Oracle Reports Sales That Meet Estimates, Touts Cerner Deal

Oracle Corp. Quarterly Revenue up 18%, driven by the software maker’s transition to cloud computing and its acquisition of healthcare data provider Cerner.

Revenue came in at $11.4 billion for the fiscal first quarter, in line with analysts’ average estimate, according to data compiled by Bloomberg. Earnings, excluding some items, were $1.03 per share. Oracle said currency fluctuations reduced earnings by 8 cents a share. Analysts had forecast $1.06 per share.

Cloud revenue — the closely watched segment Oracle is trying to expand — rose 45% to $3.6 billion for the period ended Aug. 31, the Austin, Texas-based company said in a statement Monday . Growth was 19% in the most recent quarter before the Cerner deal closed.

Known for its database technology, the company sells enterprise software applications that can be used over the Internet and offers customers the ability to store and compute information on Oracle’s servers, known as cloud infrastructure. Inc. and Microsoft Corp., the leaders in this market, are way ahead of Oracle. Executives say the $28.3 billion acquisition of Cerner will propel the company into the healthcare industry, which has been comparatively slow to adopt cloud technology.

“The company’s application and infrastructure cloud businesses now account for over 30% of total revenue,” Chief Executive Officer Safra Catz said in the statement. “As our cloud businesses account for an increasing percentage of our overall business, we expect our currency-neutral organic revenue growth rate to be double-digit, with a corresponding increase in earnings per share.”

Oracle completed its purchase of Cerner in June. The provider of digital medical records had revenue of $1.4 billion during that period, which Catz called its best-ever revenue quarter.

“We expect Cerner to do even better in the coming quarters as we develop an entirely new suite of healthcare cloud services,” she said.

Oracle’s strong revenue growth — even after deducting Cerner’s contribution — “bodes well for the software sector,” wrote Anurag Rana, an analyst at Bloomberg Intelligence. “While we expected strong application growth to continue, we were particularly surprised by the strength of Oracle’s infrastructure despite the deteriorating economic conditions.”

Catz said current-quarter revenue will grow 15% to 17% and cloud revenue, including Cerner’s contribution, will grow up to 46% compared to the prior-year period. Without Cerner, Oracle’s cloud sales will grow about 30% for the fiscal year, she said in a conference call following the results.

In the fiscal first quarter, revenue from Fusion’s corporate finance management application increased 33%, compared to 20% in the prior period. Revenue from NetSuite’s business planning tools, aimed at small and medium-sized businesses, increased 27%, consistent with the prior quarter.

In June, TikTok announced it was moving all US traffic to Oracle’s cloud servers. The popular short video platform owned by China-based ByteDance Ltd. is working to convince US regulators that Chinese authorities cannot access user data.

Oracle shares were up about 1.5% in extended trading after closing at $77.08 in New York. The stock is down 12% this year.

(Updates with forecast in ninth paragraph.)

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