Oracle Impresses With Earnings

Oracle Corp. (NYSE: ORCL) reported its fiscal third-quarter financial results after the markets closed Tuesday. The company said it had $0.64 in earnings per share (EPS) on $9.01 billion in revenue, compared to consensus estimates from Thomson Reuters that called for $0.62 in EPS on $9.12 billion in revenue. The same period from the previous year had $0.68 in EPS on $9.33 billion in revenue.

Short-term deferred revenues were $6.9 billion, up 7% in U.S. dollars and up 11% in constant currency compared with a year ago.

During this quarter, the board of directors authorized the repurchase of up to an additional $10 billion of common stock under the existing plan. The board also declared a quarterly cash dividend of $0.15 per share, which will be payable April 28 for shareholders of record on April 14.

Operating cash flow on a trailing twelve-month basis was $14.1 billion. On the books, cash, cash equivalents, and marketable securities totaled $50.8 billion compared to $54.4 billion at the end of the last fiscal year.
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Oracle CEO Safra Catz commented:

Our Cloud SaaS and PaaS revenue growth rate accelerated to 61% in constant currency in Q3. This dramatic revenue increase drove our non-GAAP SaaS and PaaS gross margins up to 51% in Q3 as compared with 43% in Q2. Our cloud business is now in a hyper-growth phase. Our gross margins are climbing toward our target of 80%. These two factors will ignite substantial EPS and cash flow growth over Oracle’s next few quarters.

Larry Ellison, chairman and chief technology officer, added:

In absolute dollar terms, Oracle is already selling more enterprise SaaS and PaaS new cloud revenue than any other company in the world — including Salesforce.com. We are growing much faster than Salesforce.com. We also have many more SaaS products than Salesforce.com. In some of our most important SaaS markets, such as ERP, HCM, Supply Chain and Manufacturing, Salesforce.com does not participate at all. By successfully competing in all of these markets, Oracle has the ability to sustain its high growth over a long period of time. That should make it easy for us to pass Salesforce.com and become the largest SaaS and PaaS cloud company in the world.

Shares of Oracle closed Tuesday at $38.74, with a consensus analyst price target of $43.50 and a 52-week trading range of $33.13 to $45.24. Following the release of the earnings report, the stock was up about 2.8% to $39.81 in the after-hours trading session.