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Oracle Exceeded Fiscal Q1 Estimates

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EPS surpassed estimates

Oracle (ORCL) reported fiscal Q1 2019 financial results on September 17. Its non-GAAP EPS after adjustments came in at $0.71 per share, outperforming analysts’ estimate of $0.68 per share. Moreover, the EPS in the reported quarter also improved 14.5% YoY.

The graph above shows Oracle’s EPS growth in the last five quarters. During the period, the company’s bottom line has grown at a CAGR (compound annual growth rate) of 3.4%. In the last five quarters, the company also outpaced analysts’ estimates.

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Revenue segment analysis

In fiscal Q1 2019, Oracle’s revenue rose 1% YoY to nearly $9.2 billion. However, on a constant currency basis, it increased 2% YoY. The cloud services and license support revenues were up by 3.2% YoY to $6.6 billion, whereas the cloud license and on‐premise license business revenue came in at $867 million, down 3%.

Oracle’s existing customers continue to move their workload to the cloud, which is creating an opportunity for the company to boost its cloud business. AT&T (T), one of the company’s most important clients, has moved most of its databases to the Oracle cloud. The company continues to gain market traction buoyed by higher adoption of Oracle Fusion ERP. The Oracle Fusion ERP customer count was around 5,500, and the NetSuite ERP customer count was more than 15,000 for the reported quarter.

Margin growth

The non-GAAP operating margin in Q1 2019 stood at 41%. Despite higher marketing and research and development expenses, Oracle maintained stable margin growth. The management also raised its share repurchase authorization by $12 billion.

Outlook

Oracle anticipates double-digit EPS growth in fiscal 2019, while its revenue is expected to be higher in the second half of fiscal 2019. The non-GAAP EPS in fiscal Q2 2019 is projected to be in the range of $0.77 and $0.79, up in between 11% to 15% YoY. However, in constant currency terms, the non-GAAP EPS is expected to rise 12%16% to $0.78$0.80.

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