Oracle Corp’s fiscal first-quarter revenue fell short of analysts’ projections, crimped by a slowdown in software license sales amid a shift to Web-delivered cloud products.
Revenue in the period that ended on Aug. 31 fell by 1.7 percent to US$8.45 billion, and profit before certain costs was US$0.53 per share, the Redwood City, California-based company said on Wednesday in a statement. Analysts on average had forecast sales of US$8.53 billion and profit of US$0.52, according to data compiled by Bloomberg.
Oracle is trying to navigate the transition to computing as a service over the Internet. While this move to the cloud has provided the company with opportunities to break into new markets, the shift has hurt its traditional business of selling licenses for software installed on corporate systems.
Growth has also been hurt by the strength of the US dollar, which has devalued revenue outside the US. International sales make up more than half of Oracle’s business. Had currency rates been constant, total revenue would have risen by 7 percent in the quarter, Oracle said.
“If licenses are going down and people are feeling that it’s not being made up for by billings on the cloud side, they’ll view that as maybe Oracle is growing in the cloud, but other cloud providers are growing at Oracle’s license expense,” said Kevin Buttigieg, an analyst at MKM Partners, who has a neutral rating on the stock.
Oracle shares dropped 4 percent to US$36.74 at the close on Thursday in New York, marking their biggest slide since June.
Net income in the first quarter declined to US$1.75 billion, or US$0.40 per share, from US$2.18 billion, or US$0.48, a year earlier.
Oracle co-CEO Safra Catz said that while the company feels good about its transition to the cloud, it is being prudent with its forecasts given world economic conditions.
In the current quarter, profit before certain items and assuming constant currency rates is be US$0.63 to US$0.66 per share, she said.
Revenue in the period that ends in November is expected to range from a decline of 2 percent to a gain of 1 percent compared with the same quarter a year earlier. That indicates sales of about US$9.4 billion to US$9.7 billion. Analysts had predicted profit of US$0.65 per share on revenue of US$9.54 billion, according to data compiled by Bloomberg.
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