Oracle slides on revenue decline

Oracle CEO Safra Catz delivers a keynote address during the 2019 Oracle OpenWorld on September 17, 2019 in San Francisco, California. Oracle CEO Safra Catz kicked off day two of the 2019 Oracle OpenWorld with a keynote address. The annual convention runs through September 19.

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Oracle shares fell as much as 5% in extended trading on Tuesday after the company reported fiscal fourth-quarter results that missed analysts’ revenue estimates. Revenue was down 6% from a year ago in the quarter, which ended on May 31, according to a statement.

Here’s how the company did: 

  • Earnings: $1.20 per share, adjusted
  • Revenue: $10.44 billion

The company had said in March that it was expecting roughly flat revenue in the quarter. Analysts surveyed by Refinitiv had expected $1.15 in adjusted earnings per share on $10.65 billion in revenue. Comparing the results with analysts’ estimates is not straightforward because the coronavirus impacted Oracle’s operations in the quarter.

Oracle’s largest category, cloud services and license support, delivered $6.85 billion in revenue, growing 1% on an annualized basis and just below the $6.90 billion consensus among analysts polled by FactSet. 

Revenue from cloud and on-premises licenses came to $1.96 billion, down 22% and less than the FactSet consensus of $2.14 billion.

Oracle customers held off on purchases in industries that the coronavirus challenged, such as hospitality and retail, CEO Safra Catz said in the statement.In the quarter Oracle announced new point-of-sale hardware for retailers and new cloud business from video communications companies Zoom and 8×8.

Bernstein Research’s Mark Moerdler and Firoz Valliji lowered their fiscal fourth-quarter estimates last week, partly to reflect potential fallout from the virus.

“4Q20 was expected to be a strong quarter, due to seasonally high mix of license revenue benefiting from autonomous database sales,” wrote Moerdler and Valliji, who have the equivalent of a buy rating on Oracle stock. “We are now more concerned about the license revenue, as transactional revenue is much more seriously impacted by economic disruption especially near-term as IT organizations have focused on work-from-home rather than major projects.”

Notwithstanding the after-hours move, Oracle shares are up about 3% for the year.

Executives will discuss the results with analysts on a conference call that starts at 5 p.m. Eastern time.

This is breaking news. Please check back for updates.

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