ORCL Stock Rides High on Upbeat Results
Oracle Corporation (NYSE:ORCL) reported its third-quarter results Wednesday after market hours. The profits and adjusted revenue came in better than the Street expectations, which pushed Oracle stock up by almost six percent in extended trading. ORCL stock had closed at $43.05 Wednesday.
Oracle Corporation announced fiscal 2017 Q3 results and reported adjusted earnings per share of $0.69, which came in above analysts’ expectations. Total adjusted revenues were $9.3 billion, an increase of three percent. Non-GAAP cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $1.1 billion, up 85%. Total Cloud Revenues, including infrastructure as a service (IaaS), were $1.2 billion, an increase of 62%. (Source: “Financial News Details,” Oracle Corporation, March 15, 2017.)
“The hyper-growth we continue to experience in the cloud has rapidly driven both our SaaS and PaaS businesses to scale,” said Safra Catz, the CEO of Oracle. She further added that the new, big, fast-growing and high-margin cloud businesses were driving the company’s total revenue and earnings up. (Source: Ibid.)
Oracle Corp made headlines earlier when it announced its NetSuite Inc (NYSE:N) acquisition in July last year. Oracle bought the cloud software company for about $9.3 billion in order to boost its position against competitors. ORCL stock also got a boost on this acquisition. And it appears that the deal is bearing fruit as the company has posted a strong third quarter.
The impressive results bode well for Oracle stock going forward as investors wanted to be convinced that Oracle’s cloud strategy was working. At a time when Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), and Microsoft Corporation (NASDAQ:MSFT) are taking the lead in cloud-based services, Oracle Corporation was taking a backseat, which weighed heavily on ORCL stock.
However, with the shift to cloud-based services made smoother by the NetSuite deal, Oracle is in a stronger position now. Oracle CEO Mark Hurd said that over the last year, the company has sold more new SaaS and PaaS than salesforce.com, inc. (NYSE:CRM) and their growth is three times faster. Oracle Chairman Larry Ellison stated that he was even more excited about their second generation IaaS business as it was both faster and lower cost than “Amazon Web Services.” Now, the company’s biggest customers could run their most demanding Oracle database workloads in the Oracle cloud. This is something which is not possible to do in “Amazon Cloud.”
Oracle Corporation’s efforts in catching up to its rivals seem to be working at present, as its software licensing business continues to decline. It would take some more time before the investments start bearing fruit and push Oracle stock higher. However, with the recent results announcement, ORCL stock investors should turn more optimistic.