Fri, Nov. 20, 3:56 PM
- "We think it’s reasonable to surmise that Oracle’s (NYSE:ORCL) push to blunt Workday’s (WDAY -1.4%) momentum in its PeopleSoft base is having some impact, or at least lengthening Workday’s sales cycles as per our integrator checks," writes Wedbush's Steve Koenig, downgrading the cloud HR/financials software leader to Neutral after it offered light FQ4 guidance to go with an FQ3 beat. His target has been cut by $15 to $84.
- Koenig, whose remarks come six months after Jefferies reported Oracle is pricing aggressively against Workday, also calls FQ3 revenue (though above consensus) "somewhat disappointing," and notes subscription revenue growth has dropped to 48% Y/Y from Q1's 63%. He adds Workday has been offering more flexible payment terms to counter Oracle, and that this is expected to "result in a three-point headwind to fourth-quarter subscription revenue and five points next year," before normalizing in FY18 (ends Jan. '18).
- William Blair's Justin Furby (Outperform) is less troubled by Workday's FQ4 outlook, noting the subscription shortfall is solely the result of payment term changes and that management often guides conservatively. He adds Workday originally guided for "no more than 40%" FY16 sales growth, and is now on track to post 47%+ growth.
- On its earnings call (transcript), Workday said it's "building our investment and hiring models assuming total revenue growth of above 30% for fiscal 2017." Consensus is for 37.2% growth.
- Drexel Hamilton's Brian White (Buy) is pleased with growing financials software traction, as well as the recent unveiling of several other apps (Learning, Planning, Payroll, Insight Applications). Wunderlich's Rob Breza (Hold) isn't as impressed. "Conf.call highlights focused on the Financials offering, with ~90 customers live vs. 80 in the prior quarter, which is likely to leave investors feeling uninspired. Investors are left waiting for meaningful Financials acceleration to offset the HCM deceleration as new HCM products reach [general availability] in 2H16."
Wed, Oct. 28, 4:25 PM
- Equinix (NASDAQ:EQIX) is off 2% in choppy trading after hours in the wake of posting Q3 results where revenues and FFO grew solidly though EPS fell short of consensus.
- Adjusted FFO was up to $210.4M, but net income came to $0.71/share vs. an expected $1.11. Revenues were up 10.7% Y/Y and up 3% sequentially. Recurring revenues (co-location, interconnection, managed services) were up 10% Y/Y to $646.7M.
- Gross margins were 53% compared to a year-ago 51%.
- The company also announced a deal with Oracle (NYSE:ORCL) to bring Oracle's Cloud services to six global markets via the Equinix Cloud Exchange: Amsterdam, Chicago, London, Singapore, Sydney and Washington, D.C. Cloud is the fastest-growing part of Oracle's business, supporting 62M users and 23B transactions a day.
- Equinix is guiding to Q4 revenues of $701M-$705M vs. consensus of $701M. It expects Q4 EBITDA of $328M-$332M vs. an expected $327M. It sees full-year 2015 revenues of $2.696B-$2.7B, above consensus of $2.693B, and EBITDA of $1.267B-$1.271B, above an expected $1.26B.
- Conference call to come at 5:30 p.m. ET.
- Press Release
Wed, Sep. 16, 5:29 PM
- On a constant currency basis, Oracle (NYSE:ORCL) expects FQ2 revenue to be down 2% to up 1% Y/Y, and EPS to be in a range of $0.63-$0.66 - forex is expected to have a 6% impact on revenue growth, and a $0.05 impact on EPS. Consensus in actual dollars is for -0.6% revenue growth and EPS of $0.65.
- Total software and cloud revenue is expected to be flat to up 2% in constant currency. SaaS/Pass revenue is expected to grow 36%-40%, and IaaS revenue 5%-9%.
- For the whole of FY16 (ends May '16), Oracle expects 3%-4% CC software/cloud revenue growth, 50% SaaS/PaaS growth, and 0%-1% on-premise software (licenses + update/support revenue) growth.
- Strong bookings are expected to lead SaaS/PaaS revenue growth to accelerate as FY16 progresses - bookings were up 165% in FQ1 in CC, leading dollar-based billings to rise 70% (well above 34% revenue growth).
- ORCL -2.4% after hours to $37.35.
- FQ1 results, details
Wed, Sep. 16, 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
Wed, Sep. 16, 4:02 PM
Tue, Sep. 15, 5:35 PM
Thu, Jun. 18, 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
Wed, Jun. 17, 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
Wed, Jun. 17, 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
Wed, Jun. 17, 4:02 PM
Tue, Jun. 16, 5:35 PM
Fri, May 29, 6:29 PM
- After tumbling on Wednesday in the wake of its FQ1 beat and in-line guidance, Workday (NYSE:WDAY) has continued trending lower. Shares fell 1.5% in regular trading today, hitting their lowest levels since Feb. 2.
- Though no downgrades have arrived, several sell-side firms have suggested tougher competition is hurting growth, with Oracle's (NYSE:ORCL) cloud HR/HCM software the biggest culprit. Jefferies' John DiFucci: "We believe Oracle (and to a lesser degree, SAP) has been behaving irrationally in the market for almost a year ... while it was likely aggressive prior to this, we believe it became even more aggressive doing almost anything to win deals from Workday."
- DiFucci sees a method to Oracle's madness. "This irrational behavior may not be so irrational since a loss to Workday is not only a loss of an HCM opportunity, but also a loss of Oracle infrastructure given Workday’s proprietary infrastructure architecture." However, he admits Oracle/SAP's HCM offerings (though improving) "still trail Workday by a meaningful margin."
- Likewise, Brean's Sarah Hindlian asserts HCM is "becoming incrementally more competitive, with material new pricing pressure from incumbents, while SaaS penetration of the market is maturing." She also thinks Workday's cloud financials software growth is slower than investors were expecting.
- Cowen's Jesse Hulsing is more positive, even if FQ1 billings were lighter than he forecast. "We are ... encouraged by the trend toward larger, blue chip HCM custs (Coca Cola, etc.) and a more bullish tone regarding the financials pipeline. PT to $101 and view the low $80s as attractive entry point, as we expect growth to improve moving forward."
- During Oracle's March FQ3 CC (transcript), Mark Hurd didn't pass up the chance to trash-talk Workday. "In the context of HCM, I think ... we have simply engineered now a better product than Workday ... we now win more than half the deals in the United States. Outside the United States, our win rate goes up actually exponentially because of the breadth of our distribution in those markets." Workday might beg to differ with those claims.
Tue, Mar. 17, 5:31 PM
- With a strong dollar having a big impact on near-term sales (as it is for peers), Oracle (NYSE:ORCL) has once provided all of its guidance (CC webcast) in constant currency.
- In constant currency, the enterprise software giant expects 1%-6% Y/Y FQ4 revenue growth and EPS of $0.90-$0.96; consensus (in actual dollars) is for 0.9% revenue growth and EPS of $0.94.
- Software/cloud revenue is expected to grow 1%-6% in CC; hardware systems guidance is once more at -2% to +8%. SaaS/PaaS growth is expected to be at 26%-30%, and IaaS growth at 29%-33%.
- Co-CEO Safra Catz asserts near-term sales are being impacted by a faster-than-expected transition to cloud subscriptions from up-front licenses. Though hardware system product revenue fell 3% Y/Y thanks to ongoing declines in SPARC/UNIX server sales, engineered systems revenue rose by double digit; Oracle claims it's taking high-end server share from IBM and HP.
- Shares have risen to $44.00 AH. The 52-week high is $46.71.
- FQ3 results, details, PR
Tue, Mar. 17, 4:21 PM
- Oracle (NYSE:ORCL) uses its FQ3 report to state it's hiking its quarterly dividend by $0.03 to $0.15/share; that's good for a 1.4% yield at current levels. The next dividend will be paid on April 28 to shareholders on record as of April 7.
- Software/cloud revenue rose 1% Y/Y in FQ3 to $7.1B, and 7% in constant currency; guidance was for 5%-8% constant currency growth. Hardware system revenue fell 2% to $1.3B, and rose 5% in constant currency; guidance at CC was -2% to +8%.
- Traditional software license revenue (hurt by cloud software adoption) fell 7% to $1.98B, a bigger decline than FQ2's 4%. Cloud app and app platform (SaaS/PaaS) revenue rose 30% to $372M, and cloud infrastructure (IaaS) revenue 28% to $155M. Software license/product support revenue (fairly stable) rose 2% to $4.66B, and other services revenue fell 3% to $858M.
- Cost controls helped EPS meet estimates in spite of the revenue miss: GAAP operating expenses rose 4% to $5.94B. R&D rose 6% to $1.37B, and sales/marketing just 1% to $1.84B; G&A was flat at $252M. Also boosting EPS: $2B was spent on buybacks.
- With forex acting as a headwind, Asia-Pac revenue fell 19% to $1.38B, and EMEA revenue 4% to $2.81B. Americas revenue rose 4% to $5.13B.
- ORCL +0.9% AH to $43.25. CC at 5PM, guidance will be provided.
- FQ3 results, PR
Tue, Mar. 17, 4:02 PM
Mon, Mar. 16, 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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