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Oracle’s Fiscal 3Q16 Earnings Beat Analysts’ Expectations

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Mar. 17 2016, Published 10:31 a.m. ET

Growth remains elusive in Oracle’s fiscal 3Q16 results

As scheduled, Oracle (ORCL) reported its fiscal 3Q16 earnings on March 15, 2016. The company posted revenues and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $9.0 billion and $0.64, respectively. Oracle’s fiscal 3Q16 revenues failed to meet analysts’ expectations by $110 million. However, EPS beat analysts’ estimates by $0.02.

On a YoY (year-over-year) basis, Oracle’s fiscal 3Q16 revenues and EPS fell by 3% and 6%, respectively. In the past seven quarters, including fiscal 3Q16, Oracle’s revenues have missed analysts’ expectations. Fiscal 3Q16 marked the fourth straight quarter for a fall in EPS.

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Operating segment performance and growth

Oracle’s Software segment reported revenues of $6.4 billion in fiscal 3Q16, which was flat on a constant currency basis. Oracle’s cloud revenues, which include SaaS (Software as a Service), PaaS (Platform as a Service), and IaaS (Infrastructure as a Service), grew to $735 million. The segment grew by 44% on a YoY basis on a constant currency basis.

Oracle’s Hardware and Services segments reported revenues of $1.1 billion and $793 million, respectively. Hardware revenues fell by 2%, while Services revenues grew a meager 1%.

Although Oracle continued to report a decline in revenues in fiscal 3Q16, its cloud offerings continued to gain momentum. Oracle, like peers Microsoft (MSFT), IBM (IBM), and SAP (SAP), is currently in the process of transitioning toward the cloud.

The above graph shows the contribution of these operating segments toward Oracle’s consolidated revenues. In this series, we’ll look at the US dollar’s impact on Oracle. We’ll also look in detail at the performances for Oracle’s operating segments in fiscal 3Q16.

You could consider investing in the iShares US Technology ETF (IYW) to gain exposure to Oracle. IYW has an exposure of 45.2% to application software and invests around 3.4% of its holdings in Oracle.

In the next part of this series, we’ll see how a strong dollar impacted Oracle’s fiscal 3Q16 results.

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