Oracle Earnings: Another Miss On Revenue!

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Larry Ellison

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Oracle just reported earnings and it's another miss on revenue!

It reported 59 cents EPS (analysts were expecting 56 cents). Non-GAAP revenue was $8.38 billion. Analysts were expecting $8.48 billion.

This is Oracle's first fiscal quarter, not traditionally one of Oracle's biggest, so analysts were expecting a modest 3.3% increase in year-over-year revenues.

The most important part of this quarter was if Oracle delivered as expected. The company's previous two quarters were misses on revenue. So we are now talking a three-in-a-row miss, even though it beat on EPS.

Oracle president Mark Hurd has been revamping the sales force and trying new methods, like hiring college grads, to increase sales. The situation has caused some of Oracle's most experienced sales people to grumble and/or find jobs elsewhere.

That said, Wall Street analysts are still mostly gung ho on Oracle and its long-term prospects. It's still a huge database and enterprise software company and its customers are not going to abandon it lightly.

Plus, during the quarter Oracle announced a big, renewed partnership with one of its big customers, Salesforce.com. Salesforce will become the proving point for Oracle's new Oracle 12c database, designed specifically for cloud providers.

It also announced a partnership deal with Microsoft that makes it easy to use Oracle's database on Microsoft's cloud, Azure.

Here's the relevant parts of the press release:

Oracle Reports Q1 GAAP EPS Up 14% to 47 Cents; Q1 Non-GAAP EPS Up 12% to 59 Cents

Q1 Operating Cash Flow Increases to $6.3 Billion, TTM Operating Cash Flow Increases to $14.8 Billion

REDWOOD SHORES, CA--(Marketwired - Sep 18, 2013) - Oracle Corporation (NYSE: ORCL) today announced that both fiscal 2014 Q1 GAAP and non-GAAP total revenues were up 2% to $8.4 billion. GAAP new software licenses and cloud software subscriptions revenues were up 5% to $1.7 billion while non-GAAP new software licenses and cloud software subscriptions revenues were up 4% to $1.7 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 7% to $4.4 billion. Hardware systems products revenues were $669 million. GAAP operating income was flat at $2.9 billion, and GAAP operating margin was 34%. Non-GAAP operating income was up 4% to $3.7 billion, and non-GAAP operating margin was 45%. GAAP net income was up 8% to $2.2 billion, while non-GAAP net income was up 6% to $2.8 billion. GAAP earnings per share were up 14% to $0.47, while non-GAAP earnings per share were up 12% to $0.59. GAAP operating cash flow on a trailing twelve-month basis was $14.8 billion. 

Without the impact of the US dollar strengthening compared to foreign currencies, Oracle's reported Q1 GAAP earnings per share would have been up 17% and non-GAAP earnings per share would have been up 14%. GAAP and non-GAAP total revenues also would have been up 4%; GAAP new software licenses and cloud software subscriptions revenues would have been up 7% while non-GAAP new software licenses and cloud software subscriptions revenues would have been up 6%.

"Non-GAAP earnings per share increased 12% to $0.59, the best ever result for the first quarter of our fiscal year," said Oracle President and CFO, Safra Catz. "Those record level earnings were enabled by an operating margin of 45% for the quarter. We also set a free cash flow record of over $6 billion in Q1, and then we returned half of that to our stockholders by repurchasing $3 billion of our shares in the quarter."

"Engineered systems had its best ever Q1 in terms of unit sales, growing over 60% compared with the same quarter last year," said Oracle President Mark Hurd. "New software license results were especially strong in the Americas, which saw 15% growth in constant currency."

"Next week at Oracle OpenWorld, we will announce the In-Memory Option for the Oracle database," said Oracle CEO, Larry Ellison. "Virtually every existing application that runs on top of the Oracle database will run dramatically faster by simply turning on the new In-Memory feature. Our customers don't have to make any changes to their applications whatsoever; they simply flip on the in-memory switch, and the Oracle database immediately starts scanning data at a rate of billions or tens of billions of rows per second."

The Board of Directors declared a quarterly cash dividend of $0.12 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on October 8, 2013, with a payment date of October 29, 2013.

 

ORACLE CORPORATION  
Q1 FISCAL 2014 FINANCIAL RESULTS  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
($ in millions, except per share data)  
                         
  Three Months Ended August 31,          
                      % Increase   
  2013   % of Revenues   2012   % of Revenues   % Increase (Decrease)
in US $
  (Decrease) in Constant Currency (1)  
REVENUES                            
  New software licenses and cloud software subscriptions $ 1,653   20%   $ 1,574   19%   5%   7%  
  Software license updates and product support   4,431   53%     4,140   51%   7%   8%  
    Software Revenues   6,084   73%     5,714   70%   6%   8%  
  Hardware systems products   669   8%     779   9%   (14%)   (13%)  
  Hardware systems support   592   7%     574   7%   3%   5%  
    Hardware Systems Revenues   1,261   15%     1,353   16%   (7%)   (6%)  
    Services Revenues   1,027   12%     1,114   14%   (8%)   (6%)  
      Total Revenues   8,372   100%     8,181   100%   2%   4%  
OPERATING EXPENSES                            
  Sales and marketing   1,708   20%     1,545   19%   11%   12%  
  Software license updates and product support   288   3%     283   3%   2%   3%  
  Hardware systems products   330   4%     384   5%   (14%)   (13%)  
  Hardware systems support   209   3%     224   3%   (7%)   (6%)  
  Services   806   10%     884   11%   (9%)   (7%)  
  Research and development   1,237   15%     1,201   15%   3%   4%  
  General and administrative   260   3%     275   3%   (5%)   (4%)  
  Amortization of intangible assets   595   7%     619   7%   (4%)   (4%)  
  Acquisition related and other (2)   10   0%     (258 ) (3%)   104%   104%  
  Restructuring   56   1%     145   2%   (61%)   (62%)  
      Total Operating Expenses   5,499   66%     5,302   65%   4%   5%  
OPERATING INCOME   2,873   34%     2,879   35%   0%   2%  
  Interest expense   (217 ) (2%)     (188 ) (2%)   15%   15%  
  Non-operating income, net   7   0%     11   0%   (40%)   36%  
INCOME BEFORE PROVISION FOR INCOME TAXES   2,663   32%     2,702   33%   (1%)   1%  
  Provision for income taxes   472   6%     668   8%   (29%)   (28%)  
NET INCOME $ 2,191   26%   $ 2,034   25%   8%   10%  
                             
EARNINGS PER SHARE:                            
  Basic $ 0.48       $ 0.42              
  Diluted $ 0.47       $ 0.41              
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                            
  Basic   4,608         4,867              
  Diluted   4,674         4,939              
                   

 



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