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.
ORCL may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 36 cases where ORCL's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .
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