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Oracle is expanding its share buyback program by $ 20 billion.
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Oracle
the stock is declining, even though the software company has reported better-than-expected financial results, while announcing an extended share buyback program and a 33% increase in dividends.
Revenue for the third fiscal quarter ended Feb. 28 was $ 10.09 billion, up 3% from a year earlier, according to the company’s growth forecast of 2% to 4%. and slightly ahead of the street consensus, at $ 10.07 billion. Adjusted profits were $ 1.16 per share, up 20%, and ahead of the company’s earnings forecasts of $ 1.09 to $ 1.13 per share.
According to generally accepted accounting principles, operating income was $ 3.9 billion, up 10%. Non-GAAP or adjusted operating income was $ 4.8 billion, also up 10%. GAAP’s net income was $ 5 billion, or $ 1.68 per share, including a $ 2.3 billion tax benefit from the transfer of certain assets between subsidiaries.
Oracle also announced a $ 20 billion expansion of its share repurchase program and raised the quarterly dividend rate to 32 cents from 24 cents. The move gives the stock a yield of about 1.8%.
Oracle said it continues to see strong sales growth in cloud-based applications, with Fusion ERP (financial software for large companies) up 30% and NetSuite ERP (for smaller companies) up 24%. Overall, subscription revenues increased by 5%. Oracle sales subscription revenue now accounts for 72% of total revenue.
The company also said it has again seen a 100% growth in its Oracle Cloud Infrastructure business, which competes with public cloud leaders.
Amazon.com
(AMZN),
Microsoft
(MSFT) and Alphabet (GOOG).
“We are opening up new regions as soon as we can to support our fast-growing $ 1 billion infrastructure business,” Oracle President and Founder Larry Ellison said in a statement. “In terms of applications, analysts continue to rank Oracle in the clear first place in cloud ERP.” He said Oracle has signed hundreds of millions of dollars worth of contracts to move several large companies from SAP ERP to Oracle Fusion.
The company said revenue from “cloud service and licensing support” rose 5 percent in the quarter to $ 7.25 billion, while revenue from “cloud licensing and on-site licensing,” the company’s traditional business, was $ 1.28 billion, up 4%. Hardware revenues were $ 820 million, down 4%, while services reached $ 737 million, down 5%.
In a call with investors on Wednesday afternoon, CEO Safra Catz said the company expects quarterly revenues to grow between 5% and 7% or between 1% and 3% in constant currency.
She said Oracle expects non-GAAP earnings for the quarter of $ 1.28 to $ 1.32 per share, or between $ 1.20 and $ 1.24 per share in constant currency. The Wall Street consensus was $ 1.20 per share. Catz said the company expects to spend aggressively in the next quarter to expand its Oracle Cloud capacity in preparation for the strong demand expected in fiscal year 2022.
In a remarkable moment, Ellison turned to a list of over 100 companies that he says have moved some or all of their financial application activities from SAP ERP software to Oracle Fusion ERP, including
The first Solar,
Cemex,
Western Digital,
and more.
In late trading, Oracle shares fell 6% to $ 67.80. Shares have suddenly outperformed the market in recent weeks. Even with the weakness on Wednesday afternoon, the stock has risen about 10% since a recent Barron’s cover about the company.
Write to Eric J. Savitz at [email protected]