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Oracle (ORCL) Q2 2023 Results

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Safra Catz, Oracle CEO and then one of Oracle’s two co-CEOs, smiles during Oracle’s OpenWorld conference in San Francisco on September 20, 2016.

David Paul Morris | Bloomberg | Getty Images

Oracle Shares rose 4% in extended trading on Monday after the software company reported fiscal second-quarter results that beat analysts’ estimates. But it provided a lighter earnings forecast than analysts had expected.

Here’s how the company did it:

  • Earnings: $1.21 per share, adjusted, versus $1.18 per share as expected by analysts, according to Refinitiv.
  • Revenue: $12.28 billion, versus $12.05 billion as forecast by analysts, according to Refinitiv.

Regarding guidance, Oracle CEO Safra Catz said on a conference call that she expects adjusted earnings per share of $1.17 to $1.21 and growth in revenues of 17% to 19% for the third fiscal quarter. Analysts polled by Refinitiv had expected $1.24 per share and $12.34 billion in revenue, implying growth of 17.3%.

Oracle’s total revenue increased 18% year-over-year in the fiscal second quarter, which ended Nov. 30, according to a statement. Healthcare software company Cerner, which Oracle acquired for $28 billion in June, generated $1.5 billion in revenue.

Excluding the currency impact, Oracle’s adjusted earnings would have been 9 cents higher, the company said. Revenue for the quarter exceeded the high end of its guidance by more than $200 million, Catz said in the statement. She cited the strength of cloud infrastructure and cloud-based applications.

“We really have it from all walks of life,” she said on Monday’s call.

Net income was $1.74 billion, compared to a net loss of $1.25 billion in the year-ago quarter. Last year’s loss was related to the payment of a judgment related to Mark Hurd, who previously served as co-CEO alongside Catz. Hurd passed away in 2019.

Oracle widened its adjusted operating margin to 41% from 39% in the prior quarter.

Catz said Oracle isn’t done integrating Cerner.

“We are already realizing some level of cost savings, but ultimately, just so you understand, we expect that we will apply them to typical Oracle margins,” she said. “So we still have a long way to go. And I think over the next couple of quarters you’ll see continued improvement as we’ve done some of our operational integration and at the same time I think they’re continuing to outperform for us.”

The company’s cloud services and licensing support segment recorded revenue of $8.6 billion, up 14% and above consensus of $8.56 billion among analysts polled by StreetAccount . Cloud infrastructure revenue jumped 53% to $1 billion.

Revenue from cloud and on-premises licensing, at $1.44 billion, topped the StreetAccount consensus of $1.24 billion.

During the quarter, Oracle announced Alloy, a way for partners to run the company’s cloud services in their own data centers. Separately, the U.S. Securities and Exchange Commission fined Oracle $23 million for alleged violations of the Foreign Corrupt Practices Act.

Oracle said it is targeting $65 billion in organic revenue, including Cerner’s contribution, in fiscal year 2026, with an adjusted operating margin of 45%.

Prior to the after-hours move, Oracle shares were down about 7% for the year, while the S&P 500 index fell 15% over the same period.

LOOK: Two takes on the software space with Baird’s Will Power and Mighty Capital’s SC Moatti

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