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Author: Alan LittleDate: 2021-12-13

Oracle (ORCL) +16% as cloud division drives Q2 earnings beats

 

Oracle (ORCL) said that its cloud division accounted for $7.5bn of its total $10.4bn revenues in fiscal Q2 as it posted earnings beats and shares jumped 16%.

Oracle (ORCL) shares hit a record high and closed 16% up in New York on Friday after a stellar fiscal Q2 report showed strong returns for the computer software company’s cloud products.

Around three-quarters of Oracle’s revenue came from its thriving cloud division amid a rise in businesses buying into hybrid work solutions, which combine on-premise IT with public cloud services.

The overall top-line figure of $10.4bn was a 6% improvement on the same period last year and enough to trump the $10.21bn Wall Street consensus.

Earnings per share of $1.21 also eased ahead of the $1.11 expectations, while profit margins soared to an impressive 84%, and total bookings jumped 11% year-over-year.

Oracle then followed up by guiding for Q3 revenues of up to $10.9bn and profits of between $1.19 and $1.23 per share.

However, analysts quickly pointed out that Oracle’s cloud division had grown at a slower rate than rivals, including SAP (SAPGF) and Salesforce (CRM).

Oracle CEO Safra Catz was in a bullish mood in a conference call though as she highlighted the company’s “highly differentiated strategy” centred on cloud-based apps and infrastructure.

She added: “Cloud is fundamentally a more profitable business compared to on-premise, and I expect that our operating margins this year will be the same or better than pre-pandemic levels of 44%.”

Credit Suisse analyst Phil Winslow said that the latest report was evidence that Oracle will be able to drive growth for a number of years while being a market leader in both the cloud services and software-as-a-service markets.

The positivity translated to share gains for ORCL on Friday as the 15.58% advance by close-set a $102.60 price.

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