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Jun 16, 2021
Oracle (ORCL, $77.22) shares fall, on lower-than-expected guidance

Oracle (ORCL, $77.22) shares fall, on lower-than-expected guidance

Oracle shares dropped -5% in extended trading on Tuesday, despite earnings beat. It provided a lower-than-expected guidance on quarterly revenue.  The computer tech company also expressed plans to boost capital expenditures for cloud computing workloads.

Adjusted earnings for the fiscal fourth quarter came in at $1.54 per share, beating the $1.31 per share expected by analysts, according to Refinitiv.

Revenue for the quarter rose +8% year-over-year (vs. +3% in the prior quarter) to $11.23 billion, compared to $11.04 billion as expected by analysts (according to Refinitiv). Revenue growth got a boost from base effect since the prior-year quarter revenue fell around -6% amid the coronavirus pandemic.

Revenue from the cloud services and license support business was $7.39 billion, up +8% and above the FactSet consensus estimate of $7.32 billion. According to the company, revenue from its second-generation cloud infrastructure doubled in the quarter.

The cloud license and on-premises license segment generated $2.14 billion in revenue, growing  +9% and beating consensus estimate of $2.05 billion.

The company’s hardware revenue fell -2% to $882 million, in line with analysts’ estimates.

Looking ahead, Oracle is expecting adjusted earnings of 94 cents to 98 cents in per share for the fiscal first quarter, vs. $1.03 per share projected by analysts polled by Refinitiv. The company forecasts 3% to 5% revenue growth for that quarter, vs. 3% revenue growth estimated by analysts surveyed by Refinitiv.

According to Oracle, it expects to roughly double its cloud capex spending in FY 2022 to nearly $4 billion. “We are confident that the increased return in the cloud business more than justifies this increased investment, and our margins will expand over time,” CEO Safra Catz said.

 

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