Larry Ellison, chairman and co-founder of Oracle Corp, speaks during the Oracle OpenWorld 2017 conference in San Francisco, California, US, on Sunday, October 1, 2017.
David Paul Morris | Bloomberg | Getty Images
oracle Shares fell 8% on Tuesday and were headed for their biggest drop in a year after the database software vendor's disappointing earnings report.
The stock's worst day of the year was a 5.4% decline in May. Shares are still up about 68% in 2024, which would be the best annual performance since the dot-com boom in 1999.
After Monday's close, Oracle reported fiscal second-quarter adjusted earnings per share of $1.47, missing analysts' average estimates by a penny, according to LSEG. Revenue rose 9% from the previous year to $14.06 billion, below the average estimate of $14.1 billion.
Net income rose 26% to $3.15 billion, or $1.10 per share, from $2.5 billion, or 89 cents per share, the previous year. Revenue from Oracle's cloud services business jumped 12% from the previous year to $10.81 billion, representing 77% of total revenue.
“There's a bit of a tumble here for a stock that has created some lofty expectations for itself,” analysts at KeyBank Capital Markets wrote in a note after the report on Monday. They still recommend buying the stock and said “we still like Oracle heading into 2025.”
For the current quarter, Oracle expects revenue to grow 7% to 9%. In the middle of that range, revenue would be about $14.3 billion. Analysts were expecting sales of $14.65 billion, according to LSEG. The company said it expects adjusted earnings of between $1.50 and $1.54 per share. Analysts were calling for earnings per share of $1.57.
Oracle's biggest growth driver has been cloud infrastructure, with which it competes Amazon, Microsoft and Google Companies move workloads from their data centers.
Business is booming due to the growing demand for computing power that can handle AI projects. Oracle said revenue at its cloud infrastructure unit rose 52% from a year earlier to $2.4 billion.
Oracle said it had just signed an agreement with… deadallowing the social media company to use its infrastructure to assist in various related projects The Llama family is one of the largest examples of languages.
“Oracle Cloud Infrastructure trains many of the world's most important AI models because we are faster and less expensive than other clouds,” Oracle Founder Larry Ellison He said in a statement.
Analysts at Piper Sandler raised their price target on the stock to $210 from $185 “based on continued cloud momentum.” They noted Oracle's cRPO (current residual performance obligations) growth of 20%. These numbers indicate contracted revenues that have not yet been booked.
