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
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
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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