Oracle shares surge as earnings soar

Listen to this article

00:00
00:00

Oracle bounced back to report robust growth across its range of database, middleware and applications software products in the latest quarter, shrugging off the softness in sales that was apparent recently at arch-rival SAP.

Referring to the quarter as a “blockbuster” for Oracle, Safra Catz, chief financial officer, said: “It was really outstanding across all products, all geographies.”

Shares in the US software company on Tuesday rose by more than 3 per cent after news of its third quarter earnings, which showed that the company had made up lost ground after lacklustre growth in some areas of its business in the previous three months.

Aided by acquisitions, revenues climbed by 27 per cent to $4.4bn (£2.24bn), above Wall Street estimates of $4.3bn, with four percentage points of the growth reflecting the lower US dollar. Pro-forma earnings, excluding amortisation and stock options costs and the basis on which most analysts judge the company, rose by 31 per cent to 25 cents a share, ahead of the 23 cents that had been expected. Reported earnings rose 36 per cent to 20 cents a share.

Database and middleware licence revenues rose by 17 per cent in the latest quarter, or 13 per cent excluding currency translation effects, to $967m. Meanwhile, licence revenues in the more volatile applications division jumped by 57 per cent, or 52 per cent in constant currency terms, to $423m.

The performance in applications, which has been the focus of Oracle’s string of acquisitions, returned the company to the sort of strong growth shown in other recent quarters, before the second quarter fall-off.

Excluding the effect of all acquisitions, including that of Siebel Systems, which was completed during the same period a year before, new applications licence revenues grew by 32 per cent in the latest quarter, said Ms Catz.

That compares with underlying growth of just 1 per cent in the preceding three months, reflecting the typical unevenness seen in the business.

Ms Catz said that the performance reflected broad demand from customers, rather than any particular big contracts that may have distorted quarterly comparisons. Oracle executives also claimed further market shares gains over SAP, which fell short of sales targets in its own most recent quarter.

Oracle’s shares climbed more than 20 per cent over the past 12 months on signs that its acquisition spree is paying off, while SAP’s stock has fallen by 15 per cent on concerns that its heavy investment in new products has yet to show any returns.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.