Why Oracle’s Top Line Could Continue to Impress Investors



Oracle’s revenue

Oracle’s (ORCL) revenue rose 1% YoY (year-over-year) in the fourth quarter of fiscal 2019. In comparison, peer Symantec’s (SYMC) fiscal 2019 fourth-quarter revenue fell 3.2% YoY due to a fall in its billings. Microsoft’s (MSFT) revenue surged 14% YoY in the third quarter of fiscal 2019, as the company has been shifting to the public cloud.

We expect Oracle to continue to impress investors with improved revenue growth in the coming quarters. Despite adverse currency fluctuations, Oracle has beaten analysts’ expectations in the last three consecutive quarters as a result of the growth in its cloud-based services.

Factors that will affect Oracle’s revenue

We expect currency challenges to continue to restrict Oracle’s top line growth in the first quarter of fiscal 2020. However, the company’s focus on growing its cloud business is expected to drive its sales. Oracle’s cloud license and on-premises license revenue is expected to continue to rise driven by contracts with new customers. The company is also likely to generate significant revenue from the rapid growth in its cloud applications business. However, Oracle has been seeing declines in its hardware and services revenue for the past several quarters, and the decline is likely to continue in the upcoming quarter as well.

Oracle expects its sales to grow as much as 2% in the upcoming quarter and expects higher YoY revenue growth (on a constant currency basis) in fiscal 2020.

What analysts expect

Wall Street analysts expect Oracle’s top line to increase 0.96% in the first quarter. However, this projected growth rate indicates the expectation of a sequential slowdown. Analysts expect the company’s revenue to rise 2.46% in fiscal 2020.

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