Oracle Corporation (ORCL) on Q3 2021 Results - Earnings Call Transcript

Operator: Welcome to Oracle's Third Quarter 2021 Earnings Conference Call. Now I'd like to turn the call over to Ken Bond, Senior Vice President. Ken Bond: Thank you, Erica. Good afternoon, everyone. And welcome to Oracle's third 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 customer 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. Safra Catz: Thanks, Ken. And good afternoon, everyone. We are again, reporting earnings 10 days after the end of the fiscal quarter, faster than any other company in the S&P 500. Fusion Cloud ERP enables us to understand our business performance sooner and with greater insight, which is an advantage our customers are rapidly beginning to appreciate. As you can see, we had a great quarter and executed well against our growth plan. Revenue was in line with our USD guidance while EPS beat the mid-point of guidance by $0.05. Our total cloud services and license support revenue for the quarter was $7.3 billion, up 5% in U.S. dollars, 2% in constant currency, driven by Fusion, Autonomous Database and our Gen2 OCI cloud. Recurring revenue, as a percentage of total revenue now represents 72% of total company revenue and we anticipate this trend to continue as cloud services grow. Application subscription revenues were $3 billion up 5% in U.S. dollars, 3% in constant currency. Our strategic back-office cloud applications now have annualized revenue of $4 billion and grew 24% this quarter, including Fusion ERP up 27%, NetSuite ERP up 22% and Fusion HCM up 21%. Infrastructure subscription revenues were $4.3 billion, up 4% in U.S. dollars, up 2% in constant currency. Infrastructure cloud services now have an annualized revenue of more than $2 billion, including OCI consumption revenue, which was up 123%; autonomous database was up 55%; cloud customer consumption revenue was up over 200%, but on small numbers. Larry Ellison: Thank you, Safra. Three months ago, Bob Evans posted an article on the Cloud Wars’ website in which he quotes SAP, CFO, Luka Mucic making the following statement at an investors conference. And I quote, “I have checked and we have not lost a single ERP customer to Oracle.” In other words, after personally, checking SAP’s Chief Financial Officer could not find a single example of an SAP ERP customer move into Oracle Fusion on ERP, not one. Perhaps he should have checked a little bit more carefully. In Q3 alone we signed contracts, totaling hundreds of millions of dollars to migrate several very large SAP ERP customers, to Oracle Fusion ERP. But this was not just a recent Q3 event. This has been going on for a couple of years. Ken Bond: Thank you, Larry. Erica, if you could please pull the audience for questions. Operator: Our first question comes from Michael Turits with KeyBanc Capital. Michael Turits: Larry, thanks for all the color on ERP. I'd like to switch over to your database. You've made meaningful improvements in both cloud customer and OCI too which both one of the two are required for ADB. So, are those improvements enough that we're now starting to see the upgrades to ADB? And are you able to monetize those upgrades to the point where we'll start to see database growth acceleration? Larry Ellison: The answer is I think there's no question. You're going to see a lot of database growth – a lot of database acceleration starting next year which we're a quarter away from. But we'll be fine in Q4. Again, its autonomous databases is growing pretty rapidly. But we expect it really to explode next year. And I really do mean very, very rapid growth next year. I'm not really ready to disclose our plans as to why I think it's going to suddenly spike but we expect very, very rapid database growth next year. Michael Turits: Thanks, Larry. Operator: Our next question comes from Mark Murphy with JPMorgan. Mark Murphy: Yes. Hi Larry. This SAP replacement wave, feels like kind of a historic moment because that kind of activity it's usually so rare and these are the logos are pretty large that you're mentioning. So when we see… Larry Ellison: I acknowledge for interrupting. The really spectacular logos there's some of them are pretty spectacular on there. But we have some that are much larger and much – and absolutely shocking. I've been alluding to these, but sometimes we're in the middle of an 18-month implementation. And the customer doesn't want any mention. If I could mention them all, it would be – it’s front page news. I mean it's a very big deal. Yes. I agree with you. It's an historic event. It is – I think a long time ago, I said there are two technologies that will drive Oracle's future, one is the autonomous database and the other is ERP. We are – reading the Gartner report, we are so dominant. Our product is so much better than anyone else's product in the cloud. We expect to get a significant number more than half of SAP's customers we’ll get. But keeping our own, yes, plus getting a lot of it from the smaller companies like M4 and Lawson. Mark Murphy: So Larry, the ones that we see, which aren't too savvy, you mentioned DHL and Honda and Lloyds Bank. Is that a precursor to moving to Oracle core financials eventually. And I'm just wondering which of Oracle strength is really catalyzing that wave of replacements? Larry Ellison: Okay. So there are two lists. One, the first half of the list that I read and they're about equal sized lists where people that are already moved from SAP financials to Oracle financials. The second list where people that had partially moved to Oracle, but still were running SAP financials in some places. In other words, we don't consider it a complete win until we replace out. If we just sell procurement and supply chain and manufacturing and things like that, but they still run SAP financials we don't consider that a complete win. That's what we call our surround strategy. But once you start using our cloud products and compare that with SAPs on premise products, we think the vast majority of these companies that it started the journey, we'll finish the journey. And they'll want financials in the cloud, just like they have supply chain in the cloud, in procurement in the cloud. So yes, we expect company – we've already seen companies migrate off the second list. They buy procurement, they buy supply chain and they see, okay, I like that. And I'm going to buy financials. So yes, we expect all of those or excuse me, the vast majority of those customers to eventually standardize on Fusion Cloud ERP for everything. Mark Murphy: Thank you. Operator: Our next question is from Mark Moerdler with Sanford Bernstein. Mark Moerdler: Thank you. Thank you very much for taking my question and appreciate the additional color that Safra you gave on the call. I'd like to turn to OCI Gen2. We've been hearing about security concerns from consumer internet companies. To what extent has OCI security technology helped you in business with these companies and is consumer internet a big driver for OCI Gen2, also to be clear, this is not about TikTok, it's that all the other consumer internet company opportunities. Thank you. Larry Ellison: Yes. Well I think there are two things that are interesting about OCI. One on the security front. One is we believe security should be always be turned on and in other words, there is no light switch, security on, security off. We have these things called max security zones in OCI where you cannot turn security off and max security is always turned on. It's a safe place to go inside of OCI. No one has anything like this, where security is always turned on. You cannot turn it off. You cannot open up a link – a network link that puts your infrastructure and your data in jeopardy. That's one thing. So security is always on. The second thing is autonomy is very interesting, because the Oracle autonomous database, by the way, the Oracle autonomous database is not the only autonomous product we have. We have autonomous Linux that is the foundation of OCS, the foundation operating system inside of the OCI network. Oracle autonomous, Linux, Oracle autonomous database has no human labor associated with them. Okay. So everyone says, well, that's a huge cost saving. It is, but that's not the most important benefit. The most important benefit if there is no human labor, there is no human error. If there's no human labor, there's no human mission, there's no opportunity for an insider to corrupt the system. There's no opportunity for a user to misconfigure a system that creates a security vulnerability that will lead to the loss of data. So, we think one of the most attractive aspects of OCI, other than its high performance, low cost, all of that, everyone likes to pay less and they do with OCI. But we do a better job of securing your data than any other cloud vendor. We've seen that be the decisive feature in winning a lot of these deals with ISVs and end user customers. Mark Moerdler: I appreciate it. Thank you for the additional color. Operator: Our next question comes from Phil Winslow with Wells Fargo. Phil Winslow: Hi, thanks for taking my question. Congrats on a strong quarter. I just wanted to focus in on the license line it was up 4% as reported to be a flat constant currency off of what was actually the toughest comp for this fiscal year. Wondering if you can provide some context of sort of what is driving that particularly sort of relative to the strength that you are also seeing in the cloud side? Is this the Oracle database, is this the add-ons to the Oracle database? Any sort of more color there. And then also in particular in sort of in conjunction with the cloud, that'd be great. Safra Catz: So let me take that. So the Oracle database remains very strong and what's good about the Oracle database is you can also bring your own license to the cloud. So it's both on-premise and in the cloud can be used there. And it remains very, very strong. The installed base of the Oracle database continues to grow. And that is of course our central piece. Now, in addition, Java on-premise continues to do very well as more and more companies continue to invest in Java and trust Java for their own applications. And in addition, our vertical applications, some of our industry applications still require on-premise license for the customers’ use. We also have cloud services in many of these verticals, but especially in telecommunications, as many of the communications companies move to 5G, we are a very central part of their transition to 5G and need our license in those areas. So database tops, doing incredibly well, Java doing very, very well and our vertical applications. And then pretty much everything else of course as you know is offered just in the cloud. Phil Winslow: Perfect. Thank you very much for the color. Appreciate it. Operator: Our final question comes from Brad Zelnick with Crédit Suisse. Brad Zelnick: Great. Thank you so much for taking the question. And congrats as well on a great quarter. Larry, it's so great to hear every single one of those SAP wins, especially since investors think of SAP's customer relationships as being so deep. So clearly by displacing them in so many accounts, it speaks volumes to the quality of your product and trust that these companies place with Oracle. So, my question is this, why now, and why from a product perspective, you mentioned Gartner's take, but since Oracle has always competed on having better products, what have you been doing product wise that's enabled you to pull ahead of them like this and what do you need to continue to do product wise to remain ahead? Larry Ellison: So well we started 10 years ago to build fusion financials for the cloud to rewrite all – PeopleSoft ERP, JD Edwards ERP, and of course, Oracle E-Business Suite, we had these three separate on-premise ERP systems, and we decided a decade ago to rewrite all of that with the cloud. And SAP unbelievably, they just, I mean – and we did a very good job. We started a decade ago and we did, I think, a very good job redoing a big job, to say the least, redoing our ERP products for the cloud. That said, SAP chose not to rewrite their ERP products. Instead, they made a bunch of acquisitions. They bought Concur, they bought Ariba, they bought SuccessFactors, but they never – and we made some acquisitions also by the way, and others right now at other things. But we rewrote everything for the cloud. SAP instead, embedded their own database called HANA and focused on this new database and never really rewrote their ERP code for the cloud. I mean, it's just an unbelievable error. They worked on a new database and the, the thing we're competing with at so-called S/4HANA in the cloud, is what the SAP calls it, is not a cloud product at all. It is the 35-year-old ABAP, this is written in a programming language called ABAP. Oracle Fusion is written entirely in Java. And it's been entirely rewritten overload over the last decade. SAP stuff is literally 30 years old. The same that they've always had, that they now will host for you. So I would say we did a competent job rewriting for the cloud, SAP just entirely missed the boat. So SAP really is more responsible for our leadership position than we are. Again, they never rewrote their application for the cloud. It's unbelievable what's happened. And their customers are noticing. We offer a new release of our ERP system every 90 days. We offer new features and functions. That's how the cloud works. You are on the cloud, you get new features and functions, you are on this 90-day cadence. We give you more features and more capabilities every 90 days. SAP has nothing like that. It's not a cloud system. It's simply is okay, you can get the SAP S/4HANA and you can get it hosted by somebody, but they don't even have a cloud. They never built a cloud. That's what happened. Brad Zelnick: Thank you, Larry. Larry Ellison: It’s amazing. Ken Bond: Thank you, Larry. A telephonic replay of this conference call will be available for the next 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. Thank you for joining us today. With that, I will turn the call back to Erica for closing. Operator: Thank you for joining today's Oracle's third quarter of 2021 earnings conference call. We appreciate your participation. You may now disconnect.
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BMO Lifts Oracle Price Target to $245, Keeps Outperform Rating Unchanged

BMO Capital raised its price target on Oracle (NYSE:ORCL) to $245 from $235 while maintaining an Outperform rating, as the firm expects the company’s significant capital expenditure requirements to impact free cash flow and potentially necessitate new capital raises in fiscal 2026 or 2027.

The analyst noted that Oracle’s ongoing dividend commitments and anticipated share buybacks, combined with rising capex needs—likely tied to cloud infrastructure and AI investments—could pressure cash flows. While BMO sees any capital raise as manageable, it cautioned that dilution from new financing could weigh modestly on EPS.

Despite this, the firm made only slight adjustments to its estimates and reiterated its bullish stance, arguing that Oracle’s growth prospects in cloud and AI continue to support a favorable risk/reward profile. The raised target reflects confidence in Oracle’s strategy and the durability of its business model even as it navigates near-term financial balancing.

Oracle Surges 13% After Raising 2026 Revenue Forecast on Strong AI Cloud Demand

Shares of Oracle (NYSE:ORCL) jumped more than 13% intra-day today after the company raised its full-year revenue growth outlook and underscored strong demand for its AI-driven cloud offerings. CEO Safra Catz announced during the post-earnings call that Oracle now expects total revenue for fiscal 2026 to reach at least $67 billion, representing a 16.7% increase year-over-year, up from its prior forecast of 15% growth.

For the fiscal fourth quarter, Oracle reported adjusted earnings per share of $1.70 on revenue of $15.9 billion, surpassing analyst expectations of $1.64 in EPS and $15.58 billion in revenue. The standout performance came from Oracle Cloud Infrastructure, which saw revenue surge 62% year-over-year. Additionally, the company's remaining performance obligations—a forward-looking measure of contracted revenue—rose 41% to $138 billion, signaling continued momentum in demand for its services.

Oracle Corporation's Impressive Earnings Report and Future Outlook

  • Oracle Corporation (NYSE:ORCL) reported earnings per share (EPS) of $1.70 and revenue of $15.9 billion, surpassing estimates.
  • The company's stock surged by 8% following the release of its fourth-quarter earnings report, driven by robust cloud revenue and growing demand for artificial intelligence solutions.
  • Oracle's CEO, Safra Catz, projected a significant boost in cloud infrastructure revenue, anticipating an increase of over 70% in the 2026 fiscal year.

Oracle Corporation (NYSE:ORCL) is a leading technology company known for its comprehensive suite of software and hardware solutions. The company specializes in database management, cloud services, and enterprise software products. Oracle competes with other tech giants like Microsoft and Amazon in the cloud computing space. On June 11, 2025, Oracle reported earnings per share (EPS) of $1.70, surpassing the estimated $1.64, and revenue of $15.9 billion, exceeding the estimated $15.6 billion.

Following the release of its fourth-quarter earnings report, Oracle's stock surged by 8%, as highlighted by CNBC. This increase reflects the market's positive reaction to the company's strong performance, driven by robust cloud revenue and growing demand for artificial intelligence solutions. The impressive results underscore Oracle's strategic focus on cloud services and AI, positioning the company for continued growth in these high-demand sectors.

Oracle's CEO, Safra Catz, projected a significant boost in cloud infrastructure revenue, anticipating an increase of over 70% in the 2026 fiscal year, compared to a 50% growth in fiscal 2025. This optimistic outlook further contributed to the bullish sentiment surrounding Oracle's stock. The company's revenue increased by 11% year-over-year, reaching $15.9 billion, primarily fueled by rising demand for its cloud infrastructure and software services.

Oracle's financial metrics provide additional insights into its market valuation. The company's price-to-earnings (P/E) ratio is approximately 41.75, indicating the market's valuation of its earnings. Its price-to-sales ratio stands at about 8.87, reflecting the market's valuation relative to its revenue. Oracle's enterprise value to sales ratio is around 10.28, suggesting how the market values the company in relation to its sales, including debt and excluding cash.

The enterprise value to operating cash flow ratio is approximately 27.64, indicating how the market values the company in relation to its cash flow from operations. Oracle's earnings yield is about 2.40%, providing insight into the earnings generated per dollar invested. The debt-to-equity ratio is approximately 5.75, highlighting the company's financial leverage. Lastly, Oracle's current ratio is around 1.02, suggesting its ability to cover short-term liabilities with short-term assets.

Oracle Corporation's Market Outlook and Financial Performance

  • The consensus price target for Oracle Corporation (NYSE:ORCL) has been on a downward trend, indicating a cautious outlook from analysts.
  • Market conditions, including the May Consumer Price Index (CPI) data and U.S.-China trade relations, are significant factors influencing analysts' expectations.
  • Oracle's financial performance, strategic initiatives, and technological advancements are key to its market position and future revenue growth.

Oracle Corporation (NYSE:ORCL) is a prominent player in the enterprise information technology sector, providing a diverse array of products and services. These include cloud software applications, industry-specific solutions, and infrastructure technologies. Founded in 1977 and headquartered in Austin, Texas, Oracle serves a wide range of industries, government agencies, and educational institutions. Its offerings, such as Oracle Fusion cloud applications and Oracle Database, are integral to its market presence.

The consensus price target for Oracle's stock has been on a downward trend over the past year. A year ago, the target was $166.14, which decreased to $158.86 last quarter and further to $155 last month. This trend suggests a cautious outlook from analysts, possibly influenced by broader market conditions and Oracle's financial performance. As highlighted by Yahoo Finance, the market is closely watching Oracle's upcoming earnings report, which could impact future price targets.

Market conditions, such as the anticipated release of the May Consumer Price Index (CPI) data, play a significant role in shaping analysts' expectations. The CPI data is expected to influence market sentiment, as noted by Yahoo Finance. Additionally, updates on U.S.-China trade relations are being monitored, which could further impact Oracle's stock valuation. These factors contribute to the cautious outlook reflected in the consensus price target.

Oracle's financial performance and strategic initiatives are also key factors influencing the target price. The company is set to release its fourth-quarter earnings results, drawing attention from investors. As highlighted by Benzinga, analysts have been revising their forecasts ahead of this earnings call. Goldman Sachs analyst Kash Rangan has set a price target of $120 for Oracle, indicating a positive outlook despite the recent downward trend in the consensus price target.

Technological advancements and the competitive landscape are crucial in determining Oracle's market position. The company's ongoing cloud migration and leadership in AI infrastructure are expected to support continued revenue growth, as noted by Seeking Alpha. However, potential risks associated with projects like Project Stargate and Agentic AI could impact future performance. Despite these challenges, Oracle's core business and growth in remaining performance obligations (RPO) are anticipated to remain robust.

Oracle Corporation (NYSE:ORCL) Stock Analysis and Insights

Oracle Corporation (NYSE:ORCL) is a major player in the software industry, known for its comprehensive suite of cloud applications and platform services. On June 10, 2025, Mark Murphy from Loop Capital Markets set a price target of $135 for Oracle. At that time, Oracle's stock was trading at $177.48, indicating a significant price difference of approximately -23.94% from the target.

Oracle is preparing to release its upcoming earnings, and the market is closely watching trends in the software sector. Rishi Jaluria from RBC Capital Markets discusses these trends, which could impact Oracle's performance. The stock has seen a slight increase of 0.33, or 0.19%, with a current price of $177.48. This reflects a trading range today between $174.37 and $177.84.

Jared Blikre from Yahoo Finance highlights key themes driving market momentum, such as global equity outperformance and cryptocurrency price action. These factors could influence Oracle's stock movement. Oracle's market capitalization stands at approximately $497.7 billion, showcasing its significant presence in the industry.

Julie Hyman from Market Domination analyzes volatility trends, noting that a decrease in the VIX could imply positive long-term returns. Oracle's stock has fluctuated over the past year, with a high of $198.31 and a low of $118.86. Today's trading volume for Oracle is 8,923,694 shares, indicating active investor interest.

Oracle Corporation's Upcoming Earnings: A Look into Cloud and AI Sectors

  • Oracle Corporation (NYSE:ORCL) is expected to report an earnings per share (EPS) of $1.64 and revenue of $15.58 billion for the quarter, indicating growth from the previous year.
  • The company's stock has seen a 25% increase since April, attributed to the demand for Oracle Cloud Infrastructure (OCI) and advancements in AI.
  • Financial metrics reveal a price-to-earnings (P/E) ratio of 41.93 and a debt-to-equity ratio of 5.75, showcasing Oracle's market valuation and financial leverage.

Oracle Corporation (NYSE:ORCL) is a leading technology company known for its comprehensive suite of software and hardware products. It specializes in database management systems, cloud solutions, and enterprise software. As Oracle prepares to release its quarterly earnings on June 11, 2025, analysts are keenly observing its performance, particularly in the cloud and AI sectors. Competitors like Microsoft and Amazon also vie for dominance in these areas.

Analysts project Oracle's earnings per share (EPS) to be $1.64, with revenue expected to reach $15.58 billion. This marks an increase from the previous year's earnings of $1.63 per share and $14.29 billion in sales. Despite potential disruptions from the Musk-Trump fallout affecting Project Stargate, Oracle's core business remains strong. The company's growth in remaining performance obligations (RPO) is anticipated to be resilient.

Oracle's stock has gained approximately 25% since April, driven by the demand for Oracle Cloud Infrastructure (OCI) and AI advancements. Jefferies analysts, who rate Oracle as a "buy," have raised their price target to $200, citing a turning point in OCI and backlog as capacity constraints ease. Meanwhile, Citi analysts maintain a "neutral" rating with a price target of $185, noting increased interest in OCI database modernization.

Oracle's financial metrics reveal a price-to-earnings (P/E) ratio of 41.93 and a price-to-sales ratio of 8.91, indicating the market's valuation of its sales. The company's enterprise value to sales ratio is 10.32, while its enterprise value to operating cash flow ratio is 27.75. Oracle's debt-to-equity ratio of 5.75 reflects its financial leverage, and a current ratio of 1.02 suggests its ability to cover short-term liabilities.

Historically, Oracle's stock has experienced negative one-day returns following earnings announcements, with a median drop of 4.4% and a maximum decrease of 13.5%. Traders may consider pre-earnings and post-earnings positioning strategies to navigate these patterns. As Oracle continues its cloud migration and AI infrastructure leadership, it is well-positioned for sustained revenue growth.

Oracle Corporation (NYSE:ORCL) Maintains Positive Trend with Analysts' Confidence

  • Jefferies maintains a "Buy" grade for Oracle Corporation (NYSE:ORCL), with a stock price target of $200, indicating strong future performance.
  • Oracle's stock has seen a recent increase of 2.6%, trading at $178.47, driven by analyst price-target hikes.
  • The company's stock has experienced volatility, with a yearly high of $198.31 and a low of $118.86, showcasing its growth potential and associated risks.

Oracle Corporation (NYSE:ORCL) is a leading technology company known for its comprehensive suite of software and hardware products. It specializes in database management systems, cloud solutions, and enterprise software. Oracle competes with other tech giants like Microsoft and SAP in the enterprise software market. On June 9, 2025, Jefferies maintained its "Buy" grade for Oracle, with the stock priced at $178.40.

Oracle's stock has recently seen a positive trend, rising by 2.6% to a trading price of $178.47. This increase is largely due to recent price-target hikes by analysts, including Jefferies and BMO, both of which have set their targets at $200. This indicates strong confidence in Oracle's future performance.

Currently, Oracle's stock is priced at $178.42, reflecting a 2.53% increase, equivalent to a $4.40 rise. Throughout the trading day, the stock has fluctuated between $173.80 and $178.72. This volatility is typical in the stock market, where prices can change rapidly based on various factors.

Over the past year, Oracle's stock has reached a high of $198.31 and a low of $118.86. This range shows the stock's potential for growth and the risks involved. Oracle's market capitalization is approximately $500.33 billion, indicating its significant size and influence in the tech industry.

The trading volume for Oracle is 6,496,557 shares, reflecting active investor interest. A high trading volume often suggests that a stock is liquid, meaning it can be easily bought or sold without causing a significant price change. This liquidity is beneficial for investors looking to enter or exit positions in Oracle.