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After the closing bell yesterday, Oracle (ORCL - Free Report) reported mixed second-quarter fiscal 2024 results. The software giant provided downbeat revenue guidance, citing strong competition in the cloud-computing industry. However, it beat earnings estimates.
Shares of Oracle declined as much as 9% in after-market hours as well as in today’s pre-market trading. This has put ETFs with the highest allocation to this software giant in focus. These include iShares Expanded Tech-Software Sector ETF (IGV - Free Report) , First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) , FT Cboe Vest Technology Dividend Target Income ETF (TDVI - Free Report) , FMC Excelsior Focus Equity ETF (FMCX - Free Report) and Defiance Next Gen Connectivity ETF (FIVG - Free Report) .
Oracle Earnings in Focus
Earnings per share came in at $1.34, outpacing the Zacks Consensus Estimate of $1.32. Revenues rose 5.4% year over year to $12.94 billion but fell short of the estimate of $13 billion. The substantial revenue growth was powered by infrastructure and applications cloud businesses that grew 52% and 15%, respectively (see: all the Technology ETFs here).
Cloud revenues jumped 25% to $4.8 billion in the fiscal second quarter. This marked the second consecutive quarter of slowing growth for the company. Revenues from the two strategic cloud applications businesses, namely Fusion and NetSuite Cloud ERP applications, grew 21% each during the quarter. Oracle Fusion is the world's biggest cloud ERP business, while Oracle NetSuite is the second-biggest cloud ERP business.
The slowdown in the cloud computing business has raised concerns about Oracle’s ability to keep up in the highly competitive cloud computing market. Oracle expects fiscal third-quarter revenues to be below estimates due to strong competition in the cloud computing market and an uncertain economy, which are likely to affect cloud service demand.
However, CEO Catz and Chairman Ellison remain optimistic about the business. Ellison noted a significant surge in demand for Oracle’s cloud services, describing it as "astronomical." Chairman Larry Ellison also shared his confidence, emphasizing ongoing investments to expand Oracle’s cloud infrastructure, including the construction of 100 new data centers.
iShares Expanded Tech-Software Sector ETF provides exposure to software companies in the technology and communication services sectors by tracking the S&P North American Expanded Technology Software Index. It holds a basket of 114 securities, with Oracle taking the fourth spot at 7.5% of the total assets.
iShares Expanded Tech-Software Sector ETF is popular with an AUM of $7.3 billion. Volume is good as it exchanges 854,000 shares a day. IGV charges 41 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: Fed Stays Put: 5 Winning Tech ETFs).
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
First Trust NASDAQ Technology Dividend Index Fund provides exposure to dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. TDIV holds about 84 securities in its basket. Of these firms, ORCL occupies the fifth position, making up 6.8% of the assets.
First Trust NASDAQ Technology Dividend Index Fund has $2.1 billion in its asset base and trades in a moderate volume of about 99,000 shares per day. The ETF charges 50 bps in annual fees.
FT Cboe Vest Technology Dividend Target Income ETF (TDVI - Free Report)
FT Cboe Vest Technology Dividend Target Income ETF is an actively managed fund that seeks to provide a target level of current income and capital appreciation by holding a portfolio of dividend-paying U.S. technology companies. The fund invests primarily in U.S. securities contained in the Nasdaq Technology Dividend Index and by utilizing an "option strategy" consisting of writing (selling) U.S. exchange-traded call options on the Nasdaq-100 Index and/or the S&P 500 Index, or exchange-traded funds that track the Nasdaq-100 Index or the S&P 500 Index.
FT Cboe Vest Technology Dividend Target Income ETF holds 84 securities in its basket, with ORCL taking the fifth spot at 6.8% share. It has accumulated $3.1 million in its asset base and trades in a volume of 3,000 shares per day on average. TDVI charges 75 bps in annual fees (read: Guide to High Dividend Paying ETFs).
FMC Excelsior Focus Equity ETF is an actively managed ETF that seeks to invest in the highest-conviction ideas of First Manhattan's research team. Holding 42 stocks in its basket, Oracle occupies the fourth position with a 5.3% share.
FMC Excelsior Focus Equity ETF has amassed $82.7 million in its asset base and trades in an average daily volume of 200 shares. It charges 70 bps in fees per year from investors.
Defiance Next Gen Connectivity ETF follows the Bluestar 5G Communications Index and offers investors access to 5G stocks – companies engaged in the research and development or commercialization of systems and materials used in 5G communications. It holds 48 stocks in its basket, with Oracle occupying the sixth position at 4.5%.
Defiance Next Gen Connectivity ETF has AUM of $556.6 million and charges 30 bps in annual fees. It trades in a volume of 59,000 shares per day on average. It has a Zacks ETF Rank #3 (Hold).
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ETFs in Focus Post Oracle's Fiscal Q2 Earnings
After the closing bell yesterday, Oracle (ORCL - Free Report) reported mixed second-quarter fiscal 2024 results. The software giant provided downbeat revenue guidance, citing strong competition in the cloud-computing industry. However, it beat earnings estimates.
Shares of Oracle declined as much as 9% in after-market hours as well as in today’s pre-market trading. This has put ETFs with the highest allocation to this software giant in focus. These include iShares Expanded Tech-Software Sector ETF (IGV - Free Report) , First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) , FT Cboe Vest Technology Dividend Target Income ETF (TDVI - Free Report) , FMC Excelsior Focus Equity ETF (FMCX - Free Report) and Defiance Next Gen Connectivity ETF (FIVG - Free Report) .
Oracle Earnings in Focus
Earnings per share came in at $1.34, outpacing the Zacks Consensus Estimate of $1.32. Revenues rose 5.4% year over year to $12.94 billion but fell short of the estimate of $13 billion. The substantial revenue growth was powered by infrastructure and applications cloud businesses that grew 52% and 15%, respectively (see: all the Technology ETFs here).
Cloud revenues jumped 25% to $4.8 billion in the fiscal second quarter. This marked the second consecutive quarter of slowing growth for the company. Revenues from the two strategic cloud applications businesses, namely Fusion and NetSuite Cloud ERP applications, grew 21% each during the quarter. Oracle Fusion is the world's biggest cloud ERP business, while Oracle NetSuite is the second-biggest cloud ERP business.
The slowdown in the cloud computing business has raised concerns about Oracle’s ability to keep up in the highly competitive cloud computing market. Oracle expects fiscal third-quarter revenues to be below estimates due to strong competition in the cloud computing market and an uncertain economy, which are likely to affect cloud service demand.
However, CEO Catz and Chairman Ellison remain optimistic about the business. Ellison noted a significant surge in demand for Oracle’s cloud services, describing it as "astronomical." Chairman Larry Ellison also shared his confidence, emphasizing ongoing investments to expand Oracle’s cloud infrastructure, including the construction of 100 new data centers.
ETFs in Focus
Let’s delve into each ETF below:
iShares Expanded Tech-Software Sector ETF (IGV - Free Report)
iShares Expanded Tech-Software Sector ETF provides exposure to software companies in the technology and communication services sectors by tracking the S&P North American Expanded Technology Software Index. It holds a basket of 114 securities, with Oracle taking the fourth spot at 7.5% of the total assets.
iShares Expanded Tech-Software Sector ETF is popular with an AUM of $7.3 billion. Volume is good as it exchanges 854,000 shares a day. IGV charges 41 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: Fed Stays Put: 5 Winning Tech ETFs).
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)
First Trust NASDAQ Technology Dividend Index Fund provides exposure to dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. TDIV holds about 84 securities in its basket. Of these firms, ORCL occupies the fifth position, making up 6.8% of the assets.
First Trust NASDAQ Technology Dividend Index Fund has $2.1 billion in its asset base and trades in a moderate volume of about 99,000 shares per day. The ETF charges 50 bps in annual fees.
FT Cboe Vest Technology Dividend Target Income ETF (TDVI - Free Report)
FT Cboe Vest Technology Dividend Target Income ETF is an actively managed fund that seeks to provide a target level of current income and capital appreciation by holding a portfolio of dividend-paying U.S. technology companies. The fund invests primarily in U.S. securities contained in the Nasdaq Technology Dividend Index and by utilizing an "option strategy" consisting of writing (selling) U.S. exchange-traded call options on the Nasdaq-100 Index and/or the S&P 500 Index, or exchange-traded funds that track the Nasdaq-100 Index or the S&P 500 Index.
FT Cboe Vest Technology Dividend Target Income ETF holds 84 securities in its basket, with ORCL taking the fifth spot at 6.8% share. It has accumulated $3.1 million in its asset base and trades in a volume of 3,000 shares per day on average. TDVI charges 75 bps in annual fees (read: Guide to High Dividend Paying ETFs).
FMC Excelsior Focus Equity ETF (FMCX - Free Report)
FMC Excelsior Focus Equity ETF is an actively managed ETF that seeks to invest in the highest-conviction ideas of First Manhattan's research team. Holding 42 stocks in its basket, Oracle occupies the fourth position with a 5.3% share.
FMC Excelsior Focus Equity ETF has amassed $82.7 million in its asset base and trades in an average daily volume of 200 shares. It charges 70 bps in fees per year from investors.
Defiance Next Gen Connectivity ETF (FIVG - Free Report)
Defiance Next Gen Connectivity ETF follows the Bluestar 5G Communications Index and offers investors access to 5G stocks – companies engaged in the research and development or commercialization of systems and materials used in 5G communications. It holds 48 stocks in its basket, with Oracle occupying the sixth position at 4.5%.
Defiance Next Gen Connectivity ETF has AUM of $556.6 million and charges 30 bps in annual fees. It trades in a volume of 59,000 shares per day on average. It has a Zacks ETF Rank #3 (Hold).