Why Oracle Faced a Tough Q4 and What Comes Next

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Oracle Corp. (NYSE: ORCL) released its fiscal fourth-quarter financial results after the markets closed on Tuesday. The company said that it had $0.99 in earnings per share (EPS) and $11.25 billion in revenue, compared with consensus estimates of $0.94 in EPS on revenue of $11.19 billion in. The same period of last year reportedly had EPS of $0.89 and $10.94 billion in revenue.

At the end of the quarter, short-term deferred revenues were up 2% to $8.4 billion.

One of the notable changes in this report is that Oracle will not be listing its platform-as-a-service (PAAS) and software-as-a-service (SAAS) segment revenues going forward, which could have some investors concerned. In terms of its segments, the firm reported:

  • Cloud services and license support revenues increased 6% year over year to $6.77 billion.
  • Cloud license and on-premise license revenues decreased 6% to $2.48 billion.
  • Hardware revenues decreased 2% to $1.12 billion.
  • Services revenues decreased 3% to $863 million.

Looking ahead to the fiscal first quarter, the company expects to see EPS in the range of $0.67 to $0.69 and revenues up about 1% to 3% on constant currency basis. The consensus estimates call for $0.72 in EPS and $9.53 billion in revenue for the quarter.

Separately, the board of directors declared a quarterly cash dividend of $0.19 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on July 17, with a payment date of July 31.

Oracle CEO Safra Catz commented:

Last year, I forecast double-digit non-GAAP earnings per share growth for FY18 and we delivered 14% growth this year, largely driven by strong growth in our cloud businesses. Looking ahead to FY19, I expect revenue growth will enable us to deliver double-digit non-GAAP earnings per share growth once again.

Shares of Oracle closed Tuesday at $46.29, with a consensus analyst price target of $55.73 and a 52-week trading range of $44.04 to $53.48. Following the announcement, the stock was down about 4% at $44.48 in early trading indications Wednesday.