‘Customers in the hardest-hit industries that we serve, such as hospitality, retail and transportation’ delayed software purchases, CEO says
Oracle Corp. shares declined in the extended session Tuesday after the software company’s revenue faced headwinds amid the COVID-19 pandemic and forecast a possible shift back to sales growth.
“We are now at a point where our growing businesses are now larger than our declining businesses and this favorable shift will inevitably drive revenue acceleration going forward,” said Chief Executive Safra Catz on a conference call with analysts Tuesday.
But that return to growth may be a toss-up when it come to the current quarter. Catz she expects adjusted fiscal first-quarter earnings of 84 cents to 88 cents a share on revenue with revenue either increasing or declining by 1%, meaning $9.13 billion to $9.31 billion. Analysts surveyed by FactSet expect earnings of 85 cents a share on revenue of $9.05 billion.
Oracle ORCL, +2.51% on Tuesday reported fiscal fourth-quarter net income of $3.11 billion, or 99 cents a share, compared with $1.07 a share in the year-ago period. Adjusted earnings were $1.20 a share, compared with $1.16 a share in the year-ago period. Revenue declined to $10.44 billion from $11.14 billion in the year-ago quarter.
Analysts surveyed by FactSet had forecast earnings of $1.15 a share on revenue of $10.61 billion.Oracle projected adjusted earnings of $1.20 to $1.28 a share on revenue of $10.92 billion to $11.36 billion back in March.
In a statement, Catz said Oracle’s “overall business did remarkably well considering the pandemic, but our results would have been even better except for customers in the hardest-hit industries that we serve, such as hospitality, retail and transportation, postponing some of their purchases.”
Taking a different view was Jefferies analyst Brent Thill, who has a hold rating and a $55 price target on Oraclle. In a note following the earnings release, Thill said he viewed Oracle’s revenue as “underwhelming in the seasonally strong” fourth quarter.
Thill said he was looking at Oracle’s results “against a backdrop of a highly supportive software spending environment as reflective of share losses” to competitors like Microsoft Corp. MSFT, +2.45% and Amazon.com Inc. AMZN, +1.65% .
Of the 31 analysts who cover Oracle, 10 have buy or overweight ratings, 20 have hold ratings, and one has a sell rating, with an average price target of $52.54, according to FactSet data.
Oracle shares fell more than 4% after hours, after gaining 2.5% in the regular session to close at $54.59. Oracle shares are up 3% for the year, compared with a 10% gain in the Nasdaq Composite Index COMP, +1.74% and a 3% decline in the S&P 500 index SPX, +1.89%.