- Database giant smashes Q4 forecasts
- Eyes 30% cloud computing growth this year
- Analyst warns that Oracke faces huge hyperscaler competition
Enterprise database giant Oracle (ORCL:NYSE) saw its stock jump almost 14% after-hours overnight after the company reported better-than-expected full year and fourth quarter results, and predicted exciting growth from its cloud business in the future.
Oracle reported Q4 adjusted EPS (earnings per share) of $1.54 to top the $1.38 expected by market analysts, while its $11.84 billion revenue also comfortably beat estimates at $11.66 billion. The adjusted operating margin was reported at 47%, ahead of the estimate of 46.2%.
That saw the stock rally off 2022 lows of $64 to $71.86.
‘We continued to improve our top line results again this quarter with total revenue growing 10% in constant currency,’ said Oracle CEO, Safra Catz.
The company added that ‘consistent increases in our quarterly revenue growth rate typically have been driven by our market leading Fusion and NetSuite cloud applications.’
The stock was also boosted by commentary about its ability to sustain recent organic momentum.
CAN ORACLE CLOUD COMPETE?
BMO analyst Keith Bachman retained an upbeat tone despite trimming the price target on Oracle stock to $86 from $92 previously, to reflect multiple compression. ‘We continue to believe that Oracle is well positioned, particularly for the current investment climate that focuses more on free cash flow valuations.’
The analyst believes that the acquisition of healthcare software company Cerner and the implied cost efficiencies could help with cash generation. Stifel analyst Brad Reback noted that Oracle posted ‘its strongest top-line growth, 10% at constant currencies, in more than a decade.’
‘Looking at Oracle’s all-important cloud revenue figure, an expected acceleration in the organic growth rate to at least 30% in fiscal 2023 is being driven by an increase in demand for both strategic back-office applications and infrastructure, and will be topped up by its now completed acquisition of Nasdaq-listed electronic health record software provider Cerner,’ said Megabuyte analyst Cameron Naylor.
However, Stifel’s Reback had a warning for investors. ‘While the Cerner deal will likely prove to be a solid financial transaction for the company we do not believe it fundamentally changes Oracle’s competitive position as the company continues to lose share in its core Infrastructure business to the hyperscalers and aggressive, high-growth, modern cloud first vendors,’ the analyst said.
