Post Earnings Coverage as Oracle’s Cloud Software SaaS and PaaS Revenues Grew 81%

Upcoming AWS Coverage on Red Hat Post-Earnings Results

LONDON, UK / ACCESSWIRE / December 22, 2016 / Active Wall St. announces its post-earnings coverage on Oracle Corp. (NYSE: ORCL). The Company posted its second quarter fiscal 2017 financial results on December 15, 2016. The enterprise software giant’s cloud revenue surpassed $1 billion in revenue for the first time, but the Company’s overall revenue figures failed to beat market expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Oracle’s competitors within the Application Software space, Red Hat, Inc. (NYSE: RHT), reported on December 21, 2016, results of its third quarter fiscal year 2017. AWS will be initiating a research report on Red Hat in the coming days.

Today, AWS is promoting its earnings coverage on ORCL; touching on RHT. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=ORCL

http://www.activewallst.com/registration-3/?symbol=RHT

Earnings Reviewed

For the three months ended November 30, 2016, Oracle reported total revenues of $9.07 billion, flat in US dollars and up 1% in constant currency. The Company’s non-GAAP total revenues were $9.1 billion, up 1% in US dollars and up 2% in constant currency. Oracle’s revenue numbers lagged behind analysts’ expectations of $9.11 billion

The Company’s Q2 FY17 net income was $2.0 billion, while non-GAAP net income was $2.6 billion. Oracle’s earnings per share were $0.48, while non-GAAP earnings per share were $0.61. The Company stated that without the impact of the US dollar strengthening compared to foreign currencies and an unforeseen Egyptian currency exchange loss, Oracle’s reported GAAP and non-GAAP earnings per share would have been $0.2 higher. The earnings number outperformed Wall Street’s forecasts of $0.60 per share.

Segment Results

During Q2 FY17, Oracle’s Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $878 million, up 81% in US dollars and up 83% in constant currency. Non-GAAP SaaS and PaaS revenues were $912 million, up 87% in US dollars and up 89% in constant currency; these results came in better than management guided range of 78% to 82%.

Oracle’s Q2 FY17 total cloud revenues, including infrastructure as a service (IaaS), were $1.09 billion, up 62% in US dollars and up 64% in constant currency. Cloud plus On-Premise Software revenues were $7.2 billion in the reported quarter, up 2% in US dollars and up 3% in constant currency.

For Q2 FY17, Oracle reported cloud bookings of $377 million. The Company stated that SaaS and PaaS billings were up 39% on a y-o-y basis. During the reported quarter, Oracle added 1,082 new SaaS customers, 2,225 new PaaS customers, and 2,148 IaaS customers.

Oracle’s robust cloud segment performance helped offset the decline observed in the Company’s on-premise software revenues, which fell 3.7% to $6.13 billion compared to the year ago same period. The Company’s hardware revenues also witnessed a decline in Q2 FY17, with total hardware revenues declining 9.7% on a y-o-y basis to $1.01 billion.

Operating Matters

During Q2 FY17, Oracle’s total operating expenses as a percentage of revenues came in at 60.7%, down 10 basis points compared to the year earlier comparable quarter. The Company’s SaaS and PaaS gross margin in the reported quarter totaled 61%, significantly higher than the gross margin of 43% reported in Q2 FY16. The Company’s IaaS segment registered gross margin of 37% in Q2 FY17, lower than management’s estimation. Oracle’s operating margin came at 38.4%, down 20 basis points from the corresponding year ago quarter.

Balance Sheet

At the end of Q2 FY17, Oracle’s short-term deferred revenues were $7.4 billion, up 6% in US dollars and up 8% in constant currency compared with the year ago same period. Operating cash flow on a trailing twelve-month basis was $14.2 billion, up 9% from the prior year. In Q2 FY17, Oracle repurchased 30 million shares for a total of $500 million. The Board of Directors also declared a quarterly cash dividend of $0.15 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on January 05, 2017, with a payment date of January 26, 2017.

Outlook

For Q3 FY17, Oracle expects total revenue to grow in the range of 3% to 5%. The Company expects strong US dollar to impact revenues by at least 1%. Oracle is forecasting revenue growth in SaaS and PaaS in the range of 82% to 86%. For Q3 FY17, Oracle is expecting earnings to be in the band of $0.61 to $0.64 per share.

For FY17, Oracle is predicting SaaS and PaaS revenue to surpass 80% growth rate, higher than its previous guidance of 67%. Furthermore, by the end of FY17, Oracle anticipates SaaS and PaaS gross margin to be greater than 61%. For the current fiscal year, total CapEx is estimated to be approximately $2 billion.

Stock Performance

At the close of trading session on December 21, 2016, Oracle’s stock price marginally fell 0.44% to end the day at $38.83. A total volume of 11.95 million shares were exchanged during the session. The company’s share price has gained 7.77% in the past twelve months and 7.94% on YTD basis. The stock currently has a market cap of $166.60 billion. The company’s shares are trading at a PE ratio of 18.39 and have a dividend yield of 1.55%.

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