Oracle Corp. (ORCL) Stock Spikes after It Surpasses Q1 Estimates

Oracle beats the Q1 consensus estimate and wins new cloud business with top brands over the quarter.

Oracle Corporation (ORCL) outstripped the Q1 consensus forecast of Wall Street, along with the company sealing deals with McDonald’s and Albertsons for providing its cloud-based services.

The database software giant surged to almost 6% on Thursday followed by the release of fiscal Q1 results ended August 31, 2020. The company recorded a 2% increase in its revenue on an annual basis reported at $9.37 billion, versus a 6.3% decline in the same period last year. Oracle surpassed the expected revenue of $9.19 billion.

The per share earnings were expected to be around $0.86 as per Wall Street consensus, which topped the estimates reported at $0.93 per share.

The net income for the fiscal first quarter was $2.25 billion (or $0.72 per share) compared to $2.14 billion (or $0.63 per share) in the prior year period. The CEO of Oracle, Safra Catz highlighted that the business was interrupted for a brief period only by the COVID-19 pandemic.

Oracle completed major could infrastructure deals which includes, McDonald’s migrating its North American financial systems to Oracle Cloud Infrastructure. Moreover, Albertsons, one of the largest grocers in North America, is also adopting Oracle Cloud HCM.

Safra Catz mentioned that their cloud applications businesses continued their rapid revenue growth. She stated:

“Our infrastructure businesses are also growing rapidly as revenue from Zoom more than doubled from Q4 last year to Q1 this year. I have a high level of confidence that our revenue will accelerate as we move on past COVID-19.”

Followed by the two major companies adding Oracle cloud services to their network, a global information management services company, Iron Mountain will also be using Oracle’s Cloud ERP and Procurement tools. Another company, the health insurer Humana will be using Oracle’s Health Insurance Claims Administration Cloud Service.

The majority of Oracle’s revenue comes from its cloud services and license support segment. It reported a 2% sales increase to $6.95 million which was just ahead of the estimated $6.93 billion. While the cloud license and on-premise license segment surged by 9%, recording $886 million compared to consensus estimate of $749 million. The following consensus estimates were projected by FactSet.

It was being reported that Oracle was going to acquire the video-sharing platform from its owner ByteDance. In August, President Donald J. Trump showing support to Oracle stated that it can be the one to take over Tik Tok, as he has had concerns over the Chinese-based app.

During the investors’ conference for the Q1 results, Catz at the beginning of the call commented;

“I want to make sure you understand that we will be making no comments regarding the press reports about TikTok, so there’s no need to ask.”

The company presented the fiscal Q2 guidance, as Oracle expects $0.92 to $1.02 per share in adjusted earnings, and sees revenue growth between 1% to 3%. Oracle did not issue full-year guidance but it believes that once they get over this pandemic, the company expects to record higher growth in revenues.

Market Overview

Oracle shares are up almost 8% since the start of the year, while the S&P 500 index has gained about 3%.

After the announcement of Q1 and its surprising results, Oracle Corporation (ORCL) made a strong move in yesterday’s trading session ending the day at $57.33 up by 0.67%.

As we write this before hours, at 7:06 A.M. EDT, Oracle Corporation (ORCL) had surged up 5.11% trading at $59.70.

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