Software giant Oracle reported mixed fiscal first quarter earnings after the close Monday missing on earnings and beating on revenue. New acquisition Cerner contributed $1.4 billion in revenue during the quarter. $ORCL benefited from Fusion and NetSuite cloud applications sales with competition on two main fronts, $AMZN Cloud infrastructure and $CRM platform database. Revenue rose 18% to $11.45 billion, beating analysts’ expectations of $11.44 billion. Cloud revenue grew 45% to $3.6 billion. Oracle’s two cloud businesses now account for more than 30% of Oracle’s total revenue.
Oracle Q1 2023 Earnings
- Adj Rev $11.45b, Est. $11.44b
- Adj EPS $1.03, Est. $1.06
- Oracle said the strong US dollar cost 8 cents per share
- Adj. Oper Income $4.48b, Est. $4.49b
- Adj. Oper Margin 39%, Est. 39.6%
- Cloud Services & License Support Rev. $8.42b
- $ORCL 76.77▼ 0.35 (0.45%) After Hours
Prioritized healthcare IT and cloud services
Last month, Oracle laid off hundreds of employees as it prioritized its healthcare IT services and cloud businesses, with job cuts primarily hitting staff at its advertising and customer experience group.
- Cerner contributed $1.4 billion in revenue during the quarter.
- Oracle announced plans last year to acquire the electronic-medical-records company for $28.3 billion.
Chief Executive Safra Catz said Cerner is expected to help revenue and earnings-per-share growth as it is fully integrated into Oracle and benefits from ensuing cost efficiencies, “We expect Cerner to do even better in the coming quarters”.
Oracle’s cloud business has become quite substantial. Oracle has been tainted by being late to the game with cloud computing. However more of its traditional software business has slowly been transitioning from on-premises to the cloud driven by Fusion, Autonomous Database, and Gen2 OCI Cloud.
“In Q1 we expanded our relationship with Microsoft by providing all versions of the Oracle database directly to Microsoft Azure customers. Now all Microsoft customers can directly access the Oracle Exadata Cloud Service, the Oracle Autonomous Database and every other Oracle Database version directly from the Azure Cloud,” said Oracle’s CTO Larry Ellison.
Oracle sees cloud as being fundamentally a more profitable business, compared to on-premises. Oracle feels now is the right time to increase investment to capture market share. Oracle is building out its cloud infrastructure and took a near-term hit to margins. Oracle has been landing many new customers, with some very large users coming online recently that require significant amounts of capacity.
Source: Oracle, Alpha Street
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