fell 3% year over year (down 4% at cc) to $5.302 billion. As a percentage of non-GAAP revenues, the figure contracted 290 basis points (bps) to 52.6%.
Non-GAAP operating income during the reported quarter was $4.784 billion, up 10% year over year (up 6% at cc).
Non-GAAP operating margin expanded 297 bps (expanded 247 bps at cc) on a year-over-year basis to 47%.
Balance Sheet & Cash Flow
As of Feb 28, 2021, Oracle had cash & cash equivalents, and marketable securities of $35.864 billion, compared with $38.593 billion as of Nov 30, 2020.
Operating cash flow and free cash flow for the 12 months ended Feb 28, 2021 amounted to $14.659 billion and $12.808 billion, respectively.
Share Repurchases & Dividends
Oracle repurchased 68 million shares worth approximately $4 billion during the fiscal third quarter and paid out dividends worth $2.146 billion during the nine months ended Feb 28, 2021.
Over the nine-month period ended Feb 28, 2021, the company has repurchased shares worth $12.958 billion. The company’s board of directors has authorized an additional $20 billion for the repurchase of shares.
Also, on Mar 10, 2021, the company declared a quarterly dividend of 32 cents per share, up 33% over prior dividend payout of 24 cents, payable on Apr 22, 2021, to shareholders as on Apr 8, 2021.
Q4 Guidance
For fourth-quarter fiscal 2021, Oracle anticipates total revenue growth rate on a year-over-year basis in the range of 5-7% at USD and 1-3% at cc. The Zacks Consensus Estimate for revenues is pegged at $10.76 billion, indicating improvement of 3.1% on a year-over-year basis.
Oracle expects non-GAAP earnings per share between $1.28 and $1.32 at USD, and $1.20 and $1.24 at cc. The Zacks Consensus Estimate for the same is pegged at $1.27 per share.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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