Oracle Results Top Estimates

(RTTNews) - Oracle Corp. (ORCL) said Wednesday after the markets closed that its second quarter profit fell 1% from last year, as higher operating expenses more than offset a 2% increase in revenue.

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

"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."

Oracle shares are currently gaining 0.43% in after hours trading after closing the day's regular trading session at $34.60, up 97 cents or 2.88%. The shares trade in a 52-week range of $29.86 to $36.43.

Oracle has adopted an acquisition-led growth strategy. The company has acquired more than 71 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's total software revenues for the second quarter increased 4% year-over-year to $6.9 billion, with new software licenses and cloud software subscriptions revenues remaining essentially flat at $2.4 billion.

Second quarter software license updates and product support revenues grew 6% year-over-year to $4.5 billion. Service revenues for the quarter fell 6% from last year at $1.1 billion.

Hardware systems revenues for the quarter remained unchanged at $1.3 billion, with hardware systems products revenue down 3% and hardware systems support revenue up 4%.

"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."

For the second quarter ended November 30, 2013, Redwood Shores, California-based Oracle reported net income of $2.55 billion or $0.56 per share, compared to $2.58 billion or $0.53 per share for the year-ago quarter.

Excluding items, adjusted net income for the second quarter was $3.16 billion or $0.69 per share, compared to $3.12 billion or $0.64 per share in the prior year quarter.

On average, 34 analysts polled by Thomson Reuters expected the company to earn $0.67 per share for the second quarter. Analysts' estimates typically exclude special items.

Total revenue for the second quarter rose 2% to $9.28 billion from $9.0 billion a year ago, while total adjusted revenue for the quarter also grew 2% to $9.28 billion from $9.11 billion last year. Thirty-two analysts had a consensus revenue estimate of $9.19 billion for the second quarter.

Without the impact of a stronger U.S. dollar, second quarter revenue would have been up 3% and earnings per share would have been up 7%, the company said.

Oracle also declared a quarterly cash dividend of $0.12 per share, payable on January 28, 2014 to shareholders of record on January 7, 2014.