Oracle Earnings: Another Miss On Revenue!

Oracle just reported earnings and it’s another miss on revenue!

It reported 59 cents EPS (analysts were expecting 56 cents). Non-GAAP revenue was $US8.38 billion. Analysts were expecting $US8.48 billion.

This is Oracle’s first fiscal quarter, not traditionally one of Oracle’s biggest, so analysts were expecting a modest 3.3% increase in year-over-year revenues.

The most important part of this quarter was if Oracle delivered as expected. The company’s previous two quarters were misses on revenue. So we are now talking a three-in-a-row miss, even though it beat on EPS.

Oracle president Mark Hurd has been revamping the sales force and trying new methods, like hiring college grads, to increase sales. The situation has caused some of Oracle’s most experienced sales people to grumble and/or find jobs elsewhere.

That said, Wall Street analysts are still mostly gung ho on Oracle and its long-term prospects. It’s still a huge database and enterprise software company and its customers are not going to abandon it lightly.

Plus, during the quarter Oracle announced a big, renewed partnership with one of its big customers, Salesforce will become the proving point for Oracle’s new Oracle 12c database, designed specifically for cloud providers.

It also announced a partnership deal with Microsoft that makes it easy to use Oracle’s database on Microsoft’s cloud, Azure.

We’re digging through Oracle’s report. More to come.

Here’s the relevant parts of the press release:

Oracle Reports Q1 GAAP EPS Up 14% to 47 Cents; Q1 Non-GAAP EPS Up 12% to 59 Cents

Q1 Operating Cash Flow Increases to $US6.3 Billion, TTM Operating Cash Flow Increases to $US14.8 Billion

REDWOOD SHORES, CA–(Marketwired – Sep 18, 2013) – Oracle Corporation (NYSE: ORCL) today announced that both fiscal 2014 Q1 GAAP and non-GAAP total revenues were up 2% to $US8.4 billion. GAAP new software licenses and cloud software subscriptions revenues were up 5% to $US1.7 billion while non-GAAP new software licenses and cloud software subscriptions revenues were up 4% to $US1.7 billion. Both GAAP and non-GAAP software licence updates and product support revenues were up 7% to $US4.4 billion. Hardware systems products revenues were $US669 million. GAAP operating income was flat at $US2.9 billion, and GAAP operating margin was 34%. Non-GAAP operating income was up 4% to $US3.7 billion, and non-GAAP operating margin was 45%. GAAP net income was up 8% to $US2.2 billion, while non-GAAP net income was up 6% to $US2.8 billion. GAAP earnings per share were up 14% to $US0.47, while non-GAAP earnings per share were up 12% to $US0.59. GAAP operating cash flow on a trailing twelve-month basis was $US14.8 billion.

Without the impact of the US dollar strengthening compared to foreign currencies, Oracle’s reported Q1 GAAP earnings per share would have been up 17% and non-GAAP earnings per share would have been up 14%. GAAP and non-GAAP total revenues also would have been up 4%; GAAP new software licenses and cloud software subscriptions revenues would have been up 7% while non-GAAP new software licenses and cloud software subscriptions revenues would have been up 6%.

“Non-GAAP earnings per share increased 12% to $US0.59, the best ever result for the first quarter of our fiscal year,” said Oracle President and CFO, Safra Catz. “Those record level earnings were enabled by an operating margin of 45% for the quarter. We also set a free cash flow record of over $US6 billion in Q1, and then we returned half of that to our stockholders by repurchasing $US3 billion of our shares in the quarter.”

“Engineered systems had its best ever Q1 in terms of unit sales, growing over 60% compared with the same quarter last year,” said Oracle President Mark Hurd. “New software licence results were especially strong in the Americas, which saw 15% growth in constant currency.”

“Next week at Oracle OpenWorld, we will announce the In-Memory Option for the Oracle database,” said Oracle CEO, Larry Ellison. “Virtually every existing application that runs on top of the Oracle database will run dramatically faster by simply turning on the new In-Memory feature. Our customers don’t have to make any changes to their applications whatsoever; they simply flip on the in-memory switch, and the Oracle database immediately starts scanning data at a rate of billions or tens of billions of rows per second.”

The Board of Directors declared a quarterly cash dividend of $US0.12 per share of outstanding common stock. This dividend will be paid to stockholders of record as of the close of business on October 8, 2013, with a payment date of October 29, 2013.

($ in millions, except per share data)
Three Months Ended August 31,
% Increase
2013 % of Revenues 2012 % of Revenues % Increase (Decrease)

in US $US

(Decrease) in Constant Currency (1)
New software licenses and cloud software subscriptions $ 1,653 20% $ 1,574 19% 5% 7%
Software licence updates and product support 4,431 53% 4,140 51% 7% 8%
Software Revenues 6,084 73% 5,714 70% 6% 8%
Hardware systems products 669 8% 779 9% (14%) (13%)
Hardware systems support 592 7% 574 7% 3% 5%
Hardware Systems Revenues 1,261 15% 1,353 16% (7%) (6%)
Services Revenues 1,027 12% 1,114 14% (8%) (6%)
Total Revenues 8,372 100% 8,181 100% 2% 4%
Sales and marketing 1,708 20% 1,545 19% 11% 12%
Software licence updates and product support 288 3% 283 3% 2% 3%
Hardware systems products 330 4% 384 5% (14%) (13%)
Hardware systems support 209 3% 224 3% (7%) (6%)
Services 806 10% 884 11% (9%) (7%)
Research and development 1,237 15% 1,201 15% 3% 4%
General and administrative 260 3% 275 3% (5%) (4%)
Amortization of intangible assets 595 7% 619 7% (4%) (4%)
Acquisition related and other (2) 10 0% (258 ) (3%) 104% 104%
Restructuring 56 1% 145 2% (61%) (62%)
Total Operating Expenses 5,499 66% 5,302 65% 4% 5%
OPERATING INCOME 2,873 34% 2,879 35% 0% 2%
Interest expense (217 ) (2%) (188 ) (2%) 15% 15%
Non-operating income, net 7 0% 11 0% (40%) 36%
Provision for income taxes 472 6% 668 8% (29%) (28%)
NET INCOME $ 2,191 26% $ 2,034 25% 8% 10%
Basic $ 0.48 $ 0.42
Diluted $ 0.47 $ 0.41
Basic 4,608 4,867
Diluted 4,674 4,939

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