Oracle Corporation (ORCL) on Q2 2021 Results - Earnings Call Transcript

Operator: Welcome to Oracle's second quarter 2021 Earnings Conference Call. Now I'd like to turn today's call over to Ken Bond, Senior Vice President. Ken Bond: Thank you, Erica, and good afternoon, everyone, and welcome to Oracle's Second Quarter Fiscal Year 2021 Earnings Conference Call. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation and other supplemental financial information, can be viewed and downloaded from our Investor Relations website. Additionally, a list of customers mentioned on this conference call as well as many others which have purchased Oracle Cloud services or went live on Oracle Cloud recently will also be available from the Investor Relations website. Lawrence Ellison: Hello. I can't hear anything. Ken Bond: Safra, are you on mute? Safra Catz: Yes, I'm here. Sorry. Thanks, Ken, and good afternoon, everyone. As you can see, we had another excellent quarter. As usual, I'll review our non-GAAP results using constant dollar growth rates, unless I say otherwise. I first want to highlight that since our own migration to Fusion ERP, we've continued to close our books faster and faster. This quarter, we are reporting our results for our entire global operations 10 days after the end of the fiscal quarter. In fact, using Fusion ERP, we submitted our 10-K and 10-Q filings faster than any other company in the S&P 500, in fact, 21 days faster than the average. Understanding our business performance sooner is an advantage that we enjoy by using Fusion ERP, and it's one our Fusion customers are rapidly beginning to appreciate. On to the quarter. So this quarter, revenue was $40 million above the midpoint of guidance, and EPS beat the high end of guidance by $0.04. The impact of currency movement was in line with guidance, meaning that our outperformance reflects both continuing execution on the sales side and disciplined management of our operations. Operating income grew 12%, our best result in 8 years. Our total cloud services and license support revenues for the quarter were $7.1 billion, up 4% from last year. Over the last 4 years, we have doubled the percentage of revenue that is being derived from our cloud services. That is what's driving our recurring revenue as a percentage of total revenue higher and higher, now reaching 73% of total company revenue. We anticipate this trend to continue as cloud services continue to grow. Lawrence Ellison: Thank you, Safra. We just completed a great quarter, but the quarter would have been even better if we would have had more -- and we would have had more revenue growth if we had not been capacity constrained in OCI during Q2. There was more demand than we had supply. To remedy this capacity shortfall, we are adding OCI capacity and building new OCI datacenters as fast as we can. We are now up to 29 regional data centers around the world, more than AWS. OCI added customers and grew revenue at a rate well in excess of 100% year-over-year in Q2. The Oracle Autonomous Database was up over 50%. We also introduced several new OCI managed services during the quarter. The most interesting of these new OCI managed services is for the popular open source database, MySQL, featuring an all-new, Oracle-developed, massively parallel query accelerator called Heat Wave. MySQL plus Heat Wave processes queries hundreds of times faster, hundreds of times faster than the current version of MySQL by itself and other MySQL-compatible databases, such as Amazon's Aurora. MySQL plus Heat Wave is so much faster, so much easier to use and less expensive than PostgreS, Redshift, Snowflake or any other database available on Amazon AWS. The amazing thing about Heat Wave is that you don't have to move your data out of MySQL and build a separate data warehouse to get the huge performance gains. You simply take any existing MySQL or Aurora database, run that exact same database on the new MySQL version that includes Heat Wave , and immediately, your queries run hundreds of times faster. You don't have to change a single line of code. It can't get any easier to use than that. Ken Bond: Thank you, Larry. Erica, if we could queue up, I'll start off the Q&A. And just a reminder no questions on TikTok. Thank you. Operator: . Our first question comes from Heather Bellini with Goldman Sachs. Heather Bellini: Safra, I wanted to go back to your comments from June. On your Q4 call, when you talked about what was going on under the hood of your constant currency revenue growth, and you mentioned that the growing businesses were growing at a 30% CAGR, the declining businesses at about a double-digit decline and the stable ones were up 1% to 2%. I'm just wondering taking a look today and kind of how you're thinking about the future, how is the pandemic changing these growth rates, if at all, especially as OCI and things like Cloud Customer become even bigger areas of focus for customers? Safra Catz: So, the pandemic affects us, in some ways, negatively; in some ways, positively, simply because of our size and the breadth of our customer base, it affects them differently. And so obviously, our hospitality customers have had a very difficult time of it in the main. Some of our retail customers have done horribly, some have done very, very well. What has become very clear to our customers is that those that are digitally forward and that can work also under -- with a lot of automation using a digital tool, using our technology, using the cloud, they are faring far, far better. And as a result, we see change occurring, and you can see it in our ERP SaaS numbers, in our HCM numbers, NetSuite numbers, you can just see that those numbers continue to do very, very well. And then, of course, our Gen 2 cloud, whether it's compute where many of our customers are using way more than they expected to, and as Larry said, just blowing out our internal forecast such that we will need a few more weeks to really catch up with our demand while we're also expanding globally simultaneously. So, we actually believe that this remains very consistent. Obviously, there was uncertainty before because of the pandemic. At this point, I think it's very clear that our business is accelerating, our stable businesses remain stable, and our shrinking businesses whether it's nonstrategic hardware or other things, those continue to get smaller. But generally, the overall revenue number will be showing acceleration even in this pandemic, and I almost feel badly saying, maybe it helped ultimately because many of our customers have realized the importance of using technology to deal with their customers, their employees, and their suppliers. Heather Bellini: Great. Thank you. And happy holidays to you and your families. Safra Catz: Thank you. You too, Heather. Operator: Our next question comes from Brad Zelnick with Crédit Suisse. Brad Zelnick: Great. Congrats on a good quarter and strong guidance. Larry, I've got maybe a bigger question -- a bigger picture question for you. I know you appreciate there are generational aspects to IT where, most often, the winner in the last generation isn't the winner in the next. But under your leadership and vision and Safra's operational discipline, Oracle has been an industry leader for over 4 decades by thinking strategically about the future. And today, we hear amazing feedback on Oracle's latest innovations, the actual underlying technology like OCI and Autonomous. And by that alone, it would seem the future is bright for Oracle, but we've also seen in the past that the best technology doesn't always win. What gives you confidence that Oracle can remain successful and appeal to younger generation, many who think cloud-first and want to move really, really fast? Lawrence Ellison: All right. Well, let me start in two areas. I've always said there are 2 key aspects of Oracle's future, one is the Autonomous Database, which is a cloud-only product. It works at Cloud and Cloud at Customer. So, it is certainly cloud first. It is the only database that really does both transaction processing and query processing. So, query processing, we’re much faster than Snowflake, the market's current darling. And in transaction processing, we're much faster than anybody. So, we have a single unified database that is fully autonomous. It never goes down. It patches itself. Nobody else is making claims anything like that. So, we have a vast leadership in -- plus we have, by far, the largest installed base. And our database business continues to grow. Some of our other businesses, our middleware businesses have declined, but our database business continued to grow throughout the move to the cloud. So, we're very confident we're going to hold on to our database franchise. We're convinced that -- I mean, they really don't have any strong competition. One of -- and you can see there's not a lot of strong competition from Amazon because what's going on with Snow -- if you're curious what's happening with Snowflake, Snowflake is a decent product, it’s a good product, I think. And it's just killing Redshift over at Amazon. So, it's doing extremely well, but it doesn't remotely compare to Oracle's Autonomous Database. It doesn't do transactions at all. And in fact, query processing is not even close to assess as the Oracle database. So we're -- but it's much better than what Amazon has. And when it's competing inside of AWS, it does very well. It will kill Redshift. Redshift is not very good. So, we think we have a huge lead in database, and that no one's trying to do what we're doing. I mean none of the stuff patches itself. None of the stuff never goes down. That's true. The -- okay, that's holding on to our database franchise. The next thing is ERP. SAP forgot to move their ERP system to the cloud. They just built -- they decided instead to go compete with Oracle with HANA. They don't have a cloud product. We have -- if you look at Gartner and SAP, SAP asked to be moved off the Gartner list because SAP was in the lower left-hand corner. They're not even considered a cloud system by Gartner, SAP for ERP. So, we are -- we have dominant -- we have over 30,000 customers in the cloud, running our Cloud ERP systems. Who's second? Workday with a few hundred? I mean it's not close. And that's the largest applications business. That's the largest applications business on premise, and it will be the largest applications business in the cloud, and we're the overwhelming technology and market leader. So, I think those 2 lynchpins, the Autonomous Database and the Oracle ERP in the cloud secure our future. Now add to that, OCI, which is new for us, we've never been a platform company. We -- Linux is a platform. In the old on-premise days, Linux was a platform, Windows was the most famous platform. There was HP-UX and IBM Metazone offering. So there were a lot of platforms. We weren't ever in that business. We were portable and ran on lots of different platforms. Now we have our own platform for the first time. And our platform is competing very well against AWS and Microsoft, and we think we have way better technology on our platform than the other guys. And we're winning lots and lots of customers to our platform. That's an all-new initiative for us to go into the platform business. So again, we're moving from #2 to #1 in cloud applications. Again, we have the fastest-growing, cloud -- large-scale cloud applications business on the planet. Who has a multibillion-dollar cloud business that's growing at 33%? I mean maybe there's somebody, I don't know who it is. Who has anything like autonomous database technology? And who has a cloud platform that's being picked by some of the most sophisticated technology companies on earth over AWS and Microsoft? So I guess those are the 3 pieces: OCI, Autonomous Database and Fusion ERP in the cloud that gives me confidence that we're going to get our fair share of the new generation of cloud applications and infrastructure. Operator: Our next question comes from Mark Moerdler with Bernstein Research. Mark Moerdler: Congrats on the quarter. Larry, following up on the last questions, if you don't mind. Given that the world is going to start to vaccinate and we would expect that IT focus could be more on on-premise in the cloud and work from home, I'd like to get a better understanding of what you're seeing and what you're expecting to Autonomous Database running in the cloud and Cloud at Customer, when do you think we see that big inflection we've been hoping for that could drive revenue acceleration? Lawrence Ellison: Yes. So again, the interesting thing about Cloud at Customer, the change in our business model. So you've got to remember, when we sign a huge Cloud at Customer deal and we deliver a bunch of Exadata to a customer, we recognized, let's see, how much revenue, nothing, versus selling a bunch of Exadata. So what's happened -- remember, we're going from selling Exadata machine to delivering them for free and then charging, if you will, rental or usage on the machines as we go from selling hardware to selling Exadata Cloud at Customer. So our accounting model, you say, well, wow, Oracle's revenue is flat. Well, flat, maybe not so bad, actually it's growing somewhat. But keep in mind, where we used to get paid for Exadata machines right away, we now deliver them at Cloud at Customer, and we have to wait to get those monthly revenues over a 4-year period. So what you're seeing is this change in model, and Cloud at Customer is already doing pretty well. It's just there's a huge lag. There's histories. From the time -- there's a lag from the time we start selling a bunch of these things until all the revenue starts coming in. So that's what's going on right now where it's already a very successful product. We're selling a lot of them. Our sales are accelerating, but there's this time lag between sales and the revenue, very different than selling a database license or selling an Exadata machine. As we move to the new model, it's a more profitable model long term, but it doesn't have the instantaneous impact. So there's this time lag. And that's what you're seeing. Operator: Our next question is from Michael Turits with Keybanc. Michael Turits: Congrats on the quarter. Larry, you talked a lot about ERP, and that's been a lot of where the messaging has been around Fusion apps. But this has been a really strong year even during COVID, around front office. Can you talk a little bit about your CX business and whether or not you could see acceleration there and particularly how some of your AI capabilities are playing into that, if they are? Lawrence Ellison: Yes. Well, they are actually because we're making -- actually, I've been directly involved with a major push in CX. And we've come out with several new CX products, one of which is our product and references system where we have a product references database that we sell, and we have an AI engine that sits on top of it. And what it does, it tells -- it interfaces to our sales automation system. And it tells customers or it tells salespeople what product they should be selling this particular customer next. It's got a recommendations engine. And it will tell -- it will also tell the salesperson what are the best references when you're selling customer A Fusion ERP. And then it will actually -- go out and find those references and prepare a micro -- a website, a micro site for that prospect to go to. So we are enhancing our sales automation which, heretofore, sales automation really has not been about automating sales. Sales automation, which was pioneered by salesforce.com, sales automation is all about opportunity management and forecasting. Our new sales automation is all about giving salespeople tools, enabling them to sell more. It automatically generates proposals. It automatically generates reference list. It automatically generates micro sites. It automatically generates recommendations of what the salesperson should be selling to this customer next, what module. So these are the kind of products, what we call automated lead generation and qualification built into the selling system, the product reference system. We also have another new product that's coming out in CX, which we think is very important, which is the ability to launch an advertising campaign from a computer console without going through ad agencies. It's funny, this disintermediates the ad business, so that you can, again, target -- let's say, we're selling Fusion ERP to an oil company, a large oil company, and we want to advertise to people in that oil company, the decision makers, the CEO, the CFO, people in accounting, all of that, we can then launch an ad campaign targeting those people and with references for Fusion ERP. So rather than when they log on to look at Google News, rather than them seeing ads for Nike shoes where they were recently browsing the website, they're going to see ads for Oracle Fusion ERP. So we have an ad system. So we're doing a bunch of that -- by the way, no one is doing this but us. We're the only one that's doing this ability to target people and launch ads from a console. We're the only ones that -- I mean people do it on the consumer side but not on the B2B side. We're doing that on the B2B side. We're the only ones that are using the recommendation engine the way that we are not only to recommend what to sell next but who the best references are and actually preparing the micro site for the prospects to examine those references. So I think the CX is a huge opportunity for us. The fact that we have CX linked to our ERP, we have front office linked to our ERP, linked to our HCM system, it's a huge advantage that we have front office, we have HCM, we have back office, we link it all together. It's much more valuable when you have all the front office and back-office data in a single database. It allows you to do the kind of innovative things we're doing in the front office. So again, that's -- you're going to see a major improvement in our portfolio in the front office over the coming months. Operator: Our final question comes from Raimo Lenschow with Barclays. Raimo Lenschow: Congrats from me as well. You guys have been very good and disciplined. So you wouldn't kind of build data centers just for the sake of building data center. So if I look at the momentum here, like 14 new this year, at 29 now, going up to 38 in a few months. Can you talk a little bit about what you're seeing there? What's kind of driving that momentum because that's super impressive. Safra Catz: Larry, do you want to take it? Lawrence Ellison: Safra, do you want to... Safra Catz: Well, let me -- you go ahead, Larry. Go ahead. Lawrence Ellison: All right. We're just seeing demand for our products all over the world. Our data -- we're going to 1 data center, an OCI data center, that runs not only all of our technology, like Autonomous Database and our high-performance computing, all of that stuff, but it runs all of our applications as well. So we're seeing demand for these products all over the world, and we are going into more countries. We've decided -- our strategy is, because we have a large existing business, we have a large existing installed base, we believe we just have to get into more countries than someone -- than Amazon, let's say, because we have to serve those countries where we have a large installed base, like Indonesia, let's say, which is a very big country, but a lot of people don't have data centers in Indonesia. Israel, I mean, it's very important to get a good data center in Israel. Some of the cloud companies has been late to get there. We think that's a very important marketplace. So we think we have been building as fast as we can, but we've been trying not to build ahead of demand. And we were doing a pretty good job actually until this last quarter where demand was actually turned out to exceed our ambitions, where our plan for growth, though it's a very ambitious plan, still on the demand side, we have some large customers that just wanted more capacity than we could supply. And that bit us in Q2. Hopefully, it will be -- as Safra said, we're probably a month or two away from correcting that and getting ahead of that curve. But we just see right now there's more demand than we can supply. So we're going -- as I said, what are we doing? We're going as fast as we possibly can. Safra Catz: Yes. Let me just add a couple of things. One is we have upped our capital spending plans because the demand is so strong that we've increased it by probably this next quarter, probably be 50% higher than this last one just to keep everything going and growing. I also want to point out that some of our customers do not want to go into a big public data center but for different reasons, regulatory reasons or others, one have Cloud at Customer, and that's very important that we are able to offer that. And in addition, some of them have extremely a large requirement and are basically a private region. Those aren't in the numbers you were mentioning as far as data center build-outs, but that's another area where we are expanding and consumption is increasing at very, very large rate. So we're very busy here just keeping up with demand. Ken Bond: Thank you, Safra. A telephonic replay of this conference call will be available for 24 hours. Dial-in information can be found in the press release issued earlier today. Please call the Investor Relations department with any follow-up questions from this call, and we look forward to speaking with you. Appreciate you joining us today. With that, I'll turn the call back to Erica for closing. Operator: Thank you for joining today's Oracle's Second Quarter 2021 Earnings Conference Call. We appreciate your participation. You may now disconnect.
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Oracle Corporation's (NYSE:ORCL) Focus on AI Technologies Bolsters Long-Term Prospects

  • Oracle Corporation (NYSE:ORCL) maintains a promising outlook with a focus on AI technologies despite recent fiscal challenges.
  • Citigroup maintains an "Overweight" rating with a price adjustment, reflecting confidence in Oracle's future driven by AI demand.
  • Oracle's stock experiences fluctuations, yet its strategic focus on cloud services and AI technologies supports its long-term growth.

Oracle Corporation (NYSE:ORCL) is a major player in the technology sector, known for its comprehensive suite of software solutions, including database management systems and cloud services. The company competes with other tech giants like Microsoft and Amazon in the cloud computing space. Despite recent challenges, Oracle's long-term prospects remain promising, particularly due to its focus on AI technologies.

On March 11, 2025, Citigroup maintained its "Overweight" rating for Oracle, with the stock priced at $144.06. This decision comes despite Oracle's fiscal third-quarter performance falling short of expectations. Analysts, however, remain optimistic about Oracle's future, driven by strong demand in the AI sector, as highlighted by Benzinga. The company's stock has seen a decrease of 3.10%, with a current price of $144.18.

Analyst Thomas Blakey has maintained an Overweight rating on Oracle, though he reduced the price target from $214 to $175. Blakey noted that while Oracle's revenues were slightly below expectations, adjusted earnings met projections. The revenue shortfall was mainly due to the Software as a Service (SaaS) segment, but Oracle Cloud Infrastructure (OCI) performed as expected. The company's bookings exceeded expectations, driven by large deals, leading to an optimistic forecast for fiscal years 2026 and 2027.

Similarly, Analyst Keith Bachman reiterated a Market Perform rating and adjusted the price target to $175 from $205. Bachman pointed out revenue misses in several areas, including cloud revenues. Despite these challenges, the demand for AI continues to support Oracle's long-term prospects. Oracle is accelerating its OCI business, benefiting from the growing demand for AI technologies.

Oracle's stock has fluctuated between a low of $137.70 and a high of $145.78 during the day, with a market capitalization of approximately $403.27 billion. The company's trading volume today is 24,098,451 shares. Over the past year, Oracle's stock has reached a high of $198.31 and a low of $112.78, reflecting the market's response to its evolving business strategies and performance.

Oracle Slips 4% on Q3 Earnings Miss, But Surging Demand Signals Strong Growth Ahead

Oracle (NYSE:ORCL) saw its shares drop more than 4% intra-day today after reporting third-quarter results that fell short of analyst expectations. However, a massive surge in bookings and an optimistic long-term outlook suggest strong demand for the company’s cloud and AI-driven services.

For the quarter, Oracle posted adjusted earnings per share of $1.47 on revenue of $14.13 billion, missing consensus estimates of $1.49 EPS and $14.39 billion in revenue.

Despite the earnings shortfall, Oracle reported an unprecedented spike in bookings, with remaining performance obligations (RPO) rising 62% year-over-year to $130 billion. This surge reflects record demand for the company’s cloud computing and enterprise software solutions.

Chairman Larry Ellison highlighted that Oracle remains on track to double its data center capacity by the end of the calendar year, further strengthening its AI and cloud infrastructure.

Looking ahead, Oracle provided a bullish forecast, expecting revenue to grow by 15% in fiscal 2026 and accelerate to 20% in fiscal 2027—both ahead of market projections. CEO Safra Catz emphasized that demand for Oracle’s AI-powered cloud services remains robust, reinforcing confidence in the company’s long-term growth trajectory.

Oracle Corporation's Transition and Financial Performance

  • Oracle Corporation (NYSE:ORCL) missed its earnings per share and revenue estimates for the quarter.
  • The company remains optimistic about future growth, driven by artificial intelligence and cloud agreements with leading AI companies.
  • Oracle announced a 25% increase in its quarterly dividend, indicating confidence in its financial health and future prospects.

Oracle Corporation (NYSE:ORCL) is a major player in the technology sector, known for its database software and cloud solutions. The company is transitioning towards cloud-based services, focusing on Infrastructure as a Service (IaaS) and Software as a Service (SaaS). This shift aligns with the industry's move towards more flexible and scalable solutions. Oracle competes with other tech giants like Microsoft and Amazon in the cloud space.

On March 10, 2025, Oracle reported earnings per share (EPS) of $1.02, missing the estimated $1.48. The company's revenue was $14.13 billion, slightly below the anticipated $14.39 billion. Despite this, Oracle's quarterly revenue increased by 6% year-over-year, reaching $14.1 billion. The adjusted earnings rose to $4.2 billion, or $1.47 per share, up from $3.98 billion, or $1.41 per share, the previous year, yet still missed estimates.

Oracle remains optimistic about future growth, driven by artificial intelligence. CEO Safra Catz forecasts a 15% revenue growth for fiscal 2026, starting in June. The company has cloud agreements with AI leaders like Nvidia, Meta, OpenAI, and xAI. Oracle is also on track to double its data center capacity this year, driven by record levels of customer demand, as noted by Chief Technology Officer Larry Ellison.

In a positive move for shareholders, Oracle announced a 25% increase in its quarterly dividend, raising it to 50 cents per share from 40 cents. The company's stock experienced an increase despite the earnings miss, highlighting the growing demand for artificial intelligence and a robust sales outlook. Oracle's Stargate initiative presents potential opportunities for the company.

Oracle's financial metrics reflect its market position. The company has a price-to-earnings (P/E) ratio of approximately 34.05 and a price-to-sales ratio of about 7.46. Its enterprise value to sales ratio is around 8.87, while the enterprise value to operating cash flow ratio is approximately 23.86. The earnings yield is about 2.94%, and the debt-to-equity ratio is roughly 5.58, indicating a significant level of debt compared to its equity. The current ratio is approximately 1.02, showing its ability to cover short-term liabilities with short-term assets.

Oracle Corporation's Upcoming Earnings Report: A Detailed Analysis

Oracle Corporation (NYSE:ORCL) is a leading technology company known for its comprehensive suite of cloud applications and infrastructure services. As it prepares to release its quarterly earnings on March 10, 2025, investors are keenly watching the anticipated figures.

Analysts expect an earnings per share (EPS) of $1.48, reflecting a 5% increase from the previous year, and revenue projections stand at approximately $14.4 billion, marking an 8.1% year-over-year growth. The upcoming earnings report is crucial for Oracle, especially after the recent DeepSeek AI sell-off, which affected investor sentiment.

The company's price-to-earnings (P/E) ratio is 36.23, indicating how the market values its earnings. Despite a slight 0.1% downward revision in the consensus EPS estimate over the past 30 days, the anticipated growth in revenue and EPS could help restore investor confidence.

Oracle's financial metrics provide insight into its market valuation. The price-to-sales ratio of 7.69 and enterprise value to sales ratio of 9.10 reflect the market's perception of its revenue and sales. The enterprise value to operating cash flow ratio is 24.64, showing how the market values Oracle's cash flow from operations.

These figures are essential for investors assessing the company's financial health and growth potential. The company's debt-to-equity ratio of 6.45 highlights its significant leverage, which can be a double-edged sword. While leverage can amplify returns, it also increases financial risk. Oracle's current ratio of 0.81 suggests a limited ability to cover short-term liabilities with short-term assets, which may be a point of concern for some investors. However, the earnings yield of 2.76% offers a perspective on the earnings generated per dollar invested, providing a measure of potential return.

Oracle Corporation's (NYSE:ORCL) Stock Upgrade and Financial Outlook

  • Oracle Corporation (NYSE:ORCL) receives an "Overweight" rating from Piper Sandler, indicating a positive future performance outlook.
  • The company faces challenges with a "Sell" rating due to perceived overvaluation, despite strong growth in cloud services.
  • High CAPEX spending impacts Oracle's free cash flow, with forecasts showing revenue and EPS growth in the coming quarter amidst market volatility.

Oracle Corporation (NYSE:ORCL) is a leading technology company known for its software products and services, particularly in database management. The company has been expanding its cloud services, with Oracle Cloud Infrastructure being a key growth area. Oracle competes with other tech giants like Microsoft and Amazon in the cloud computing space.

On December 10, 2024, Piper Sandler upgraded Oracle's stock to an "Overweight" rating, suggesting confidence in its future performance. At the time, Oracle's stock was trading at $177.74. Piper Sandler also increased Oracle's price target from $185 to $210, as highlighted by TheFly, indicating a positive outlook for the company's stock.

Despite this upgrade, Oracle's stock has faced challenges. It received a "Sell" rating due to perceived overvaluation, with a fair value estimated at $155 per share. This suggests that some analysts believe the stock is priced higher than its intrinsic value, which could pose risks for investors.

Oracle's financial performance is influenced by its capital expenditure (CAPEX) spending. The company is experiencing strong growth in its cloud services, but high CAPEX spending impacts its ability to generate free cash flow. This could affect Oracle's financial health, especially with anticipated increases in CAPEX for fiscal year 2025.

Oracle forecasts revenue growth of 9% to 11% and earnings per share (EPS) growth of 7% to 9% for the third quarter. However, the stock has seen a decrease of approximately 6.67%, with a change of $12.71. The stock's trading range for the day was between $171.06 and $177.80, reflecting market volatility.

Oracle Corporation's Fiscal Q2 Earnings Analysis

  • Oracle Corporation (NYSE:ORCL) reported a slight miss in both earnings per share (EPS) and revenue for its fiscal second quarter.
  • The company's EPS has shown growth over the past year, indicating a positive trend in profitability despite the miss.
  • Oracle's financial metrics reveal a high market valuation and potential challenges in financial stability due to a high debt-to-equity ratio.

Oracle Corporation, listed on the NYSE:ORCL, is a leading technology company known for its software products and services, including database management systems and cloud solutions. It competes with other tech giants like Microsoft and SAP. On December 9, 2024, Oracle reported its fiscal second-quarter earnings, revealing a slight miss in both earnings per share (EPS) and revenue compared to market expectations.

Oracle's earnings per share for the quarter were $1.47, just below the Zacks Consensus Estimate of $1.48. This represents a 0.68% negative surprise. However, it is an improvement from the $1.34 EPS reported in the same quarter last year. Despite the miss, Oracle's EPS has shown growth over the past year, indicating a positive trend in profitability.

The company generated $14.06 billion in revenue for the quarter, which was slightly less than the estimated $14.12 billion. This shortfall resulted in a negative revenue surprise of 0.46%. Nevertheless, Oracle's revenue increased by 8.6% compared to the same period last year, showcasing its ability to grow its top line despite missing estimates.

Oracle's financial metrics provide insight into its market valuation and financial health. The company's price-to-earnings (P/E) ratio is approximately 45.46, suggesting a high market valuation of its earnings. Its price-to-sales ratio is about 9.61, and the enterprise value to sales ratio is around 11.02, indicating how the market values Oracle's revenue and sales, including debt.

Oracle's debt-to-equity ratio is notably high at 6.23, reflecting a significant level of debt compared to its equity. This could pose challenges in terms of financial stability. Additionally, the current ratio of approximately 0.81 suggests potential liquidity issues, as it indicates the company's ability to cover short-term liabilities with its short-term assets.

Oracle Corporation's Upcoming Earnings Report: A Comprehensive Analysis

  • Earnings Expectations: Analysts predict an EPS of $1.48 and revenue of approximately $14.1 billion.
  • Valuation Concerns: Oracle is perceived as overvalued by about 20%, with a P/E ratio of approximately 47.33.
  • Investment in AI: Demand for Oracle's AI services is outpacing supply, highlighting the importance of computing power for operations.

Oracle Corporation (NYSE:ORCL) is gearing up to release its quarterly earnings on December 9, 2024. Analysts predict an earnings per share (EPS) of $1.48, with revenue expected to reach around $14.1 billion. Oracle, a leader in database management and enterprise software, competes closely with tech giants like Microsoft.

Despite its strong market position, Oracle's stock is perceived as overvalued by about 20%, based on a discounted cash flow (DCF) model and comparisons with its five-year averages and Microsoft. The company's price-to-earnings (P/E) ratio is approximately 47.33, indicating a high valuation relative to its earnings. Its price-to-sales ratio is about 9.69, and the enterprise value to sales ratio is around 11.06.

Oracle maintains a strong economic moat in Database Management Systems (DBMS), Enterprise Resource Planning (ERP), and Cerner. However, its position is less robust in Infrastructure as a Service (IaaS) and hardware. The company's growth is expected to accelerate to around 12% by 2026, driven by capital expenditures in the IaaS Cloud sector. This growth raises concerns about potential impacts on profit margins.

Oracle's financial metrics reveal a debt-to-equity ratio of roughly 7.81, indicating a significant level of debt compared to its equity. The current ratio stands at approximately 0.72, suggesting potential liquidity challenges in meeting short-term obligations. The enterprise value to operating cash flow ratio is about 31.13, and the earnings yield is around 2.11%.

As Oracle prepares to report its fiscal 2025 first-quarter results, investors should focus on the company's AI capabilities. The demand for Oracle's AI services is outpacing supply, driven by the need for large language models (LLMs) in AI chatbots and applications. These models require substantial computing power, a critical factor for Oracle's operations.