Oracle Corp\u2019s shares climbed after the world\u2019s second-largest software maker returned to sales growth and gave a forecast indicating the momentum may continue.<\/p>\n
For investors, the results were a reprieve amid the company\u2019s uneven transition to cloud-based computing.<\/p>\n
Revenue increased 1.1% to $11.1 billion in the period ended May 31 from a year earlier, the Redwood City, California-based company said Wednesday in a statement.<\/p>\n
Analysts, on average, projected $10.9 billion, according to data compiled by Bloomberg. Oracle said sales will grow as much as 2% in the current period.<\/p>\n
Chief Executive Officers Safra Catz and Mark Hurd have sought to maintain Oracle\u2019s large customer base as the company competes with a dizzying number of rivals in the cloud-computing space.<\/p>\n
The software maker\u2019s stumbles against Amazon.com Inc. and others have spurred the company to seek help from unlikely sources.<\/p>\n
Earlier this month, Oracle announced an alliance with longtime rival Microsoft Corp, letting customers use their respective clouds.<\/p>\n
The period marked Oracle\u2019s first year-over-year increase in total revenue since the fiscal first quarter.<\/p>\n
Oracle shares jumped about 5% in extended trading after closing at $52.68 in New York. The stock has gained 17% this year.<\/p>\n
Profit, excluding some expenses, will be 80 cents to 82 cents a share in the period that ends in August, Catz said on a conference call. The forecast is in line with Wall Street\u2019s average estimate of 81 cents.<\/p>\n
Oracle reported an adjusted profit of $1.16 a share in the fiscal fourth quarter, compared with estimates of $1.07 a share.<\/p>\n
Pat Walravens, an analyst at JMP Securities, said Oracle\u2019s sales and profit outlook brought relief to concerned investors.<\/p>\n
\u201cThese are small numbers but we seem to be making some progress,\u2019\u2019 Walravens said in an interview.<\/p>\n
\u201cOracle is doing a nice job on the applications side, but on the infrastructure side you\u2019re competing against Microsoft, Amazon Web Services and the Google Cloud. That remains highly competitive.\u2019\u2019<\/p>\n
Larry Ellison, Oracle\u2019s billionaire co-founder and executive chairman, said some corporate applications for the cloud are finally boosting overall growth, even as product lines like the company\u2019s data-broker business declined.<\/p>\n
\u201cWe are focused on our star products and our star products are now driving the top line higher,\u201d Ellison said on the call. \u201cWe have these other businesses that are melting away and we just don\u2019t care.\u201d<\/p>\n
Cloud license and on-premise license sales increased 12% to $2.52 billion, suggesting that Oracle is doing a better job of signing on new customers.<\/p>\n
The company said that revenue from NetSuite grew 32%, and Fusion HR and financial suites gained by the same amount. Hurd has been keen to chase growth by selling apps and set a target for attaining 50% market share to best rival SAP SE.<\/p>\n
Revenue from cloud services and license support was unchanged at $6.8 billion in the quarter, Oracle said.<\/p>\n
While that metric includes revenue from hosting customers\u2019 data on the cloud, a large portion is generated by maintenance fees for traditional software housed on clients\u2019 servers. The unit accounted for more than 60% of total revenue.<\/p>\n
Sales of Oracle\u2019s servers declined 11% in the period. Catz said the company has chosen to \u201cdownsize our low-margin legacy hardware business,\u201d which Oracle acquired when it bought Sun Microsystems.<\/p>\n
Oracle has been firing workers around the world to cut expenses. The company\u2019s adjusted operating margin reached 47%, the highest in five years.<\/p>\n
The company\u2019s costs related to restructuring also doubled to $168 million in the quarter compared with a year earlier.<\/p>\n
The deal between Oracle and Microsoft will allow mutual customers to connect databases on Oracle\u2019s cloud to applications on Microsoft\u2019s Azure cloud.<\/p>\n
The agreement signified a concession by Oracle that it won\u2019t be able to compete against Amazon Web Services alone. AWS offers cheaper versions of the databases that make up Oracle\u2019s core business.<\/p>\n