Factors Setting the Tone for Oracle's Q1 Earnings

Oracle (ORCL - Free Report) is slated to release first-quarter fiscal 2021 results on Sep 10.

For the first-quarter fiscal 2021, the company anticipates total revenue growth rate on a year-over-year basis in the range of (1%) to 1% at USD and 0-2% at cc.

The Zacks Consensus Estimate for revenues for the fiscal first quarter is pegged at $9.15 billion, indicating a decline of 0.8% on a year-over-year basis.

Oracle expects non-GAAP earnings per share between 85 cents and 89 cents. The Zacks Consensus Estimate for earnings has been stable in the past 30 days to 86 cents, suggesting growth of 6.2% from the year-ago reported figure.

Notably, the company surpassed the Zacks Consensus Estimate in the trailing three quarters and matched the same once, the average surprise being 2.14%.

Factors Likely to Have Influenced Q1 Results

Oracle’s fiscal first-quarter performance is anticipated to have benefited from robust demand for its Cloud Infrastructure services.

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Further, coronavirus crisis-induced rapid uptake of cloud-based applications amid work-from-home and online learning wave might have bolstered adoption. This, in turn, is likely to have contributed to the to-be-reported quarter’s performance.

Markedly, the company’s Cloud Infrastructure and Autonomous Database have gained traction across enterprises in Asia, driven by benefits comprising enhanced security and management, higher-performance, and cost-effectiveness. Key deal wins include Nissan, Nomura Research Institute (NRI), Hansol PNS and 7-Eleven Philippines.

Moreover, Zoom Video Communications (ZM - Free Report) and 8x8 (EGHT - Free Report) have implemented Oracle Cloud Infrastructure services to enhance video meeting solutions in a secure manner amid explosive growth in user base.

Also, growing clout of its Exadata Cloud@Customer service offering to support the surge in demand from on-premise customers may get reflected in the fiscal first-quarter revenues.

Notably, the Zacks Consensus Estimate for Cloud services and license support revenues is pegged at $6.947 billion, indicating an improvement of 2.1% on a year-over-year basis.

Furthermore, ongoing momentum in the next-generation autonomous database and Oracle Dedicated Region Cloud@Customer, supported by ML and AI capabilities might reflected in the fiscal first-quarter results.

Ongoing momentum in cloud-based Fusion HCM, NetSuite ERP, and Fusion ERP applications is expected to have continued in the fiscal first quarter, driven by coronavirus crisis-induced demand for cloud-based applications. Notably, Fusion HCM, NetSuite ERP, and Fusion ERP businesses were up 29%, 25%, and 35% year over year in the fiscal fourth quarter, respectively.

Oracle, currently carries a Zacks Rank #3 (Hold), is also expected to have benefited from adoption of its customer engagement platforms.

However, increasing expenses on product development, on account of product rollouts and enhancements amid stiff competition from salesforce.com (CRM - Free Report), are expected to have weighed on the fiscal first-quarter performance.

Moreover, a decline in IT spending and coronavirus pandemic-induced broader macroeconomic weakness across small and medium-sized businesses are likely to have affected the fiscal first-quarter performance.

Notably, the Zacks Consensus Estimate for total hardware revenues in the fiscal first quarter is pegged at $747 million, indicating a decline of 8.3% on a year-over-year basis. Meanwhile, the consensus mark for Services revenues is pegged at $739 million, indicating a decline of almost 6% on a year-over-year basis.