Can Oracle’s Fiscal 1Q17 Results Beat Analysts’ Expectations?



Oracle’s falling revenue growth story

Oracle (ORCL) is scheduled to report its fiscal 1Q17 results on September 16, 2016. Analysts are expecting Oracle to post revenues and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $8.7 billion and $0.58, respectively.

Like its peer in the enterprise software space, IBM (IBM) Oracle is finding it difficult to report revenue growth. In the past ten quarters, including fiscal 4Q16, Oracle’s revenues have missed analyst expectations eight times. In fiscal 4Q16, while Oracle’s revenues of $10.6 billion managed to beat analyst expectations by $130 million, its EPS failed to meet the threshold by $0.02.

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Cloud will continue to dominate

Although revenue growth was almost flat in fiscal 2016, Oracle’s cloud revenue rose 40% on a constant currency basis to $2.9 billion. On a quarterly basis, this rise was 51% in fiscal 4Q16.

Oracle (ORCL) attracted significant negative publicity due to a lawsuit filed against the company about the reporting of its cloud services in 2016. Despite this news, Cloud dominated the company’s fiscal 4Q16 and 2016 results.

The company’s recent acquisitions in the cloud space include the $1-billion acquisition of Netsuite. Given the revenue growth of its cloud revenues, we’ll likely hear more about company’s initiatives in the cloud space in its fiscal 1Q17 earnings.

Of late, it appears that all the leading technology companies are trying to outpace each other in acquisitions. The deals between Microsoft (MSFT) and LinkedIn (LNKD), Symantec (SYMC) and Blue Coat Systems, and salesforce.com (CRM) and Demandware were among the prominent acquisitions announced in 2016.

Keep reading this series for a discussion of Oracle’s most recent acquisition in the cloud space and an analysis of its growth strategy.


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