Must-know: What can you expect from Oracle’s 1Q15 earnings?

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Sep. 18 2014, Published 2:17 p.m. ET

Expected 1Q15 earnings results

On September 18, 2014, after the market closes, Oracle (ORCL) will announce its 1Q15 results. Q1 is usually considered Oracle’s strongest quarter. But, considering the company’s ongoing transition from the software business to the cloud, it’s uncertain whether its results could bring a smile back to investors’ faces.

In constant currency, the company’s non-GAAP earnings per share (or EPS) are expected to be in the range of 61 to 65 cents.

The chart above shows the market shares of players in the global software market. Microsoft (MSFT) leads the market with a share of 16%. Its’s followed by Oracle and IBM (IBM). SAP AG (SAP) and Symantec (SYMC) are other leading players.

Oracle’s earnings have been below expectations for a while

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In 4Q14, Oracle posted revenue growth of 3.4% and EPS of $0.92 or 92 cents per share. Both were at the low end of the company’s own expectations. But this wasn’t the first time the company disappointed with its results. It’s been three years since Oracle reported a quarter with year-over-year, double-digit revenue growth.

Low contribution of cloud-based products

Oracle is present in all the main segments of the cloud services market—software-as-a-service (or SaaS), platform-as-a-service (or PaaS), and infrastructure-as-a-service (or IaaS). But its contribution to overall revenues is a mere 4%. The low contribution of cloud-based products when there’s an increasing trend towards cloud adoption has jeopardized Oracle’s position.

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