Oracle Joins Hands With Microsoft To Take On Amazon

Oracle’s (NYSE: ORCL) recently announced fourth quarter results were a pleasant surprise for the stock. After two-quarters of shrinking revenue, the company finally reported marginal growth in revenues. Oracle has been transitioning from a traditional licensed-based model to a subscription-based model to drive cloud computing revenues. The transition has hurt revenue growth in the recent past but is expected to deliver results in the longer run. The market was pleased with Oracle’s results and the stock soared to a record high post result announcement.

Oracle’s Financials

Revenue for the fourth quarter grew 1% over the year to $11.13 billion, ahead of the market’s forecast of $10.95 billion. EPS of $1.16 was also ahead of the market’s forecast of $1.07. The improvement in earnings was attributed to the continued adoption of high-margin Fusion and NetSuite cloud applications and the downsizing of its low-margin legacy hardware business. Its non-GAAP operating margin was 47%, which is the highest in the last five years.

By segment, cloud services and license support revenues were flat over the year at $6.80 billion, marginally ahead of the Street’s forecast of $6.76 billion. Cloud licenses and on-premise license revenues grew 12% to $2.52 billion, again ahead of the market’s forecast of $2.3 billion. Hardware revenues reported a decline of 11% over the year to $994 million and Services revenues fell 7% to $823 million.

Oracle ended the year with revenues remaining flat at $39.5 billion. Adjusted earnings grew 15% to $3.52 per share.

For the current quarter, Oracle expects to report an EPS of $0.80-$0.82, compared with the Street’s forecast of $0.80.

Oracle’s Product Expansion

Oracle continues to focus on machine learning and AI to drive revenues within the cloud segment. Its ML-backed Autonomous Database was released during the last quarter. To drive market adoption of the Database, Oracle entered into a new partnership with Microsoft earlier this month. As part of the agreement, Microsoft’s Azure cloud platform will be able to connect with Oracle Cloud to allow customers to connect Azure services with Oracle cloud services. They will be able to run some workloads on Microsoft’s cloud and some on Oracle’s cloud. The partnership will help Oracle attract customers to the Autonomous Database while continuing to benefit from the cloud services from Microsoft.

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Alpha Stockman 9 months ago Member's comment

#Oracle figured out that they will never be able to compete with #Amazon unless they get #Microsoft on their side. $AMZN is simply smiling at them and telling them :"May the Jedi Force be with you!!!" $AMZN has the JEDI contract in the bag and everyone else is left in the dust. $MSFT $AMZN $ORCL

Black Widow 9 months ago Member's comment

I'm not so sure Alpha Stockman. I think that $MSFT and $ORCL together could beat $AMZN.

Doug Morris 9 months ago Member's comment

This is big news, how did we not know this is coming? Watch out #Amazon! This could really hurt $AMZN in a big way.