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Oracle's (ORCL) Q4 Earnings Coming Up: What's in Store?

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Oracle (ORCL - Free Report) is scheduled to release fourth-quarter fiscal 2022 results on Jun 13 after market close.

For fourth-quarter fiscal 2022, Oracle anticipates total revenue growth rate, on a year-over-year basis, in the range of 3-5% at USD and 6-8% at cc. The Zacks Consensus Estimate for revenues is pegged at $11.65 billion, indicating an increase of 3.72% on a year-over-year basis.

Oracle expects non-GAAP earnings per share (“EPS”) growth rate on a year-over-year basis in the range of 2-6% at cc and in the band of $1.40-$1.44 per share. The non-GAAP EPS for the fourth quarter is expected in the band of $1.14-$1.18 per share at cc.

The Zacks Consensus Estimate for earnings has been revised upward by 1.5% in the past 30 days to $1.38 per share, suggesting a decline of 10.3% from the year-ago quarter’s reported figure.

Over the trailing four quarters, Oracle’s earnings beat the Zacks Consensus Estimate on three occasions and missed on one with the average surprise being 7.34%.

Oracle Corporation Price and EPS Surprise

Oracle Corporation Price and EPS Surprise

Oracle Corporation price-eps-surprise | Oracle Corporation Quote

Factors to Consider

Accelerated digital transformation along with the continuation of remote work and mainstream adoption of the hybrid/flexible work model is likely to have driven demand for Oracle Cloud Infrastructure (“OCI”) services and the company’s other cloud-based applications.

Cloud services and license support revenues are projected to grow 4-6% in USD and at 6-8% at cc for the fourth quarter of fiscal 2022.

In the last reported quarter, Oracle’s Cloud license and on-premise license revenues (12% of total revenues) increased 1% year over year (up 4% at cc) to $1.289 billion.

Continued momentum in back-office cloud-based Fusion Human Capital Management (“HCM”) solutions along with NetSuite Enterprise Resource Planning (“ERP”) and Fusion ERP applications is expected to have favored ORCL’s quarterly performance.

The migration of several large-scale SAP clients to Oracle Fusion ERP cloud and increasing deal wins in several verticals, especially banking and healthcare, might have acted as tailwinds for the company’s ERP business.

Fusion ERP, Fusion HCM and NetSuite ERP were up 35%, 22% and 29%, respectively, in the third quarter of fiscal 2022.

The robust adoption of Oracle’s next-generation autonomous database and Oracle Dedicated Region Cloud, supported by machine learning (ML) and Artificial Intelligence (AI) capabilities, might have benefited the top line. Autonomous database in Gen2 public cloud infrastructure is witnessing healthy traction.

On Mar 29. Oracle announced that Oracle MySQL HeatWave will now support in-database ML, in addition to the previously available transaction processing and analytics.

Oracle’s latest Multiple-VM Autonomous Database on Oracle Exadata Cloud@Customer service offering is gaining considerable traction among on-premises clients. Multiple-VM Autonomous Database enables organizations to create and run isolated, highly available Autonomous Database instances on Exadata Cloud@Customer systems that are also running non-autonomous Oracle Databases.

Higher customer acquisitions, including independent software vendors, are likely to have contributed to the top line.

Strength in the Oracle Fusion Cloud Supply Chain & Manufacturing solution, integrated with new capabilities that help companies foster innovation and improve decision making, is expected to contribute to the top line in the about-to-be-reported quarter.

Higher expenses on product development, especially increased investment toward cloud platform, might have dented fiscal fourth-quarter performance. Intense competition in the cloud computing market from the likes of Amazon Web Services, Azure platform and Google Cloud might also have limited margin expansion.

Q4 Highlights

In the to-be-reported quarter, Oracle announced that OCI attained Department of Defense (“DOD”) Impact Level 5 (IL5) Provisional Authorization (“PA”) for additional services. With the DOD authorizations in place, Oracle is expected to deliver a highly secure, compliant and cost-effective cloud, built for the U.S. government, at a much lower price.

This Zacks Rank #3 (Hold) company also announced that it is expanding OCI’s built-in services and capabilities. The integration of the threat management capabilities in OCI will help customers protect their cloud applications and data against emerging threats without any additional investment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Oracle partnered with VMware (VMW - Free Report) to launch Oracle Cloud VMware Solution. The Oracle VMware Solution provides a faster route to the cloud, providing predictability, security and control of on-premise VMware workloads. The solution gained popularity among leading enterprises in retail, telecommunication, finance and banking, manufacturing, government and others.

The American energy company, Williams Companies (WMB - Free Report) selected Oracle to shift its finance and operations to the cloud.

Williams Companies handles approximately 30% of the natural gas in the United States that is used every day by the population. The natural gas industry witnessed a boom and then stabilized, which impacted Williams’ cost structure.

Williams Companies opted for Oracle Fusion Cloud ERP which provides the company with real-time insights and control over its costs and reduces its energy consumption with SaaS.

Moreover, to consolidate and replace its Human Resources systems in the cloud as part of its global digitalization program, Nokia (NOK - Free Report) selected HCM.

Implementing Oracle Cloud HCM will help Nokia standardize its HR processes on a common data platform. This will enable Nokia to easily manage and scale its global HR services and provide a consistent employee experience across teams.

On Apr 4, Oracle announced that NTT DOCOMO, a Japan-based mobile operator, adopted OCI to build a new development environment for All Around DOCOMO Information Systems. It is one of the largest customer information management systems in the world.

This apart, Oracle announced the availability of Java 18, the latest version of the world’s number one programming language and development platform.