Dec 10, 2020
Oracle reports sluggish sales growth in line with estimates
, Bloomberg News
Oracle Corp. reported lackluster growth in quarterly revenue, in line with Wall Street estimates, reflecting fewer software licensing deals during a pandemic-fueled recession.
Sales climbed 1.9 per cent to US$9.8 billion in the fiscal second quarter, which ended Nov. 30, the Redwood Shores, California-based company said Thursday in a statement. Analysts, on average, expected US$9.79 billion, according to data compiled by Bloomberg. Profit, excluding some items, was US$1.06 a share. Analysts projected US$1.
Executive Chairman Larry Ellison and Chief Executive Officer Safra Catz have tried to boost the languid revenue growth at the world’s second-largest software maker. While internet-based applications for managing corporate employees, accounting and financial planning have performed well, clients have shown waning interest in the company’s legacy tools. Oracle is trying to become a technology partner and cloud computing services provider to ByteDance Ltd.’s TikTok in its bid to land major customers for its public cloud, but the deal remains mired in U.S. regulatory review.
Shares fell less than 1 per cent in extended trading after closing at US$59.48 in New York. The stock has gained 12 per cent this year.
Cloud license and on-premise license sales decreased 3 per cent to US$1.09 billion, suggesting the company is signing fewer new software deals. Analysts had expected US$1.15 billion.
Revenue from cloud services and license support climbed 4 per cent to US$7.1 billion. That metric includes sales from hosting customers’ data in the cloud, but a large portion is generated by maintenance fees for traditional software kept on clients’ corporate servers.
Oracle said sales of its Fusion application for managing corporate finances jumped 33 per cent in the quarter. Revenue from NetSuite’s financial software, targeted to small and mid-sized businesses, increased 21 per cent in the period. The company didn’t disclose the sales totals, but Catz described them as “highly profitable” and “multi-billion dollar” applications.
“These two strategic cloud applications businesses are major contributors to Oracle’s increased operating earnings and consistent earnings per share growth,” Catz said in the statement.
