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What Helped Oracle’s First-Quarter Results?

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Oracle beat Q1 earnings estimates

Cloud services company Oracle (ORCL) easily topped earnings estimates in the fiscal 2019 first quarter. The company posted adjusted earnings of $0.71 per share, which exceeded Wall Street expectations of $0.69 per share and the year-ago earnings of $0.61 per share. Excluding currency headwinds, profits grew 19% YoY.

In comparison, Oracle’s peer Microsoft (MSFT) posted earnings of $1.13 per share in the fiscal 2018 fourth quarter, which beat estimates of $1.08 per share. Rival Symantec (SYMC) delivered adjusted earnings of $0.34 per share in its fiscal 2019 first quarter, beating Wall Street expectations by a penny.

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Earnings drivers

While revenues remained sluggish, they grew 1% on a YoY basis and 2% on a constant currency basis. Currency also had a negative impact on Oracle’s adjusted operating income. Adjusted operating income increased 1% to $3.8 billion and rose 3% YoY on a currency-neutral basis. Its adjusted operating margin was flat at 41%.

Meanwhile, Oracle’s earnings benefited from a whopping $10 billion worth of stock buybacks during the quarter. The company’s fiscal year earnings are expected to ride on massive share buybacks. The company’s board has permitted additional spending of $12 billion on share buybacks, which would boost the company’s earnings in fiscal 2019.

Along with the share buyback program, Oracle’s board has declared a quarterly cash dividend for the quarter of $0.19 per share, which is to be paid on October 30 to stockholders of record as of October 16. Notably, analysts had predicted the company would increase dividends in this quarter.

Guidance

Oracle forecasts adjusted earnings in the range of $0.77 and $0.79 per share for the fiscal second quarter of 2019 as compared with analysts’ expectation of $0.79. Further, Oracle expects double-digit growth in earnings for fiscal 2019.

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