Oracle Edges Past Estimates

(RTTNews) - Oracle Corp. (ORCL) said Wednesday after the markets closed that its second quarter profit fell 2% from last year, hurt mainly by higher income tax expenses even as revenue increased 3%.

However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.

"We continue to deliver industry-leading operating margins and cash flow even after adding the thousands of specialized sales people and engineers necessary to accelerate the growth of our new cloud businesses," said Oracle CEO Safra Catz.

"Total Q2 new cloud bookings grew at a rate of more than 140%," said Oracle CEO Mark Hurd. "We now have over 600 ERP Fusion Cloud customers -- that's five-times more ERP customers than Workday."

Oracle shares are currently gaining 6.10% in after hours trading after closing the day's regular trading trading session at $41.16, up 53 cents or 1.30%. The shares trade in a 52-week range of $33.70 to $43.19.

Oracle has adopted an acquisition-led growth strategy. The company has acquired more than 73 companies since 2005. Of late, Oracle has set its eyes on cloud-based software firms.

However, Oracle' revenue growth has slowed down in the last few quarters, raising investor concern about the company's ability to transition from its traditional approach of licensing software to the so call cloud computing method.

Oracle shuffled its top management in September. Company founder Larry Ellison stepped down as CEO after 37 years and became Executive Chairman and Chief Technology Officer. Both Hurd and Catz were promoted to the position of CEO.

Oracle's total software and cloud revenues for the second quarter increased 5% year-over-year to $7.3 billion, with new software licenses revenues down 4% at $2.0 billion. Cloud software-as-a-service, platform-as-a-service and infrastructure-as-a-service revenue surged 45% to $516 million in the second quarter.

Second quarter software license updates and product support revenues grew 6% year-over-year to $4.8 billion. Services revenues for the quarter fell 3% from last year at $935 million.

Hardware systems revenues for the quarter increased 1% to $1.3 billion, with hardware systems products revenue remaining essentially flat with last year and hardware systems support revenue up 1%.

For the second quarter ended November 30, 2014, Redwood Shores, California-based Oracle reported net income of $2.50 billion or $0.56 per share, compared to $2.55 billion or $0.56 per share for the year-ago quarter.

Excluding items, adjusted net income for the second quarter was $3.12 billion or $0.69 per share, compared to $3.16 billion or $0.69 per share in the prior year quarter.

On average, 33 analysts polled by Thomson Reuters expected the company to earn $0.68 per share for the second quarter. Analysts' estimates typically exclude special items.

Total revenue for the second quarter rose 3% to $9.598 billion from $9.275 billion a year ago, while total adjusted revenue for the quarter also grew 3% to $9.608 billion from $9.283 billion last year. Thirty-one analysts had a consensus revenue estimate of $9.52 billion for the second quarter.

Without the impact of a stronger US dollar, Oracle said its earnings per share would have been up 5% and total revenues would have been up 7%.

Oracle also declared a quarterly cash dividend of $0.12 per share, payable on January 28, 2015 to shareholders of record January 7, 2015.