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Oracle forecasts upbeat third quarter as IT spending rebounds

Oracle forecasts upbeat third quarter as IT spending rebounds

The company logo for Oracle Corp. is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, U.S., September 18, 2019. REUTERS/Brendan McDermid/File Photo

Enterprise software maker Oracle Corp forecast current-quarter profit and revenue above market estimates on Thursday after posting upbeat results for the second quarter, helped by higher tech spending from businesses looking to support hybrid work.

As the pandemic pushed more companies to shift to a hybrid work model, spending on cloud technology has risen, benefiting Oracle and other firms such as Salesforce, Amazon.com Inc and Microsoft.

The company's shares rose about 10.4per cent at US$98 in extended trading.

Revenue at Oracle's cloud services and license support unit, its largest, rose to US$7.55 billion in the second quarter from US$7.11 billion a year earlier. This is expected to grow between 6per cent and 8per cent in the third quarter, the company said.

Oracle has been ramping up investments in data centers worldwide, especially in government-focused ones, CEO Safra Catz said on a conference call with analysts.

About 75per cent of Oracle's Enterprise Resource Planning (ERP) customers have not transitioned to the cloud, and the company has a very good chance of shifting them over and boosting its ERP revenues, said Scott Kessler, an analyst at Third Bridge.

The company expects current-quarter profit between US$1.19 per share and US$1.23 per share, higher than Refinitiv IBES estimates of US$1.16 per share. It expects revenue of US$10.7 billion to US$10.9 billion, according to Reuters calculations, above estimates of US$10.56 billion.

Oracle said it made a payment for a judgment related to a dispute regarding former CEO Mark Hurd's employment, that resulted in a third-quarter loss of US$1.25 billion versus a profit of US$2.44 billion a year earlier.

On an adjusted basis, the company earned US$1.21 per share on revenue of US$10.36 billion. Analysts had expected profit of US$1.11 per share and revenue of US$10.21 billion, according to Refinitiv IBES data.

(Reporting by Akash Sriram in Bengaluru; Editing by Shounak Dasgupta and Ramakrishnan M.)

Source: Reuters
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