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Oracle Stock Rises. Sales Topped Guidance but Profits Missed.

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Oracle’s headquarters. The software giant’s earnings disappointed.

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Oracle posted mixed numbers for the quarter. Revenue edged out guidance, but profits fell short of the company’s target, largely due to the strength of the U.S. dollar against foreign currencies.

For the fiscal first quarter ended Aug. 31, Oracle (ticker: ORCL) posted revenue of $11.4 billion, up 18%, or up 23% when adjusted for currency. The company’s guidance had called for 20% to 22% growth on a currency-adjusted basis.

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Adjusted profits were $1.03 a share, below the company’s guidance range of $1.09 to $1.13 a share. Under generally accepted accounting practices, the company earned 56 cents a share. Street consensus had called for revenue of $11.2 billion and adjusted profits of $1.07 a share.

Oracle said both adjusted and GAAP earnings were reduced by about 8 cents a share due to unfavorable foreign-exchange rates.

Oracle continues to make progress on shifting customers to cloud-based versions of its database and application software.

Oracle said cloud revenue was $3.6 billion, up 45%, or up 50% when adjusted for currency. The company said revenue from Fusion ERP, the company’s financial software for large companies, was up 33%, or 38% on a currency-adjusted basis. NetSuite ERP, financial software for smaller companies, saw revenue increase 27%, or increase 30% when adjusted for currency.

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Revenue in the quarter included $1.4 billion from the company’s recent acquisition of Cerner, an electronic healthcare-records company. Oracle said revenue was up 8% in constant currency from a year ago excluding the Cerner acquisition, and driven by growth in its cloud applications and infrastructure businesses, which Oracle said now account for more than 30% of revenue.

“As our cloud businesses become a larger-and-larger percentage of our overall business, we expect our constant-currency organic revenue growth rate to hit double-digits with a corresponding increase in earnings per share,” CEO Safra Catz said in a statement. “Cerner will also positively impact revenue and earnings-per-share growth in the coming quarters as we fully integrate Cerner into Oracle and benefit from the resulting cost efficiencies. This is the first quarter we owned Cerner and they just delivered the best revenue quarter in their history.”

For the November quarter, Oracle sees revenue up between 21% and 23% in constant currency, or 15% to 17% as reported, with cloud revenues up between 46% and 50% adjusted for currency.

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The company sees adjusted profits for the quarter of between $1.23 and $1.27 a share in constant currency, or $1.16 to $1.20 as reported. Oracle expects cloud growth in fiscal 2023 of more than 30%. The company expects currency to be a drag of 5% to 6% on revenue in the November quarter. Oracle said it expects the Cerner acquisition to be accretive for both the quarter and the fiscal year.

Oracle stock was up 1.4% in late trading. Shares rose 1.6% in Monday’s regular session.

Write to Eric J. Savitz at [email protected]

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