Dec. 17, 2014, 5:26 PM
- Oracle (NYSE:ORCL) has declined to provide guidance in absolute dollars on its FQ2 CC. In constant currency, the company expects FQ3 revenue to be up 4%-8% Y/Y, and EPS to be in a range of $0.69-$0.74. Consensus (based on absolute dollars, naturally) is for 4% revenue growth and EPS of $0.73.
- If exchange rates remain where they are, forex is expected to have 4%+ impact on absolute dollar revenue growth, and a $0.04 impact on EPS.
- In constant currency, software/cloud revenue is expected to be up 5%-8% Y/Y (~1%-4% in absolute dollars, at current exchange rates). Within cloud, SaaS/PaaS and IaaS revenue is respectively forecast to grow 30%-34% and 29%-33%; total cloud revenue was up 45% in FQ2. Hardware system growth guidance is set at -2% to +8%.
- ORCL +5.5% AH. Morgan Stanley's pre-earnings upgrade is looking good.
- FQ2 results, PR
Dec. 17, 2014, 4:18 PM
- Oracle's (NYSE:ORCL) total software/cloud revenue rose 5% Y/Y in FQ2 to $7.3B, in-line with guidance for 3%-6% growth. However, hardware system revenue grew 1% to $1.3B, beating guidance for flat to -10% growth.
- SaaS, (cloud app), PaaS (cloud app platform), and IaaS (cloud infrastructure) revenue collectively rose 45% to $516M; guidance was for 39%-44% SaaS/PaaS growth and 39%-43% IaaS growth.
- On the other hand, traditional software license revenue remains pressured by the cloud migration, it fell 4% to $2.05B. Services revenue fell 3% to $935M. License update/product support revenue (50% of revenue, driven by past deals) rose 6% to $4.8B.
- GAAP opex +3% Y/Y to $6.06B, even with revenue growth. Sales/marketing spend only rose 1% to $19B; R&D rose 9% to $1.39B.
- Americas revenue +5% Y/Y to $5.2B; EMEA +3% to $2.9B; Asia-Pac roughly flat at $1.5B (an improvement from recent quarters).
- $2.1B was spent on buybacks, up slightly from FQ1's $2B. Forex had a 400 bps impact on revenue.
- ORCL +2.7% AH. CC at 5PM ET, guidance should be provided.
- FQ2 results, PR.
Dec. 17, 2014, 4:02 PM
Dec. 16, 2014, 5:35 PM
Oct. 22, 2014, 1:22 PM
- Enterprise software vendors are having a rough day after VMware (VMW -5.6%) provided light Q4 guidance to go with a Q3 beat.
- On its CC (transcript), VMware also reported its bookings fell Q/Q in Q3. They were hurt by Russian and German softness, and a failure to close a major enterprise license agreement (ELA) with a federal client. ELAs made up 29% of Q3 bookings, down from 37% in Q2.
- Rivals Oracle (ORCL -1.5%), Red Hat (RHT -3.3%), and Citrix (CTXS -1.5%) are among the decliners, as are Splunk (SPLK -4.7%), Tableau (DATA -2.8%), Qlik (QLIK -2.5%), and MicroStrategy (MSTR -0.9%). Oracle provided light guidance last month.
- Several enterprise cloud software stocks are also selling off: N -2.5%. VEEV -2.9%. ZEN -4.2%. CSOD -2.3%. SAAS -3.2%. NOW -1.7%.
- Nomura and Raymond James have downgraded VMware. Nomura thinks 2015 guidance (expected in January) will also be light, and believes slow vSphere server virtualization growth (affected by competition and high penetration rates) will remain a headwind, given it's still over half of VMware's business. "Growth has to come from the vCloud Suite ... other newer products are just too small still to matter."
- Some of those "other newer products" are doing well: VMware's end-user computing license bookings (boosted by the AirWatch acquisition) rose over 60% Y/Y in Q3, and its much-hyped NSX software-defined networking platform now has 250+ paying customers (up from just 100 a few months ago).
- A slew of enterprise tech names sold off on Monday in response to IBM's Q3 report. Big Blue's software sales fell 2% Y/Y in Q3, after rising 1% in Q2. CA, Citrix, and ServiceNow report after the bell.
Sep. 19, 2014, 4:54 PM
- Though Oracle's (ORCL -4%) cloud-related sales saw healthy growth in FQ1, its core database business saw negative license growth, notes Deutsche's Karl Keirstead, downgrading shares to Hold. "Coupled with Larry Ellison’s decision to give up the CEO role, our confidence in the core database business is getting tested and we’d prefer to step to the sidelines while Oracle shares are still near their 10-year high."
- While Oracle blames the database weakness on tough comps and sales execution - the latter is a common excuse among enterprise software firms - Keirstead also sees other factors at work: A mature relational database market; Microsoft's share gains; and a secular shift to new data types (e.g. Hadoop/NoSQL) and cloud apps (often running on non-Oracle databases). He estimates Oracle's FQ2 guidance implies a 3%-4% Y/Y drop in license revenue.
- D.A. Davidson (Neutral) also isn't thrilled with Oracle's numbers. "ORCL's financial results have now either missed or come in at the low end of management's guidance range in 7 of the last 9 quarters." Ditto Sterne Agee: "Given the current moderate size of the cloud business, the transition will span several years and create both revenue and EPS estimate volatility."
- On the other hand, Sterne (like many others) isn't concerned about Oracle's CEO change, calling it "more of a change in titles than in functions." On the CC (transcript), new co-CEOs Safra Catz and Mark Hurd insisted there will be no major operational changes.
- Wedbush, however, sees negative long-term implications. "Mr. Ellison's desire to delegate more responsibility (and credit) to Safra Catz and Mark Hurd is understandable ... but it underlines our view that Oracle's days as an organic grower are rapidly coming to an end."
- Prior Oracle coverage
Sep. 18, 2014, 5:40 PM
- Oracle (NYSE:ORCL) guides on its FQ1 CC for FQ2 Y/Y revenue growth of 0%-4%, and EPS of $0.66-$0.70. That's below a consensus for 4.8% growth and EPS of $0.74.
- Software/cloud revenue is expected to grow 3%-6% Y/Y vs. 6% in FQ1, and hardware revenue is expected to be flat to down 10%. SaaS/PaaS revenue is expected to grow 39%-44%, and IaaS revenue 40%-44%.
- Oracle largely blames the near-term weakness on a transition to cloud subscriptions from up-front licenses, though it also admits execution issues are hurting hardware and services sales. Micros is expected to provide a slight boost to FQ2 results.
- Shares -2.3% AH.
- Prior Oracle coverage.
Sep. 18, 2014, 4:29 PM
- Oracle (NYSE:ORCL) has added $13B to its buyback plan; that's good for repurchasing 7% of shares at current levels. As it is, $2B was spent on buybacks in each of the last three quarters.
- Software and cloud revenue (76% of total revenue) rose 6% Y/Y in FQ1 to $6.6B, hitting the low end of guidance for 6%-8% growth. However, new software license revenue (pressured by cloud competition) fell 2% to $1.37B.
- License update/product support revenue (fairly stable) rose 7% to $4.7B. Cloud app (SaaS) and app platform (PaaS) revenue rose 32% to $337M, towards the high end of guidance for 25%-35% growth. Cloud infrastructure (IaaS) revenue grew 26% to $138M, topping guidance for 10%-20% growth.
- Hardware revenue (hurt by UNIX server declines) remains weak, falling 8% to $1.17B; that's soundly below guidance for -1% to +3% growth. Hardware products -14%, support -1%. Services revenue -7% to $855M.
- GAAP opex +2% to $5.6B; sales/marketing spend +5% to $1.71B, R&D +7% to $1.32B.
- Shares -2.3% AH. CC at 5PM ET, guidance will be provided.
- FQ1 results, CEO news, PR
Sep. 18, 2014, 4:03 PM
Sep. 17, 2014, 5:35 PM
Jun. 20, 2014, 11:00 AM
- The license growth worries that plagued Oracle (ORCL -5.7%) much of last year are back with a vengeance following yesterday's FQ4 miss, in spite of the in-line guidance that followed it.
- Citi has cut shares to Neutral, arguing SaaS (cloud app) strength isn't reflected in earnings. Before the downgrade, the firm noted estimated total license revenue of $4.09B missed its $4.3B estimate.
- But Oracle also has its defenders. BMO (Outperform) asserts Oracle's cloud transition efforts are still going well, and that "new product releases across the board should be a tailwind to growth."
- The firm attributes the FQ4 miss to an apparent "thousand cuts" that include deal slippage, Asia-Pac weakness (an ongoing issue), a shift from up-front license payments to cloud subscriptions, and potential order delays ahead of Oracle's 12c database launch (previous).
- Separately, Oracle has announced it's buying LiveLOOK, a developer of co-browsing/screen sharing tech for Web customer support apps. Terms are undisclosed.
- Oracle, which bought cloud customer support firm RightNow in 2011, plans to integrate LiveLOOK's offerings with its Service Cloud platform. Rival LivePerson (LPSN -0.9%) recently announced a deal to buy co-browsing tech developer Synchronite.
- Prior coverage. CC transcript.
Jun. 19, 2014, 5:26 PM
- Oracle (ORCL) expects FQ1 revenue growth of 4%-6% Y/Y, and EPS of $0.62-$0.66. That's in-line with a consensus of 4.8% growth and $0.64.
- New software license/cloud revenue is expected to be up 6%-8% Y/Y, an improvement from FQ4 and driven by an expected 25%-35% increase in SaaS/PaaS revenue. Hardware systems revenue is expected to see -1% to +3% growth.
- CFO Safra Catz noted a $102M forex loss (Venezuela-related) pressured FQ4 EPS by $0.02.
- FQ4 results, details
Jun. 19, 2014, 4:22 PM
- With cloud competition continuing to take a toll, Oracle's (ORCL) new software license revenue was flat Y/Y in FQ4 at $3.77B. Cloud app (SaaS) and app platform (PaaS) revenue rose 25% to $322M, and cloud infrastructure (IaaS) revenue 13% to $128M.
- Altogether, new license/cloud revenue rose 2% Y/Y to $4.22B. Oracle had guided for 0%-10% new license/cloud subscription growth.
- License update/product support revenue (stems from existing deals, relatively stable) rose 7% to $4.7B after growing 5% in FQ3. Hardware product sales +2% to $870M, near the low end of a 0%-10% guidance range. Hardware support +2% to $596M.
- $2B was spent on buybacks, even with FQ3 and boosting EPS. GAAP opex +8% Y/Y - sales/marketing +6%, R&D +7%.
- CC at 5PM ET, guidance will be provided. FQ4 results, PR.
Jun. 19, 2014, 4:05 PM
Jun. 18, 2014, 5:35 PM
Apr. 23, 2014, 3:58 PM
- Plenty of enterprise software names have underperformed on a down day for tech stocks after VMware (VMW -9.2%) provided soft bookings numbers (sub-10% Y/Y growth in the Americas, EMEA, and Asia-Pac), and blamed it on delays in signing major enterprise licensing deals (ELAs) as it talks with clients about more expansive agreements.
- VMware rivals Oracle (ORCL -1.6%), Citrix (CTXS -2.8%), and Red Hat (RHT -1.7%) are among the decliners. Others: CRM -2.5%. WDAY -5.6%. SPLK -6.3%. VEEV -4.3%. NOW -4.2%. TIBX -2.9%. INFA -2.2%. QLIK -3.2%.
- Nomura (Buy) observes that while VMware reported 18% Y/Y billings growth, underlying growth may have been in the single digits after accounting for the AirWatch deal and other adjustments. Nonetheless, it thinks ELA weakness might be a seasonal issue that will correct in Q2.
- Is competition taking a toll? In spite of the soft bookings figures, VMware managed to report strong licensing activity for products other than its core vSphere server virtualization platform, and noted on its CC (transcript) solutions other than standalone vSphere made up over 45% of license bookings (up from 30%+ a year ago).
- Microsoft's Hyper-V has been gradually eating into vSphere's market dominance. Other cheaper alternatives such as the open-source Xen (backed by Citrix) and KVM have also been gaining ground.
ORCL vs. ETF Alternatives
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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