Oracle Corp., a leading software giant, experienced a 7% drop in shares during Monday’s aftermarket trading as its latest quarter’s revenue fell slightly below expectations.
Financial Performance
In the fiscal second quarter, Oracle recorded a net income of $2.50 billion, or 89 cents per share, compared to $1.74 billion, or 63 cents per share, in the same period last year. On an adjusted basis, Oracle reported earnings per share of $1.34, slightly surpassing analysts’ estimate of $1.33.
The company’s revenue increased to $12.94 billion from $12.28 billion the previous year, showing a 5% growth rate. However, this fell short of the FactSet consensus of $13.05 billion. Similarly, revenue on a constant-currency basis also came in slightly behind expectations at a 4% increase.
Cloud Services and License Support
Oracle’s revenue from cloud services and license support grew by 12% to reach $9.64 billion, but it fell just shy of analysts’ predicted amount of $9.71 billion. On the other hand, cloud license and on-premise license revenue experienced an 18% decline, amounting to $1.18 billion instead of the expected $1.21 billion.
Hardware and Services Revenue
Revenue from hardware declined by 11% to $756 million compared to the previous year, while services revenue saw a 2% decrease to $1.37 billion. Analysts had anticipated $747 million in hardware revenue and $1.39 billion in services revenue.
CEO’s Optimistic Outlook
Chief Executive Safra Catz remains optimistic about Oracle’s future prospects, stating that there is a tremendous increase in demand for their cloud infrastructure and generative AI services. The company has over $65 billion in total remaining performance obligations.
Moreover, Catz announced that Oracle’s cloud businesses are approaching an impressive annual revenue run rate of $20 billion.
Conclusion
Although Oracle’s stock has seen a 41% increase this year, surpassing the S&P 500’s gain of 20%, the company’s quarterly revenue falling short of expectations has led to a 7% drop in shares.
