Daily Management Review

Oracle's Beats Quarterly Profit Estimates Powered By Growth In Its Cloud Business


Contrary to what many of the leading tech companies have been announcing with reference to their financial performance amid the coronavirus pandemic as announced by the World Health Organization (WHO), Oracle said that there will be a "minimal impact" on the fourth-quarter revenue of the company because of the coronavirus scare. 
Oracle, which is usually focused more towards software licenses rather than hardware, noted that it managed to report better than expected quarterly profit and revenue for the fourth quarter because of a growth in its cloud business.
"We expect minimal impact from the virus in the quarter, given that much of the subscription revenue is already contracted," Oracle's chief executive Safra Catz said on an earnings call with investors.
There was a 4 per cent growth in the revenues earned by the business software maker's cloud services and license support business unit and total revenues from these businesses came in at $6.93 billion in the fourth quarter. The two business segments of the company account for more than half of the global revenues.
In recent years, the focus of Oracle has been on expanding its foot print in the cloud computing business and trying to catch up with rivals and industry leaders such as Amazon.com and Microsoft. This business segment has been a booming one for many tech companies as more and more businesses opt to use cloud computing services to save on costs as they no longer need to make capital investment and for maintenance of large data centres and servers themselves.
The company had already added new data centres in five countries and is in the process of setting up more such centres in the 36 more locations by the end of the current year, the company had said last month.
Oracle said that there was an almost 2 per cent growth in its total revenue to $9.8 billion which comfortably beat analysts' average estimate of revenues of $9.75 billion, according to IBES data from Refinitiv.
However the company also noted that there was a drop in its net income to $2.57 billion in the quarter ended February 29 compared to a net profit of $2.75 billion. But on a per share basis, it rose to 79 cents per share from 76 cents a year earlier.
The California-based company earned 97 cents per share – which was a cent over the market’s expectations, on an adjusted basis.