(Reuters) – Oracle Corp on Monday forecast current quarter profit above estimates of the growth in the cloud services and license support unit helped the business software maker to surpass Wall Street expectations for the second quarter.
FILE PHOTO: People gather prior to the start of a keynote speech at the All Things Oracle OpenWorld Summit in San Francisco, California on September 24, 2013. REUTERS/Jana Asenbrennerova/File Photo
Shares rose 5 percent, while the company says that the exclusion of fluctuations in the exchange rates, expected third-quarter adjusted profit between 86 cents and 88 cents per share.
Analysts on average had expected 84 cents, according to IBES data of Refinitiv.
The revenue of the cloud services and the licensing support unit, the largest, rose 2.7 percent to $6.64 billion, and beat analysts estimate, as more companies shift to cloud computing from traditional on-premise database model to save costs.
Oracle ‘ s in June of a new revenue reporting structure that merges its cloud and software-license, the companies, which analysts have said gives little insight in the independent exercise of its cloud unit.
Oracle is a late entrant to the fast-growing cloud-based software business, but aggressively stepped up its efforts to catch up with rivals such as Workday Inc, Microsoft Corp and Salesforce.com Inc.
“Oracle’s growth in cloud services and license support of only 3 percent seems to be in contradiction with the strength in the overall cloud market,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co, 152,500 shares in the company.
Last month, business Day reported 35 per cent jump in cloud subscription revenues, while Salesforce’s flagship product, Sales Cloud, grew by 11 percent.
“Oracle is still dragging behind other old-line enterprise software players like Microsoft in the transition to becoming a top cloud company,” said Morgan, whose company also shares in Salesforce and Microsoft Corp.
The net profit rose to $2.33 billion, or 61 cents per share, in the second quarter that ended Nov. 30. Excluding items, the company earned 80 cents per share, beating the average analyst estimate of 78 cents.
The total turnover declined marginally to $9.56 billion, but brushed past analyst expectation of $9.52 billion.
Shares of the company were up at $48 in after-market trading.
Reporting by Vibhuti Sharma in Bengaluru; Editing by Arun Koyyur