Oracle beats Q1 estimates, wins new cloud business with major brands

Oracle on Thursday reported better-than-expected first-quarter financial results, after racking up a number of major customers wins in both its cloud applications and infrastructure businesses. McDonald’s, for instance, is migrating its North American financial systems to Oracle Cloud Infrastructure. Albertsons, one of the largest grocers in North America, is adopting Oracle Cloud HCM.

Oracle’s non-GAAP net income for the first quarter was up 4% to $2.9 billion, while non-GAAP earnings per share were up 15% to 93 cents. Total quarterly revenues were $9.37 billion, up 2% year over year.

Analysts were expecting earnings of 86 cents per share on revenue of $9.19 billion. 

“Our cloud applications businesses continued their rapid revenue growth,” Oracle CEO Safra Catz said in a statement. “Our infrastructure businesses are also growing rapidly as revenue from Zoom more than doubled from Q4 last year to Q1 this year. I have a high level of confidence that our revenue will accelerate as we move on past COVID-19.”

Oracle said it expects second quarter non-GAAP earnings between 98 cents a share and $1.02 a share. Wall Street was expecting non-GAAP earnings of 94 cents a share.

On a conference call with analysts, Catz said:

Our mix of business is increasingly favorable. What that means is that our growing businesses are growing faster and are now larger than our declining businesses. Our Fusion SaaS momentum is very strong. We’re seeing the success of Autonomous Database, which will continue to get even better now that we have Autonomous Database available on Cloud at Customer.

Oracle’s Fusion Cloud ERP Suite grew 33% year over year, while NetSuite ERP was up 23%. Oracle now has more than 7,300 Fusion ERP customers and 23,000 Netsuite ERP customers. 

CTO Larry Ellison said Oracle’s ability to offer cloud infrastructure and applications will become an advantage over time and took aim at AWS again. He also argued that cloud infrastructure is speeding up database moves, and Oracle is keeping those customers as well as acquiring new ones like Zoom.

He added:

We’re not slowing down, we’re speeding up. Oracle Database Cloud at Customer is functionally identical to the Oracle database in the public cloud. That’s why we’re seeing the migrations going both places. They’re going to database Cloud at Customer, which is a unique Oracle offering and they’re going directly into our public cloud. The price is the same in both cases, the database is fully serverless and elastic in both cases. You only pay for what you use in both cases, and there are no upfront fees in both cases. We are seeing very rapid adoption of Oracle Database Cloud at Customer among our very largest customers, and this is just the beginning.

In Q1, cloud services and license support revenues were up 2%, reaching $6.9 billion. Within that category, applications cloud services and license support brought in $2.8 billion, up 4%, while infrastructure cloud services and license support brought in $4.13 billion, up 1%. 

Cloud license and on-premise license revenues were up 9% to $886 million.

In addition to McDonald’s and Albertsons, Oracle highlighted a number of other customer wins. Iron Mountain, a global information management services company, has selected Oracle’s Cloud ERP and Procurement tools. Meanwhile, the health insurer Humana extended its broad portfolio of horizontal cloud services from Oracle to now include Oracle Health Insurance Claims Administration Cloud Service. This service will be replacing a legacy mainframe system. 

Also on Thursday, Oracle’s board of directors declared a quarterly cash dividend of 24 cents per share of outstanding common stock. 

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