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Factors Setting the Tone for Oracle's (ORCL) Q2 Earnings

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Oracle (ORCL - Free Report) is slated to release second-quarter fiscal 2020 results on Dec 12.

For the fiscal second quarter, the company expects total revenues to improve 1-3% in cc. In dollar terms, total revenues are expected to increase 0-2%.

The Zacks Consensus Estimate for revenues for fiscal second quarter is pegged at $9.63 billion, indicating an improvement of 0.7% from the year-ago quarter.

Oracle expects non-GAAP earnings per share to be 88-90 cents in cc (and 87-89 cents excluding currency impact).

The Zacks Consensus Estimate for earnings has been pegged at 88 cents over the past 30 days, suggesting growth of 10% from the year-ago reported figure.

Notably, the company surpassed the Zacks Consensus Estimate in three of the trailing four quarters, while matching the same once. The trailing four-quarter positive earnings surprise is 3.64%, on average.

In first-quarter fiscal 2020, Oracle reported non-GAAP earnings of 81 cents per share, which matched the Zacks Consensus Estimate. Revenues of $9.220 billion missed the Zacks Consensus Estimate of $9.289 billion.

 Factors at Play

Oracle fiscal second-quarter top line is anticipated to have benefited from adoption of Oracle Data Cloud services, which offer marketers the required data and tools to strengthen their end-to-end marketing processes.

In the fiscal second quarter, Oracle’s Data Cloud capabilities were selected by GIPHY to enable advertisers to validate and quantify ad-content viewability and delivery on a real-time basis. Notably, the GIPHY platform leverages Moat intelligence capabilities to improve viewability, avoid invalid traffic (IVT) and optimize spend on media.

Moreover, synergies from other acquisitions comprising Grapeshot, Moat, Crosswise, AddThis, BlueKai, and Datalogix, have been strengthening Oracle Data Cloud platform.

Oracle Corporation Price and EPS Surprise

Oracle Corporation Price and EPS Surprise

Oracle Corporation price-eps-surprise | Oracle Corporation Quote

Additionally, continued momentum in the next-generation autonomous database launched by Oracle, supported by ML and AI, is likely to have contributed to the fiscal second-quarter top line.

In the fiscal first quarter, Oracle added around 500 new Autonomous Database cloud customers. Management anticipates the count to grow more than twofold in the fiscal second quarter. This is expected to be a key catalyst. Markedly, Uber, Siemens Energy, among others have selected Oracle’s latest services.

Further, momentum in cloud-based Fusion ERP, NetSuite and HCM applications is expected to have continued in the fiscal second quarter. Notably, in the fiscal first quarter, both NetSuite ERP and Fusion ERP businesses were up 33%.

However, increasing expenses on product development, by means of new hiring, product roll outs and partnerships, and acquisitions, is expected to have weighed on margins in the fiscal second quarter.

Notably, the Zacks Consensus Estimate for Total Hardware revenues is pegged at $844 million, compared with $815 million reported in the fiscal first quarter. Meanwhile, the consensus for Services revenues is pegged at $804 million, compared with $786 million reported in the fiscal first quarter.

Key Developments in Q2

At its OpenWorld conference, Oracle unveiled new cloud security services including Cloud Guard, Data Safe, and Maximum Security Zones. Moreover, Oracle Cloud Infrastructure secured FedRAMP Authorization. It is expected to aid the company in expanding clientele comprising U.S. Government based agencies.

The company is making every effort to enhance functionalities of cloud-based applications, which is encouraging adoption. These initiatives are expected to provide the company a competitive edge in the Database-as-a-Service market against Amazon’s (AMZN - Free Report) AWS.

The company also launched Oracle Exadata Database Machine X8M, which is based on remote direct memory access over Converged Ethernet (RoCE) technology and utilizes Intel’s (INTC - Free Report) Optane DC Persistent Memory modules.

Oracle also announced partnership with VMware, Deloitte, and Box, among others, and strengthened cloud partnership with Microsoft (MSFT - Free Report) .

Furthermore, the company inked a deal to acquire CrowdTwist, a provider of a customer loyalty and analytics platform, in an effort to enhance Oracle Customer Experience (CX) Cloud suite. However, the financial terms of the deal have been kept under wraps.

Zacks Rank

Currently, Oracle carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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