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Oracle Posts 4th-Quarter Earnings Beat

- By Mayank Marwah

Oracle Corp. (NYSE:ORCL) released its fiscal fourth-quarter financial results on June 19 after the market closed. Owing to strong database licence sales, the database giant reported robust and better-than-expected earnings and revenue.

Key metrics

Oracle posted fourth-quarter earnings per share of $1.16, barring certain items. Revenue during the same period came to $11.13 billion versus $10.95 billion expected by Wall Street.


The company recorded sales and marketing expenses of $2.32 million while its research and development expenditures rose 1% in the reported quarter to $823 million.

Segment details

Oracle's cloud licence and on-premise licence sales surged 12% to $2.52 billion. Licence revenue got a boost thanks to vigorous spending on enterprise software.

On the flip side, cloud services and license support revenue was $6.80 billion, flat from last year. The company's total annualized enterprise resource planning and human capital management revenue stood at a combined $3 billion. The company, however, did not provide details about its CRM SaaS revenue.

Hardware revenue plunged 11% to $994 million on account of low spending on enterprise hardware.

The Oracle-Microsoft cloud partnership

Microsoft (NASDAQ:MSFT) recently announced a new cloud interoperability affiliation with Microsoft Azure and Oracle Cloud Infrastructure (OCI) in view of delivering a "highly optimized, best-of-both-clouds experience."

Enterprise customers that use Microsoft and Oracle technology can deploy applications that run on both the companies' public cloud environments. This will help them capitalize on their interoperability and combination. Don Johnson, executive vice president of Oracle Cloud Infrastructure (OCI), said in a statement, "Oracle and Microsoft have served enterprise customer needs for decades. With this partnership, our joint customers can migrate their entire set of existing applications to the cloud without having to re-architect anything, preserving the large investments they have already made."

Microsoft and Oracle have made investments in dedicated private networks, which would help join enterprise data centers with the related cloud platforms. Both ExpressRoute (an Azure service) and FastConnect (Oracle's private connection model) depend on partners for giving connectivity and providing network switching. Several telecom and network providers can deliver speedy connectivity between cloud and the data center.

Financial forecast

For the full 2020 fiscal year, analysts project earnings per share of $3.79 for Oracle. Revenue is expected to grow 2.2% for the full year to $40.17 billion. Having spent $1.7 billion in fiscal 2019 on capital expenditures, the company anticipates capital spending of approximately $2.2 billion in fiscal 2020.

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

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This article first appeared on GuruFocus.