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Oracle (ORCL) Q4 Earnings Beat Estimates, Revenues Miss
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Oracle (ORCL - Free Report) reported fourth-quarter fiscal 2020 non-GAAP earnings of $1.20 per share, beating the Zacks Consensus Estimate by 5.26%. Further, the bottom line was up 3% from the year-ago quarter (up 5% in constant currency or cc).
However, non-GAAP revenues declined 6% (down 4% in cc) year over year to $10.441 billion, missing the Zacks Consensus Estimate by 1.64%.
Notably, shares of Oracle were down around 3% in the pre-market, on Jun 17, following bleak fiscal fourth-quarter top-line performance.
The company’s shares have declined 8% year to date, against the industry’s rally of 14.2%.
Top Line in Detail
Oracle reported total revenues (on a GAAP basis) of $10.44 billion, down 6% (down 4% in cc) year over year, primarily led by decline in license revenues.
Revenues by Offerings
Oracle’s top line benefited from the ongoing cloud-based momentum. Cloud services and license support revenues (66% of total revenues) in the reported quarter rose 1% year over year (up 3% in cc) to $6.845 billion.
Break up of Cloud services and license support Revenues
Applications revenues (contributed 40.2% to total cloud services and license support revenues) amounted to $2.749 billion, up 1% year over year (up 3% in cc).
Infrastructure related revenues (59.8%) were $4.096 billion, flat on a year-over-year basis (up 3% in cc).
Meanwhile, Cloud license and on-premise license revenues (19%) declined 22% year over year (down 21% in cc) to $1.959 billion.
Hardware revenues (8%) were $901 million, down 9% (down 7% in cc) year over year.
Services revenues (7%) declined 11% (down 8% in cc) to $735 million.
Revenues by Geography
Revenues from Americas (representing 55% of total revenues) declined 7.1% year over year to $5.746 billion.
Revenues from Europe/Middle East/Africa (28%) declined 5.7% from the year-ago quarter’s figure to $2.952 billion.
Revenues from Asia Pacific (17%) declined 4.3% from the year-ago quarter level to $1.742 billion.
Customer Expansion Bodes Well
Management announced that Fusion HCM, NetSuite ERP and Fusion ERP businesses were up 29%, 25% and 35% in the fiscal fourth quarter, respectively. NetSuite ERP and Fusion ERP have customer strength of around 22,000 and 7,100, respectively.
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. Markedly, Goldman Sachs implemented and went live with Oracle Cloud HCM in the recent past. Further, the migration of several midsized SAP customers to Fusion ERP and Fusion HCM is an upside.
Expanding clientele is enabling the company to maintain leading position in cloud ERP market. Management is optimistic on latest ERP deal wins from companies including JPMorgan Chase, Mount Sinai Hospital and the Icahn School of Medicine, KPM Netherlands, and Westpac New Zealand.
Key HCM wins include Kroger, Malaysia-based Petronas, Norfolk County Council, the United Nations, MD Anderson Cancer Center and the University of Texas.
Moreover, the next-generation autonomous database launched by Oracle, supported by ML, is gaining traction. In the reported quarter, Oracle added new Autonomous Database cloud customers. New product introductions are likely to boost growth further 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.
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 an edge in the Database-as-a-Service market and reinforce its competitive position against Amazon Web Services.
Markedly, during the quarter under review, Zoom Video Communications (ZM - Free Report) and 8x8 (EGHT - Free Report) selected Oracle Cloud Infrastructure (OCI) services to enhance video meeting solutions in a secure manner amid explosive growth in user base.
Other key deal wins include Omani Information Technology and Communications Group, Jefferies, Saudi Arabia-based General Authority of Civil Aviation, Quest Diagnostics, Canada-based TD Bank Group, Verizon Business Group, Cybereason, Synacor, India-based Manappuram Finance and Altair.
During fiscal fourth quarter, American Electric Power (AEP - Free Report) selected Oracle Utilities Opower solution to provide customers with personalized energy management programs.
Operating Details
Non-GAAP operating expenses fell 10% year over year (down 8% in cc) to $5.299 billion.
Non-GAAP operating income during the reported quarter was $5.142 billion, down 2% year over year (almost flat at cc).
Non-GAAP operating margin expanded 200 basis points (bps) on a year-over-year basis to 49%.
Balance Sheet & Cash Flow
As of May 21, 2020, Oracle had cash & cash equivalents, and marketable securities of $ 43.057 billion, up from $25.858 billion as of Feb 29, 2020.
The company issued debt of $20 billion in the reported quarter, which increased interest expenses, and lowered earnings per share by 3 cents.
Operating cash flow and free cash flow for the 12 months ended May 21, 2020 came in at $13.139 billion and $11.575 billion, respectively.
Share Repurchases & Dividends
Oracle repurchased 107 million shares worth approximately $5.2 billion during the fiscal fourth quarter and paid out dividends worth $3.07 billion during the 12 months ended May 21, 2020.
Over the past 12 months, the company has repurchased 361 million shares worth $19.2 billion. Over the last 10 years, Oracle has reduced the shares outstanding by nearly 40%.
On Jun 16, 2020, the company declared a quarterly dividend of 24 cents per share, payable on Jul 15, 2020, to shareholders as on Jul 28, 2020.
Guidance
For first-quarter fiscal 2021, Oracle anticipates total revenue growth rate on a year-over-year basis in the range of (1%) to 1% at USD and 0-2% at cc.
Oracle expects non-GAAP earnings per share in the range of 85-89 cents. The Zacks Consensus Estimate for the same is pegged at 85 cents per share.
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Oracle (ORCL) Q4 Earnings Beat Estimates, Revenues Miss
Oracle (ORCL - Free Report) reported fourth-quarter fiscal 2020 non-GAAP earnings of $1.20 per share, beating the Zacks Consensus Estimate by 5.26%. Further, the bottom line was up 3% from the year-ago quarter (up 5% in constant currency or cc).
However, non-GAAP revenues declined 6% (down 4% in cc) year over year to $10.441 billion, missing the Zacks Consensus Estimate by 1.64%.
Notably, shares of Oracle were down around 3% in the pre-market, on Jun 17, following bleak fiscal fourth-quarter top-line performance.
The company’s shares have declined 8% year to date, against the industry’s rally of 14.2%.
Top Line in Detail
Oracle reported total revenues (on a GAAP basis) of $10.44 billion, down 6% (down 4% in cc) year over year, primarily led by decline in license revenues.
Revenues by Offerings
Oracle’s top line benefited from the ongoing cloud-based momentum. Cloud services and license support revenues (66% of total revenues) in the reported quarter rose 1% year over year (up 3% in cc) to $6.845 billion.
Break up of Cloud services and license support Revenues
Applications revenues (contributed 40.2% to total cloud services and license support revenues) amounted to $2.749 billion, up 1% year over year (up 3% in cc).
Infrastructure related revenues (59.8%) were $4.096 billion, flat on a year-over-year basis (up 3% in cc).
Meanwhile, Cloud license and on-premise license revenues (19%) declined 22% year over year (down 21% in cc) to $1.959 billion.
Hardware revenues (8%) were $901 million, down 9% (down 7% in cc) year over year.
Services revenues (7%) declined 11% (down 8% in cc) to $735 million.
Revenues by Geography
Revenues from Americas (representing 55% of total revenues) declined 7.1% year over year to $5.746 billion.
Revenues from Europe/Middle East/Africa (28%) declined 5.7% from the year-ago quarter’s figure to $2.952 billion.
Revenues from Asia Pacific (17%) declined 4.3% from the year-ago quarter level to $1.742 billion.
Customer Expansion Bodes Well
Management announced that Fusion HCM, NetSuite ERP and Fusion ERP businesses were up 29%, 25% and 35% in the fiscal fourth quarter, respectively. NetSuite ERP and Fusion ERP have customer strength of around 22,000 and 7,100, respectively.
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. Markedly, Goldman Sachs implemented and went live with Oracle Cloud HCM in the recent past. Further, the migration of several midsized SAP customers to Fusion ERP and Fusion HCM is an upside.
Expanding clientele is enabling the company to maintain leading position in cloud ERP market. Management is optimistic on latest ERP deal wins from companies including JPMorgan Chase, Mount Sinai Hospital and the Icahn School of Medicine, KPM Netherlands, and Westpac New Zealand.
Key HCM wins include Kroger, Malaysia-based Petronas, Norfolk County Council, the United Nations, MD Anderson Cancer Center and the University of Texas.
Moreover, the next-generation autonomous database launched by Oracle, supported by ML, is gaining traction. In the reported quarter, Oracle added new Autonomous Database cloud customers. New product introductions are likely to boost growth further 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.
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 an edge in the Database-as-a-Service market and reinforce its competitive position against Amazon Web Services.
Markedly, during the quarter under review, Zoom Video Communications (ZM - Free Report) and 8x8 (EGHT - Free Report) selected Oracle Cloud Infrastructure (OCI) services to enhance video meeting solutions in a secure manner amid explosive growth in user base.
Other key deal wins include Omani Information Technology and Communications Group, Jefferies, Saudi Arabia-based General Authority of Civil Aviation, Quest Diagnostics, Canada-based TD Bank Group, Verizon Business Group, Cybereason, Synacor, India-based Manappuram Finance and Altair.
Oracle, currently carrying a Zacks Rank #3 (Hold), also benefited from adoption of customer engagement platforms. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Oracle Corporation Price, Consensus and EPS Surprise
Oracle Corporation price-consensus-eps-surprise-chart | Oracle Corporation Quote
During fiscal fourth quarter, American Electric Power (AEP - Free Report) selected Oracle Utilities Opower solution to provide customers with personalized energy management programs.
Operating Details
Non-GAAP operating expenses fell 10% year over year (down 8% in cc) to $5.299 billion.
Non-GAAP operating income during the reported quarter was $5.142 billion, down 2% year over year (almost flat at cc).
Non-GAAP operating margin expanded 200 basis points (bps) on a year-over-year basis to 49%.
Balance Sheet & Cash Flow
As of May 21, 2020, Oracle had cash & cash equivalents, and marketable securities of $ 43.057 billion, up from $25.858 billion as of Feb 29, 2020.
The company issued debt of $20 billion in the reported quarter, which increased interest expenses, and lowered earnings per share by 3 cents.
Operating cash flow and free cash flow for the 12 months ended May 21, 2020 came in at $13.139 billion and $11.575 billion, respectively.
Share Repurchases & Dividends
Oracle repurchased 107 million shares worth approximately $5.2 billion during the fiscal fourth quarter and paid out dividends worth $3.07 billion during the 12 months ended May 21, 2020.
Over the past 12 months, the company has repurchased 361 million shares worth $19.2 billion. Over the last 10 years, Oracle has reduced the shares outstanding by nearly 40%.
On Jun 16, 2020, the company declared a quarterly dividend of 24 cents per share, payable on Jul 15, 2020, to shareholders as on Jul 28, 2020.
Guidance
For first-quarter fiscal 2021, Oracle anticipates total revenue growth rate on a year-over-year basis in the range of (1%) to 1% at USD and 0-2% at cc.
Oracle expects non-GAAP earnings per share in the range of 85-89 cents. The Zacks Consensus Estimate for the same is pegged at 85 cents per share.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>