Oracle Corp. reported a strong sales forecast during its fiscal second-quarter report yesterday, signaling the world’s second-largest software maker expects greater customer demand in its transition to cloud-based computing.
Oracle co-CEO Mark Hurd said Oracle’s NetSuite unit—which provides cloud-based e-commerce and business operations software designed for manufacturers, distributors and retailers—grew its revenue from enterprise resource planning technology 25% year over year, as Oracle’s total revenue remained unchanged. Oracle didn’t break out figures for NetSuite’s growth in its e-commerce software, which its customers often integrate with its ERP technology for managing such business operations as financial records and inventory.
16,000 NetSuite customers
NetSuite, which Oracle acquired in 2016, now has more than 16,000 customers, Hurd said in a Monday conference call with analysts, according to a transcript from Seeking Alpha. Oracle’s fiscal second quarter ended Nov. 30.
Oracle’s total revenue will increase 2% to 4% in the current third quarter, holding currency exchange rates constant, with higher growth through the second half of the fiscal year, co-CEO Safra Catz said on the conference call. Adjusted profit is projected at 83 cents a share to 85 cents a share in the fiscal third quarter. Analysts estimated 84 cents.
Oracle earlier reported fiscal second-quarter sales that were in line with analysts’ estimates. Shares increased about 5% in extended trading.
Catz and Hurd have sought to move the information technology company’s 430,000 customers to internet-based software from programs housed on their corporate servers, as a way to keep up with the rapid sales growth of Amazon.com Inc.’s cloud unit, Salesforce.com Inc. and others.
Sales remained close to $9.56 billion in the fiscal second quarter. Analysts, on average, had projected $9.52 billion, according to data compiled by Bloomberg. Revenue from Oracle’s cloud services and license support, which includes maintenance fees for its traditional software, grew 2.7% to $6.64 billion. Oracle’s new cloud and on-premise licenses sales fell 8.5% to $1.22 billion.
Oracle’s report and predictions helped defuse concern that corporate spending on infrastructure is declining and gave investors hope that the company can return to stronger revenue growth, said Patrick Walravens, an analyst at JMP Securities. Executive Chairman Larry Ellison’s comments on the conference call also provided an explanation of why Oracle’s attempt to turn its database clients into cloud customers hasn’t happened as quickly as some had hoped, Walravens said. Ellison said Oracle didn’t have good enough computing infrastructure in place until recently to support cloud customers.
“Larry’s brilliant, but our due diligence suggests that there’s more to it than that,” Walravens said. “I think there will be some debate about whether that is a sufficient explanation.”
Oracle shares rose to a high of $48.18 in extended trading after closing $45.73. The stock has declined 3.3% this year.
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