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Key Takeaways From Oracle's 3rd-Quarter Results

Oracle Corp. (NYSE:ORCL) released its third-quarter results after the market closed on March 12. The software company posted strong results, surpassing earnings and revenue expectations on the back of robust growth in the cloud business.

By the numbers

The database giant registered adjusted earnings per share of 97 cents, which edged past analysts' expectations of 96 cents. Revenue of $9.8 billion grew roughly 2% on a year-over-year basis and surpassed projections of $9.75 billion. This was the company's best revenue growth since May 2018. Reflecting on the company's performance, CEO Safra Catz said:

"We had an extremely strong quarter with Total Revenues growing 3% in constant currency. Subscription revenues, made up of Cloud Services and License Support revenues, grew 5% in constant currency. These consistently growing and recurring subscription revenues now account for 71% of total company revenues, thus enabling a sequential increase in our operating margin, and double-digit non-GAAP Earnings Per Share growth in Q3."

Segment details

Cloud service and license support, which makes up roughly 75% of total revenue, surged 4% year over year to $6.9 billion. Within this segment, Oracle's autonomous database cloud revenue inched up 150%.

On the flip side, cloud license and on-premise license sales declined 2% to $1.23 billion, while hardware revenue came in at $857 million (down 6%) and service revenue dropped 1% to $778 million.

Key developments

While the technology giant has not been successful in competing with the biggest cloud infrastructure providers, its infrastructure service has helped bolster application sales.

During the quarter, the software giant introduced a Cloud Data Science Platform service and announced Vishal Sikka, the former CEO of Infosys Ltd. (NYSE:INFY), is joining its board.

The company also revealed it will buy back $15 billion worth of shares, an increase from the $13.9 billion it spent in the first nine months of the year.

Financial forecast

For the fourth quarter, the company anticipates adjusted earnings per share between $1.20 and $1.28. Revenue is expected to fall within the range of 2% down and 2% up for the same period. The company has provided a wider revenue guidance range owing to stock market volatility.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.