Oracle’s Stock Takes a 9% Dive as Cloud Forecast Disappoints; Goldman Sachs Cautions on High Expectations
12 Setembro 2023 - 8:08AM
IH Market News
Oracle’s fiscal first-quarter results, which exceeded analysts’
expectations, were driven by businesses’ growing interest in
developing generative artificial intelligence applications, leading
to increased demand for cloud services.
Although Oracle Corporation’s (NYSE:ORCL) shares initially
dipped more than 3% in after-hours trading after the report, they
fell as much as 9% following a cautious outlook provided by
management during the earnings call for the second quarter.
Oracle reported adjusted earnings per share (EPS) of $1.19 on
revenue of $12.45 billion, surpassing analysts’ projections of
$1.15 EPS and $12.44 billion in revenue.
Cloud services and license support revenues experienced a 13%
year-on-year increase, reaching $9.5 billion. In contrast, cloud
license and on-premise license revenues saw a 10% decline, totaling
$0.8 billion.
Oracle highlighted that AI development companies had committed
to purchasing over $4 billion of capacity in Oracle’s Gen2 Cloud,
doubling the amount booked by the end of Q4.
The adjusted operating margin increased from 39% to 41% compared
to the same period last year.
During the earnings call, Oracle projected total revenue growth
of 5-7% at current currency rates and 3-5% in constant currency.
Cloud revenue was expected to grow at 28% in constant currency,
slightly below the 29% reported for Q1. This contributed to the
decline in the stock’s value post-earnings.
The management attributed the soft cloud outlook to the rapid
transition of Cerner (NASDAQ:CERN) to the cloud, resulting in
short-term challenges as customers shift from upfront licensed
purchases to cloud subscriptions.
Adjusted EPS for the next quarter was forecasted at $1.29 (with
a variance of up to 2 cents), surpassing the consensus estimate of
$1.25.
Oracle’s financial analyst meeting is scheduled for the
following week, where it may provide updates on its mid-term
outlook.
Goldman Sachs analysts noted that Oracle’s Q2 outlook fell short
of high expectations, while Guggenheim analysts remained bullish,
emphasizing that Oracle’s growth prospects in SaaS, OCI, and cloud
database migration supported their Buy rating and Best Idea
designation.
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