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Factors Setting the Tone Ahead of Oracle's (ORCL) Q1 Earnings

Oracle's (ORCL) fiscal first-quarter performance is likely to gain from momentum in cloud infrastructure services and the Autonomous Database solution...

This story originally appeared on Zacks

Oracle ORCL is scheduled to release first-quarter fiscal 2022 results on Sep 13.

Oracle expects non-GAAP earnings per share in the range of 94-98 cents at USD and 91-95 cents at constant currency (cc). The Zacks Consensus Estimate for earnings has been stable in the past 30 days at 97 cents, suggesting growth of 4.3% from the year-ago quarter’s reported figure.

For first-quarter fiscal 2022, Oracle anticipates total revenue growth rate on a year-over-year basis in the range of 3-5% at USD and 1-3% at cc. The Zacks Consensus Estimate is pegged at $9.77 billion, indicating growth of 4.3% on a year-over-year basis.

The company has a trailing four-quarter earnings surprise of 9.1%, on average.

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Oracle Corporation Price and EPS Surprise


Oracle Corporation Price and EPS Surprise

Oracle Corporation price-eps-surprise | Oracle Corporation Quote


Factors Setting the Tone for Q1 Performance

Oracle’s fiscal first-quarter performance is likely to gain from momentum in Oracle Cloud Infrastructure (OCI) services as well as other cloud-based applications amid continuation of remote work and online learning set up and mainstream adoption of hybrid/flexible work model.

In the last reported quarter, Oracle’s Cloud services and license support revenues (nearly 66% of total revenues) increased 8% year over year (up 4% at cc) to $7.4 billion.

Solid uptake of its next-generation autonomous database and Oracle Dedicated Region Cloud, supported by machine learning (ML) and Artificial Intelligence (AI) capabilities, might have benefited fiscal first-quarter performance. Autonomous database in Gen2 public cloud infrastructure is witnessing healthy traction.

In August 2021, Oracle introduced the MySQL Autopilot feature for its MySQL Heatwave service at no added costs to the Heatwave clients. The new capabilities are available on the Oracle Cloud Infrastructure (OCI) platform on all 30 Oracle cloud regions. MySQL Heatwave is a “in-memory query accelerator” belonging to Oracle’s MySQL Database service.

Oracle’s latest Exadata Cloud@Customer service offering is gaining traction among on-premises customers. This might get reflected in fiscal first-quarter revenues. Also, increasing customer acquisitions including independent software vendors (ISVs) is also likely to have positively contributed to the top-line performance.

Increasing clout of back-office cloud-based Fusion Human Capital Management (“HCM”) solutions along with NetSuite Enterprise Resource Planning (“ERP”) and Fusion ERP applications is expected to have favored its quarterly performance. Fusion HCM, NetSuite ERP and Fusion ERP businesses were up 30%, 22% and 42%, respectively, in the fiscal fourth quarter.

In June 2021, Oracle rolled out the Oracle Dynamic Skills solution that will enable businesses to gain a thorough understanding of their employees’ skill sets as well as help staff to upskill. Oracle Dynamic Skills, powered by AI, offers employees’ skills data record (capabilities, experience, skill strength and job titles) to assist Human Resource (HR) department to make talent management and acquisition process more useful as well as build a competent workforce.

The migration of several large-scale SAP SAP clients to Oracle Fusion ERP cloud might have acted as a tailwind.

Strength in the Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) solution, integrated with new capabilities that help companies foster innovation and improve decision making, is expected to contribute to top-line growth in the about-to-be-reported quarter.

Higher expenses on product development, especially increased investment toward cloud platform, might have dented fiscal first-quarter performance.

Intensifying competition in the cloud computing market from the likes of Amazon’s AMZN Amazon Web Services (“AWS”), Microsoft’s MSFT Azure platform and Alphabet’s Google Cloud might have limited margin expansion.

At present, Oracle carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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