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Oracle's 1st-Quarter Earnings Rise, but Revenue Falls Short of Expectations

·3 min read

Oracle Corp. (NYSE:ORCL) released its fiscal fourth-quarter 2020 results after the market closed on June 16. The software company's earnings surpassed expectations, but revenue missed projections. The company cited low enterprise software spending as the reason for mixed results.

By the numbers

The database giant registered adjusted earnings per share of $1.20, which edged past Wall Street's expectations of $1.18. Revenue of $10.4 billion plunged 6% on a year-over-year basis and was below analysts' projections of $10.6 billion.

Reflecting on the company's performance, CEO Safra Catz said:

"Our overall business did remarkably well considering the pandemic, but our results would have been even better except for customers in the hardest-hit industries that we serve such as hospitality, retail, and transportation postponing some of their purchases."

Segment performance

Cloud service and license support, which makes up roughly 70% of total revenue, surged 1% year over year to $6.8 billion. Analysts had called for revenue of $2.14 billion.

On the flip side, cloud license and on-premise license sales declined 22% to $2 billion, while hardware revenue came in at $901 million (down 9%) and service revenue dropped 11% to $735 million.

Key developments

Oracle rolled out an improved form of its Exadata Cloud Customer service in the fourth quarter, which allows the on-premise database customers to operate the Oracle Autonomous database in their own datacenter. Larry Ellison, company's Chairman and Chief Technology Officer, commented:

"Enabling all our on-premise database customers to upgrade and run Oracle's latest and best database technology in their own data center should dramatically accelerate the rate of adoption of the Oracle Autonomous Database...especially by our largest customers including banks and governments that are not currently planning to move their largest and most critical systems to a public cloud."

During the quarter, 8x8, Inc. (NYSE:EGHT), a provider of Voice over Internet Protocol (VoIP) products, started running its services on the Oracle Cloud Infrastructure (OCI). 8x8 was amazed looking at the "performance gains" by moving workloads from AWS to Oracle, which is why the company is moving all of its services from AWS to Oracle.

Financial forecast

For the first quarter of fiscal 2021, the company anticipates adjusted earnings per share between $0.84 and $0.88. Change in revenue is expected to fall within the -1% to 1% range.

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

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This article first appeared on GuruFocus.