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Sep. 16, 2015, 4:24 PM
- Oracle's (NYSE:ORCL) cloud + on-premise software revenue totaled $6.5B in FQ1, -2% Y/Y in dollars and +6% in constant currency; guidance was for 6%-8% CC growth.
- Top-line performance: SaaS/PaaS (cloud app and app platform) revenue rose 34% in dollars to $451M and 38% in CC, slightly missing guidance for 39%-43% CC growth. Traditional software licenses (hurt by cloud adoption) -16% to $1.15B. Software license update/product support (driven by past deals) -1% to $4.7B. Hardware -3% to $1.1B; products -1%, support -5%. IaaS (cloud infrastructure) +16% to $160M. Services +1% to $862M.
- Americas revenue rose, while EMEA and Asia-Pac (hurt by forex) fell. A strong dollar had a 9% impact on total revenue growth (-2% vs. +7%). SaaS/PaaS bookings are said to be growing at more than a 150% Y/Y clip, which leads Oracle to reiterate it expects $1.5B-$2B worth of FY16 (ends May '16) SaaS/PaaS bookings.
- Financials: $2.8B was spent on buybacks, helping EPS beat estimates in spite of a revenue miss. Thanks to forex, GAAP costs/expenses rose a modest 3% Y/Y to $5.8B - sales/marketing spend totaled $1.7B (+1%) and R&D $1.4B (+5%). Oracle ended FQ1 with $55.9B in cash/investments (much of it offshore), and $42.1B in debt.
- ORCL -0.6% after hours to $38.01. Earnings call at 5PM ET (webcast), guidance should be provided.
- FQ1 results, PR
Sep. 16, 2015, 4:02 PM
- Oracle (NYSE:ORCL): FQ1 EPS of $0.53 beats by $0.01.
- Revenue of $8.45B (-1.7% Y/Y) misses by $80M.
- Shares -1.9%.
Sep. 16, 2015, 9:32 AM
- Citing increasing cloud opportunities and a favorable valuation, SunTrust has upgraded Oracle (ORCL] +0.3%) to Buy ahead of this afternoon's FQ1 report, and set a $48 target.
- Oracle is down 15% since missing FQ4 estimates, reporting 2% Y/Y constant currency software/cloud revenue growth, and offering light EPS guidance on June 17. Shares go for 14x an FY16 (ends May '16) EPS consensus of $2.71.
- Update: More details on SunTrust's upgrade here. Analyst John Rizzuto: "[W]e believe that enterprises will increase their technology spending as they adopt cloud solutions, giving Oracle a unique opportunity as a consolidator. ... Importantly, it has re-architected and designed its middleware and database platforms to be more readily extensible to the cloud. We believe this will prove to be a critical differentiator within its customer base. Oracle, like only one or two others, is in a position to transition its customers to the cloud rather than causing disruption in cloud adoption."
Sep. 15, 2015, 5:35 PM
Sep. 14, 2015, 11:15 AM
- With market eyes on a Fed rate-hike decision considered to be a bit of a toss-up amid differing opinions, Goldman Sachs is banking on the (slightly) more dovish position that the agency will wait until December. The bank is still laying out how to play the hike when it invariably comes.
- Strength in balance sheets is what you need, it says, noting that those companies outperform (by an average 5%) in the three months after a rate-boosting cycle begins. In Goldman's "High Quality Stock" basket: CMG, DLTR, PEP, KMI, BLK, GOOG, AAPL, PCLN, ORCL, WFC.
- Meanwhile, it suggests avoiding companies with high floating-rate debt as they bear the brunt of a move away from near-zero interest rate policy. "When the tightening cycle finally starts, the immediate impact will be felt by firms with high proportions of variable rate borrowing."
- Included in that "avoid" list: CL, COL, JNJ, AAPL, EBAY, MET, KO, GIS, F, MCD, GM, TWX, CVX, AGN, MON.
- (Yes, cash-rich Apple made both lists, having a strong balance sheet along with floating debt.)
Aug. 20, 2015, 2:35 PM
- Maxymiser provides cloud software for testing and personalizing online/mobile ad campaigns, as well as analyzing customer demographics to improve targeting. Clients include HSBC, Allianz, Epson, Wyndham, and Calvin Klein.
- Oracle (ORCL -1.8%) is buying Maxymiser for an undisclosed sum, and plans to add the company's offerings to its Marketing Cloud platform. In a presentation (.pdf), the company claims Maxymiser "optimizes over 20 billion customer experiences per month for more than 250 prominent brands," and asserts its "Maxymiser’s capabilities in web and mobile channels complement Oracle Marketing Cloud’s strengths in email, SMS, social, push messaging, and display-advertising channels."
- Past Oracle marketing/CRM acquisitions: Datalogix (online/offline data), BlueKai (marketing data management), Eloqua (cloud marketing automation), Responsys (ditto), Vitrue (social media marketing), Collective Intellect (ditto)
- Yesterday: Citi estimates Oracle's cloud software ROI relative to traditional licenses
Aug. 19, 2015, 7:14 PM
- An analysis done by Citi's Walter Pritchard (Neutral, $42 target) indicates Oracle (NYSE:ORCL) needs 5 years to generate as much from cloud subscription sales for financials software as it does from traditional up-front licenses, assuming the licenses are discounted by 33% and cloud sales are done at list prices. For HR/HCM and CRM software, the breakeven points respectively rise to 8 and 10 years.
- Cloud database sales fare better in the analysis, with an estimated breakeven time of 2-5 years. Nonetheless, Pritchard concludes Oracle's management is "too optimistic on profitability of the cloud business."
- Oracle's FQ4 (May quarter) numbers had already led Pritchard and other analysts to fret about the margin pressures caused by the cloud transition. Jefferies has reported Oracle is pricing its cloud HR/HCM offerings aggressively to take share from market leader Workday, and Business Insider has reported Oracle has begun using the "nuclear option" of issuing breach-of-contract notices to clients - if enforced, such notices can require a client to stop using Oracle's software in 30 days - to get them to buy cloud subscriptions.
- The transition's effects: Oracle's SaaS/PaaS cloud revenue rose 29% Y/Y in FQ4 to $416M, while its traditional license revenue fell 17% (10% exc. forex) to $3.1B.
Jun. 29, 2015, 6:15 PM
- Barclays has named enterprise software giant Oracle (NYSE:ORCL), glass giant Corning (NYSE:GLW), network processor/ARM server CPU vendor Cavium (NASDAQ:CAVM), and payment services provider Total System Services (NYSE:TSS) its top Americas tech picks.
- On Oracle: "Oracle is emerging from an extended period of product development and internal changes that position it well to capitalize on key tailwinds through 2016. With better execution in software and stabilization in hardware, we think investor sentiment will become more positive, specifically as quarterly results have been better, and the current valuation makes Oracle shares attractive." Shares are less than two weeks removed from selling off due to an FQ4 miss and light guidance.
- On Corning: "The launch of Gorilla Glass 4 has been successful and additional glass industry dynamics remain beneficial. Other new glass products highlight Corning’s ability to move with the market and compete with non-glass solutions over time. Capital allocation will remain a major component of the story and the company’s large share repurchase program (roughly $1bn remaining) and $0.48 annual dividend should lend support to the stock." Barron's made a bull case earlier this month.
- On Cavium: "CAVM’s base business is levered to strong end market growth trends within the security, wireless infra, and data center end markets, but we also see [addressable market] expansion through its Fusion-M (doubles base station content and likely drives share gains), Liquid IO (gen 2 ramps 2H15), 2/4 core Octeon (addresses FSL $500+ business), and Fusion (small cell) products. ThunderX (ARM server SoC) and XPliant (switch silicon) both add incremental $1bn+ TAMs with disruptive solutions. CAVM will likely need to weather one more quarter without real upside but multiple products are progressing toward material revenue in 2016." CLSA and Needham cited some of the same catalysts in bullish June notes.
- On TSS: "Despite recent accounts on file (AOF) wins (e.g., BMO, TD, BAC) TSS expects to be able to grow North American revenue by mid- to-high single digits organically on an annual basis over the longer term. Given strong drivers such as card transactions (Nilson projects transactions on cards to grow ~7% from 2013 to 2018), and AOF outsourcing trends, we see the implied 5-9% y/y longer-term growth guidance as achievable, particularly when combined with nominal GDP growth."
Jun. 29, 2015, 10:17 AM
- The Supreme Court has ruled Oracle (ORCL -0.4%) can press claims Google (GOOG -1%) infringed its copyrights by using Java APIs within Android, turning down a request by Google to hear the case. The dispute will now return to a lower court.
- Oracle has sought over $1B in damages. Though a district court jury cleared Google in 2012 of infringing 8 Oracle patents, it ruled Google infringed Oracle copyrights. A federal appeals court later declared Oracle's code is eligible for copyright protection, sending the case back to the district court. Google had appealed that decision to the Supreme Court.
- Google, backed by Yahoo, Red Hat, and HP, has argued granting Oracle's code copyright protection will prevent developers from building on top of past software innovations. Oracle, backed by Microsoft, EMC, and NetApp, has accused Google of plagiarizing its code.
- Update: Some more Google news: The EU is now giving Google until Aug. 17 to respond to antitrust charges. The WSJ recently reported the EU wants major changes to Google's shopping search rankings.
Jun. 23, 2015, 4:01 AM
- Oracle (NYSE:ORCL) is expanding its cloud-computing offerings, bringing the company into more direct competition with Amazon Web Services.
- "We're prepared to compete with Amazon on price," said Executive Chairman Larry Ellison in a webcast, after announcing that Oracle would offer online storage and capability for customers to run their applications entirely in the cloud.
- The company's cloud business is growing quickly, running at a rate of about $2.3B a year in revenue.
Jun. 18, 2015, 5:33 PM
- Dave Donatelli, the head of HP's enterprise hardware ops until being reassigned in 2013, has been named Oracle's (NYSE:ORCL) EVP of Converged Infrastructure. That puts him in charge of engineered systems, server, storage/tape, and networking hardware.
- Oracle's hardware systems revenue fell 4% Y/Y in FQ4 to $1.4B, with a strong dollar and ongoing SPARC server declines offsetting engineered systems growth. Engineered bookings were up double-digits.
- Meanwhile, the enterprise software giant received a handful of target cuts following its FQ4 miss and soft FQ1 guidance, but no downgrades. Bulls focused on healthy cloud growth, and bears on declining license revenue and the margin pressures caused by the cloud shift. Shares closed down 4.8%.
- Goldman's Heather Bellini (Buy): “We expect ORCL’s license results to continue to be pressured on a yoy basis,” writes Bellini. “However our field checks also confirm that the company’s competitiveness in the cloud has improved considerably over the last 12-18 months.” Her FY16 (ends May '16) EPS estimates has been cut by $0.24 to $2.66.
- FBR's Daniel Ives (Outperform): "While management blamed the weakness on currency, it is clear to us that the company continues to struggle with its cloud transition, secular headwinds, and lingering execution issues in the field ... While it would be easy for us to throw in the white towel ... we see some positive signs of cloud growth and ultimately believe that the 12c [database] product cycle could be a growth catalyst in FY16 as more customers adopt the cloud-centric platform."
- Citi's Walter Pritchard (Neutral): "[W]e do not have a great framework for cloud transition at Oracle and Q4 results raise concerns about profitability levels in SaaS/PaaS as it substitutes for license ... SaaS / PaaS gross margin deteriorated further and on 28% higher SaaS/PaaS revenue in 4Q15, ORCL gross profit was 14% lower."
- Prior Oracle coverage
Jun. 18, 2015, 9:22 AM
Jun. 17, 2015, 5:41 PM
- Continuing its recent custom, Oracle (NYSE:ORCL) has provided all of its FQ1 guidance (delivered on the FQ4 call) in constant currency, which backs out the impact of the dollar's rise.
- On a CC basis, the company forecasts 5%-8% FQ1 revenue growth and EPS of $0.56-$0.59; consensus in actual dollars is for 0.2% revenue growth and EPS of $0.61. Total software/cloud revenue is expected to grow 6%-8% in CC, and SaaS/PaaS revenue 39%-43%. For reference, forex had an 8% impact on FQ4 revenue growth, and a $0.09 impact on EPS.
- Trying to put a good face on Oracle's FQ4 performance, co-CEO Safra Catz highlighted the company's strong cloud software/services growth, and noted the shift to cloud subscriptions from licenses leads revenue recognition to be pushed out. SaaS/PaaS bookings rose over 200% Y/Y to $426M (said to top an internal target of $300M), and total cloud billings rose 78% to $834M. Traditional app and database license revenue (-17%) was at $3.1B during the quarter.
- Oracle is at $42.15 AH.
- FQ4 results, details, PR
- Previously: Oracle seen pricing aggressively against Workday
Jun. 17, 2015, 4:31 PM
- Oracle's (NYSE:ORCL) closely-watched software/cloud revenue rose 2% Y/Y in constant currency in FQ4 to $8.4B, towards the low end of a 1%-6% guidance range. In actual dollars, sales fell 6%.
- Segment performance: Hardware systems revenue rose 5% Y/Y in CC (guidance was -2% to +8%), and fell 4% in dollars to $1.4B. Within software/cloud, SaaS/PaaS (cloud app/app platform) revenue rose 29% in dollars to $416M, and IaaS (cloud infrastructure) revenue rose 25% to $160M. However, traditional software license revenue (hurt by the cloud shift) fell 17% to $3.1B (10% in CC). License update/product support revenue (driven by past deals) was flat at $4.7B, and other services fell 4% to $899M.
- Financials: Roughly $2B was spent on buybacks, even with FQ3. GAAP costs/expenses rose 5% Y/Y to $6.72B - sales/marketing -1% to $2.21B, R&D +6% to $1.44B, G&A +5% to $278M. Oracle ended FQ4 with $54.4B in cash/marketable securities (much of it offshore), and $42B in debt.
- Shares have fallen to $41.84 AH. Conference call at 5PM ET (webcast), guidance should be provided.
- FQ4 results, PR
Jun. 17, 2015, 4:02 PM
- Oracle (NYSE:ORCL): FQ4 EPS of $0.78 misses by $0.09.
- Revenue of $10.71B (-5.5% Y/Y) misses by $240M.
- Shares -4%.
Jun. 16, 2015, 5:35 PM
Oracle Corporation develops, manufactures, markets, hosts and supports database and middleware software, application software, cloud infrastructure, hardware system including computer server, storage and networking products and related services.
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