Oracle Cloud Revenue Q4 Financial Forecasts are Poorly Expected, Drop Nearly 7%

Oracle announced on Wednesday (10th) that the third quarter of the 2021 fiscal year’s cloud business was worse than market expectations, and the fourth quarter financial forecast was not as good as market expectations. Although Oracle is optimistic that cloud infrastructure and enterprise resource planning system (ERP) demand will drive revenue growth in fiscal year 2022, it still fell nearly 7% after the market.

F2021 Q4 financial forecast

Revenue growth of 5% to 7%, better than the 4% growth expected by Refinitiv survey analysts
The adjusted EPS was reported at US$1.20 to US$1.24, which was less than the US$1.28 expected by Refinitiv survey analysts
Oracle CEO Safra Catz said that the annual computing cloud infrastructure demand exceeds 2 billion US dollars, and Oracle will invest in this quarter to prepare for cloud consumption and revenue growth in the next fiscal year.

Oracle Chief Technology Officer Larry Ellison said that in terms of software, Oracle is still the leader of cloud ERP. Hundreds of contracts have been signed in the fourth quarter. More large companies will convert SAP’s ERP system to Oracle’s Fusion. The ERP system is expected to start contributing revenue in fiscal year 2022.

Oracle (ORCL-US) fell 0.7% to 72.12 on Wednesday. After the after-hours financial report was announced, as of 7 o’clock, the stock price plunged 6.41% to US$67.5.

Revenue was reported at US$10.09 billion, better than the US$10.07 billion expected by Refinitiv survey analysts
The adjusted EPS was reported at US$1.16, better than the US$1.11 expected by Refinitiv survey analysts
The revenue of the cloud service and authorization support department reported 7.25 billion US dollars, an annual increase of 5%, which was less than the FactSet survey analysts expected 7.28 billion US dollars.

Cloud and local licenses reported US$1.28 billion, an annual increase of 4%, higher than the US$1.21 billion expected by FactSet survey analysts.
Hardware revenue was reported at US$820 million, a 4% year-on-year decrease, but still higher than FactSet’s research analysts’ expectations of US$843 million.
Service revenue reported US$737 million, a 5% annual decrease

Catz said: “With Fusion ERP growing by 30% in the third quarter and NetSuite ERP growing by 24%, we continue to expand our leading position in the ERP market.”

Catz said that Oracle’s billion-dollar cloud ERP business increased its service subscription revenue by 5% in the quarter, and subscription revenue currently accounts for 72% of Oracle’s total revenue.

Ellison said: “In the third quarter, Oracle’s Gen2 cloud infrastructure business once again won new customers, with revenue growth exceeding 100%, and we will continue to expand new businesses in the future.”

Oracle also announced an increase in its quarterly cash dividend from the original US$0.24 per share to US$0.32, an increase of 33%.

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Oracle Cloud Revenue Q4 Financial Forecasts are Poorly Expected, Drop Nearly 7 - /10


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