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Could Oracle Follow IBM’s Growth Trend?

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Sep. 13 2017, Updated 9:09 a.m. ET

Analyst expectations for Oracle’s fiscal 1Q18 earnings

Previously in this series, we discussed Oracle’s (ORCL) enhancements to its IoT cloud platform. Recently, Oracle has been in the news for layoffs in its Server and Solaris units, which we will discuss later in the series. Oracle is also garnering attention as it is scheduled to report its fiscal 1Q18[1. fiscal 1Q18 ended August 31, 2017] earnings on September 13, 2017.

Analysts are expecting Oracle to post revenues and non-GAAP[2. generally accepted accounting principles] EPS (earnings per share) of ~$9.0 billion and $0.61, respectively, in fiscal 1Q18.

As the chart below shows, the company missed analysts’ revenue expectations only six times in the last ten quarters. However, on the EPS front, Oracle’s performance has improved, as it has missed only three times in the last ten quarters.

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Oracle’s steady growth in the cloud

Like IBM, (IBM) Oracle has found it difficult to report revenue growth. However, the situation seems to have improved for Oracle, which had posted single-digit revenue growth in fiscal 1Q18 as well as fiscal 2017.

Oracle’s better-than-expected fiscal 4Q17 results beat market “expectations by the widest margins in at least” the last five years, as reported by MarketWatch. Oracle’s fiscal 4Q17 results provided stimulus to its stock.

Oracle stock hit a new one-year high in late June 2017, which led its market capitalization to soar to more than $210 billion. Increased adoption of SMAC (social, mobile, analytics, and cloud)—especially cloud—has influenced Oracle as well.

Like its peers Microsoft (MSFT) and IBM (IBM), Oracle is aggressively trying to broaden and scale up its offerings and presence in the rapidly growing, consolidated, and competitive cloud space.

With each passing quarter, Oracle’s cloud revenues have continued their upward trajectory. Oracle’s cloud revenues, which comprise PaaS (platform-as-a-service), SaaS (software-as-a-service), and IaaS (infrastructure-as-a-service), rose 64% to $1.4 billion in fiscal 4Q17.

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