Oracle reports sales that meet estimates, touts Cerner deal

ORACLE’S quarterly sales jumped 18 per cent, buoyed by the software maker’s transition to cloud computing and the acquisition of health records provider Cerner.

Sales were US$11.4 billion in the fiscal first quarter, meeting analysts’ average estimate, according to data compiled by Bloomberg. Profit, excluding some items, was US$1.03 a share. Oracle said currency fluctuations reduced the earnings by 8 US cents a share. Analysts projected US$1.06 a share.

Cloud revenue - the highly watched segment that Oracle has been trying to expand - rose 45 per cent to US$3.6 billion in the period ended Aug 31, the Austin, Texas-based company said on Monday (Sep 12) in a statement. Growth was 19 per cent last quarter before the Cerner deal closed.

The company, known for its database technology, sells business software applications that can be used over the Internet as well as offering customers the ability to store and compute information through Oracle’s servers, called cloud infrastructure. Amazon.com and Microsoft, the leaders in that market, are far ahead of Oracle. Executives say the Cerner acquisition will give the company inroads in the health care industry, which has been comparatively slow to adopt cloud technology.

“The company’s application and infrastructure cloud businesses now account for over 30 per cent of total revenue,” chief executive officer Safra Catz said in the statement. “As our cloud businesses become a larger-and-larger percentage of our overall business, we expect our constant currency organic revenue growth rate to hit double-digits with a corresponding increase in earnings per share.”

Oracle completed its acquisition of Cerner in June. The digital medical records provider generated US$1.4 billion in sales in the period, which Catz called its best revenue quarter ever.

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

Oracle’s strong sales growth - even after removing the Cerner contribution - “bodes well for the software sector”, wrote Bloomberg Intelligence analyst Anurag Rana. “Though we were expecting application growth to stay strong, we were particularly surprised by Oracle’s infrastructure strength despite worsening economic conditions.”

Sales of the Fusion application for managing corporate finances rose 33 per cent in the period, compared with 20 per cent last quarter. Revenue from NetSuite’s enterprise planning tools, targeted to small- and mid-sized businesses, increased 27 per cent, the same as the previous period.

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Oracle shares were little changed in extended trading after closing at US$77.08 in New York. The stock has slipped 12 per cent this year. BLOOMBERG