Arik Hesseldahl

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Oracle Shakes Off Wall Street’s Worries, Beats Estimates in Q2

Quarterly results from Oracle have just crossed the wires, and apparently there wasn’t quite as much to worry about as analysts had led us to believe.

Earnings on a per-share basis were 69 cents versus the 67-cent consensus view. Sales were $9.3 billion, beating the expected $9.2 billion. Shares rose a bit after hours as the results were first announced, but ahead of the conference call they’re down slightly to $34.43 after closing higher by nearly three percent during the regular session.

Leading the results were sales of new software licenses, which were flat at $2.4 billion, as was hardware sales at $1.3 billion. License update revenue grew six percent to $4.5 billion.

Since it’s Oracle, CEO Larry Ellison made a few statements meant to disparage the competition, specifically cloud software companies and Workday. Never mind that Salesforce is a big Oracle database customer — its main product, the Salesforce CRM application, still competes directly with Oracle’s.

Ellison made a point of calling attention to Oracle’s “billion dollar SaaS business” and crowed that bookings grew 35 percent in the quarter and continue to grow at a “triple-digit rate.”

Update: Oracle just shared its guidance for the quarter ending in February. It said it expects per-share earnings of 68 cents to 72 cents, which straddles the consensus of 70 cents. It sees revenue growing between three percent and seven percent. It still expects a flat-to-up outlook on hardware, ranging from a decline of one percent to growth of eight percent. That’s a good signal — last quarter it was forward guidance that caused the shares to drop the next day. The shares have recovered a bit from an earlier drop after hours.

Here’s Oracle’s original announcement.


TTM Operating Cash Flow Increases to Record $15.2 billion, TTM Free Cash Flow up 14%

REDWOOD SHORES, Calif., December 18, 2013 — Oracle Corporation (NYSE: ORCL) today announced that both fiscal 2014 Q2 GAAP and non-GAAP total revenues were up 2% to $9.3 billion. GAAP new software licenses and cloud software subscriptions revenues were unchanged at $2.4 billion, while non-GAAP new software licenses and cloud software subscriptions revenues were down 1% to $2.4 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 6% to $4.5 billion. Hardware Systems revenues, including hardware systems products and hardware systems support, were unchanged at $1.3 billion. Hardware systems products revenues were down 3% to $714 million. GAAP operating income was down 2% to $3.4 billion, and the GAAP operating margin was 37%. Non-GAAP operating income was down 1% at $4.2 billion, and the non-GAAP operating margin was 46%. GAAP net income was down 1% to $2.6 billion, while non-GAAP net income was up 1% to $3.2 billion. GAAP earnings per share were up 5% to $0.56, while non-GAAP earnings per share were up 7% to $0.69. GAAP operating cash flow on a trailing twelve-month basis was $15.2 billion.

Without the impact of the US dollar strengthening compared to foreign currencies, Oracle’s reported Q2 GAAP earnings per share would have been up 7% and non-GAAP earnings per share would have been up 9%. GAAP and non-GAAP total revenues also would have been up 3%; GAAP and non-GAAP new software licenses and cloud software subscriptions revenues would have been up 1%. Hardware Systems revenues, including hardware systems products and hardware systems support, would have been up 2%.

“We’re very pleased with our results as new software license and cloud software subscription revenue grew 1% in constant currency over the 18% growth reported last year,” said Oracle President and CFO, Safra Catz.

“Software revenue grew 5% helping drive our tremendous cash flow and for the first time ever, we generated more than $15 billion in operating cash flow over four quarters.”

“Our hardware business, including support, grew 2% in constant currency this quarter driven by double-digit revenue growth in Exadata, Exalogic and Exalytics,” said Oracle President Mark Hurd. “The SPARC SuperCluster and Big Data Appliance were even better, with triple-digit growth and we expect hardware products will show growth next quarter.”

“Our billion dollar SaaS business delivered overall bookings growth of 35% in the quarter,” said Oracle CEO, Larry Ellison. “Our fastest growing cloud services were Fusion Human Capital Management and Fusion Salesforce Automation, each growing bookings at a triple-digit rate.”

The Board of Directors declared a quarterly cash dividend of $0.12 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 7, 2014, with a payment date of January 28, 2014.

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