Oracle shares fall as first-quarter revenue misses estimates

US software company was a late entrant to highly competitive cloud market

Shares of Oracle fell 4 per cent to $47.30.  Photograph: Mike Blake/File Photo/Reuters

Shares of Oracle fell 4 per cent to $47.30. Photograph: Mike Blake/File Photo/Reuters


Oracle on Monday reported first-quarter revenue that narrowly missed analysts’ estimates, suggesting that the business software maker was struggling to make inroads in the highly competitive cloud computing market.

Shares of Oracle fell 4 per cent to $47.30 (€40.40) in extended trading as the company’s biggest unit, which houses its cloud services business, also reported disappointing sales.

Revenue in its cloud services and license support business rose 3.2 per cent to $6.61 billion (€5.66 billion), falling short of the average analyst estimate of $6.71 billion (€5.74 billion), with the co-chief executive Safra Katz attributing the miss to a strong dollar.

Oracle is a late entrant to the cloud business and has been playing catch up with rivals, including Amazon. com, Microsoft and Salesforce. com.

In its efforts to take a bigger share of the cloud computing market, the company said earlier this year that it would quadruple the number of its largest data centres.


However, the company is yet to present a credible challenge to the dominant players in the industry.

Oracle stopped breaking out its cloud computing numbers in the fourth quarter, a move that drew criticism from analysts and investors, who said it gave little insight into the performance of its key business.

“We want to compare Oracle’s cloud business to other cloud leaders that recently reported strong cloud growth . . . but we cannot due to the lack of specific details,” said Daniel Morgan, senior portfolio manager of Synovus Trust Co, which holds Oracle shares.

“That’s actually the nitty gritty why everyone is frustrated and the stock is down.”

For the second quarter, the company said it expected revenue to be flat to up 2 per cent and earnings of 78 to 80 cents per share, the mid-point of which was in line with analysts’ estimates.

Net income rose to $2.27 billion (€1.94 billion), or 57 cents per share, in the reported quarter ended August 31st from $2.14 billion (€1.83 billion), or 50 cents per share, a year earlier.

Excluding items, the company earned 71 cents per share, while total revenue rose 1 per cent to $9.19 billion (€7.87 billion).

Analysts on average were expecting an adjusted profit of 69 cents per share on revenue of $9.28 billion (€7.95 billion), according to Thomson Reuters.

– Reuters