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Oracle Surprises but Still Trails Cloud Competitors

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Jun. 21 2019, Updated 2:05 p.m. ET

Oracle stock rises ~7% after market hours

Business database management giant Oracle (ORCL) has been struggling to grow in recent years as customers opt to keep their data on the cloud instead. Oracle announced better-than-expected fourth-quarter fiscal 2019 earnings (quarter ended May 31) on Wednesday after the closing bell, prompting its stock to rise 8.3% during the first hour of trading on Thursday.

The company’s revenue grew 1% YoY (year-over-year) to $11.14 billion in the quarter, beating Wall Street’s estimate of $10.93 billion. This beat came after two consecutive quarters of shrinking revenue.

Oracle’s net profit rose 15.2% YoY to $3.74 billion, and it adjusted EPS of $1.16 surpassed analysts’ estimate of $1.07. The company’s adjusted profit margin was at its widest in five years.

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Oracle’s licensing software business was its silver lining

The company’s licensing software revenue rose 12% YoY to $2.52 billion during the fourth quarter, whereas its cloud service and license support revenue grew just 0.5% YoY to $6.79 billion. The company’s hardware revenue fell 11% YoY to $1.12 billion.

The company said that its customer base is growing and its growth is accelerating, and it impressed Wall Street with its fiscal 2020 outlook. The company aims to grow its earnings by a double-digit percentage this fiscal year, and is striving for faster revenue growth. However, it still trails some cloud competitors.

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