Oracle (ORCL) shares rose Monday evening after the tech giant reported initial fiscal results quarterly profit and revenue that beat expectations. Oracle also announced a strategic partnership with cloud services rival Amazon (AMZN) Web Services.
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For the quarter ended August, Oracle said it earned adjusted earnings of $1.39 per share on revenue of $13.3 billion. Analysts on average had predicted the Austin, Texas-based company would post adjusted earnings of $1.33 per share on revenue of $13.2 billion.
For the same period a year earlier, Oracle reported adjusted earnings of $1.19 per share on revenue of $12.5 billion.
“As cloud services became Oracle’s largest line of business, both our revenue and earnings per share accelerated,” Oracle Chief Executive Safra Catz said in a press release.
Catz added in the press release that “the biggest news of all was signing a multi-cloud agreement with AWS, including our latest technology, Exadata hardware, and version 23ai of our database software, embedded in AWS cloud data centers.”
On the stock market today, Oracle shares rose more than 6% to 149.22 in recent after-hours trading.
This is a breaking news story and will be updated with further earnings reporting. Read a preview of Oracle’s earnings report below.
Oracle (ORCL) is up nearly 35% so far this year, but that momentum will be tested on Monday.
The database software giant is scheduled to report earnings for its first fiscal quarter after the market closes today. Analysts will be watching closely for signs of progress for the 47-year-old company in becoming a cutting-edge provider of cloud services and the computing power needed for artificial intelligence.
The earnings announcement kicks off a busy week for the company. Oracle’s annual CloudWorld conference kicks off Tuesday in Las Vegas, where Oracle stock analysts expect new announcements for OCI and other parts of the company.
Here’s what you need to know before the report appears:
Oracle Stock: Q1 in Numbers
For Oracle’s quarter ended Aug. 31, analysts polled by FactSet expect the company’s adjusted earnings to grow 12% year over year to $1.33 per share. Revenue is expected to increase 6.3% year over year to $13.2 billion.
Another number to watch: the growth of Oracle’s cloud infrastructure business. OCI, as it’s known, is a critical part of Oracle’s shift to an enterprise cloud service provider that competes with Amazon.nl(AMZN) Amazon Web Services and Microsoft (MSFT) Azure.
Oracle shares have benefited this year as the company signed AI startups to OCI and built up a pipeline of demand for cloud services.
Oracle Chief Executive Safra Catz told analysts in June that Oracle signed more than 30 AI-related sales contracts, totaling $12.5 billion, in the quarter ended May alone. The comments helped send Oracle shares up 13% following its fiscal Q4 report in June, even as Oracle’s total revenue fell short of expectations.
Investors expect Oracle to post year-over-year growth in cloud infrastructure sales of about 46% in the first quarter, Jefferies analyst Brent Thill wrote in a recent client note.
Oracle’s cloud infrastructure revenue rose 42% year over year to $2 billion for the May quarter. Revenue rose 49%, 52% and 66% in the previous quarters.
One challenge for Oracle is building enough AI-enabled data centers to meet demand. Oracle’s remaining performance obligations, or contracted work, grew 44% year over year to $98 billion in the May quarter.
Thill said Oracle’s order book “must continue to grow strongly in (fiscal Q1) for the stock to continue to perform.” Thill is neutral on Oracle shares.
Oracle CloudWorld, Analyst Day on Deck
Later this week, Oracle will highlight its cloud offerings at a conference in Las Vegas, which includes an analyst day on Thursday.
Publishing its earnings statement and holding a conference in the same week creates an “interesting situation” for Oracle’s first quarter, Barclays analyst Raimo Lenschow recently told clients.
He said the more immediate results could be more mixed, while the conference could provide more positive data points about Oracle’s customer base and progress in improving margins.
“We continue to enjoy it Oracle story and think long-term investors should focus on long-term progress (growth acceleration over multiple years) rather than a single quarter, especially this seasonally small first quarter,” Lenschow wrote. Lenschow rates Oracle as Positively Overweight.
Oracle Stocks With a Flat Base
On the stock market, Oracle is trading at around the same level today in morning trading at around 142.
MarketSurge shows that Oracle shares have formed a flat base pattern and are approaching a buy point of 146.59. In June, Oracle shares broke out above a buy point of 132.77 from a cup base, according to MarketSurge pattern recognition.
Shares have risen 34% so far this year, ahead of the S&P 500’s 15% gain. But Oracle’s 14% gain over the past 12 months lags the S&P 500’s 22.5% gain.
Meanwhile, Oracle stock has an IBD Composite Rating of 81 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Additionally, Oracle’s IBD Relative Strength Rating is 86 out of 99. The RS Rating means that Oracle has outperformed 86% of all stocks in IBD’s database over the past year.
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