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Can Oracle Meet Its Revenue Guidance in Fiscal Q1 2019?

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Sep. 13 2018, Published 9:09 a.m. ET

Fiscal Q1 2019 outlook

During its fiscal fourth-quarter earnings report on June 19, Oracle’s (ORCL) revenue guidance for its fiscal first quarter of 2019[1. fiscal Q1 2019 ended August 31] called for 1.0%–3.0% growth on a constant currency basis. The ongoing migration trend of databases from on-premises software to the cloud platform is expected to support its revenue growth.

The company changed its policy to report its SaaS revenues under the ratable method. This method considers only the revenues earned for that period, leaving the rest of the revenues for subsequent periods. This shift could dent the company’s top-line growth. 

The higher lock-in period for the Oracle Autonomous Database Cloud may also impact the company’s sales. Oracle’s revenues may be affected by the stronger dollar, as more than 40.0% of the company’s business originates outside the United States.

The graph above illustrates Oracle’s revenue growth in the last five quarters, which has increased since the fiscal first quarter. During this period, its revenues grew at a CAGR (compound annual growth rate) of 8.8%.

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Comprehensive analysis of key catalysts

Oracle’s (ORCL) largest clients have been shifting their on-premises databases to the Oracle Cloud, creating more opportunities for the company’s top-line growth. AT&T (T), which is one of Oracle’s major customers, has already moved most of its databases to Oracle Cloud.

According to Gartner, Microsoft (MSFT), Amazon (AMZN), and Google (GOOGL) comprise the cloud leadership group in Gartner’s 2018 Magic Quadrant while Oracle joins IBM and Alibaba in the niche category. Despite being relatively late to the cloud sector, Oracle has been accelerating its business through several important acquisitions. 

Oracle’s NetSuite acquisition in July 2016 remains one of the major turnarounds in the company’s business, boosting its ERP (Enterprise Resource Planning) products with large, small, and medium enterprises. Oracle’s 2015 acquisitions of CloudMonkey and Maxymiser helped the company develop cloud-based software, testing tools, and platforms for mobile apps.

The launch of Oracle Autonomous Database Cloud can be a key driver for the company’s business, as it has garnered positive reviews from its customers. It’s designed to reduce errors and accelerate workloads while improving cost savings, time management, and efficiency for its users.

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