Oracle sales top estimates on growth at Cerner health-records unit

ORACLE reported quarterly sales that exceeded analysts’ estimates on a strong effort from its Cerner digital health records unit, overcoming softer demand for information technology services in a choppy economy.

Sales increased 18 per cent to US$12.3 billion in the period ended Nov 30, compared with analysts’ average estimate of US$12 billion, according to data compiled by Bloomberg. Profit, excluding some items, was US$1.21 a share, which included a hit of 9 US cents from currency fluctuations. Analysts, on average, projected US$1.18 a share.

Cloud revenue — the highly watched segment that Oracle has been trying to expand — rose 43 per cent to US$3.8 billion in the fiscal second quarter, the Austin, Texas-based company said on Monday (Dec 12) in a statement. The segment produced 45 per cent year-over-year growth in the prior quarter.

The software giant, known for its database technology, sells enterprise software applications that can be used over the internet. The company also has been striving to increase its business of renting computing power and storage, which is a market called cloud infrastructure that is led by Amazon.com and Microsoft. At an analyst day in October, Oracle forecast a better-than-expected US$65 billion in annual revenue by the 2026 fiscal year, fuelled by the cloud effort.

The company also is relying on its acquisition of Cerner, which was completed in June, to build inroads in health care, an industry that has been slow to move its data technology to the web. Cerner generated US$1.5 billion in the quarter, Oracle said.

“Since the acquisition, Cerner has contributed to Oracle’s growth — and Oracle has helped Cerner improve its technology,” chairman Larry Ellison said in the statement. “But we are just beginning our mission to modernise health care information systems.”

In a note before the results were announced, Anurag Rana, a senior analyst at Bloomberg Intelligence, expected the digital medical records unit “might more than offset any economic-related weakness”.

Also last week, Oracle, Amazon Web Services, Microsoft and Alphabet’s Google won a share of a US$9 billion Department of Defence contract for cloud services.

The stock gained about 2 per cent in extended trading after closing at US$81.28 in New York. Oracle has been one of the best performing tech stocks in recent months. The shares have jumped 33 per cent since the end of September, compared with a 12 per cent rise in the S&P 500 Information Technology Index.

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Sales of the Fusion application for managing corporate finances rose 23 per cent in the period, compared with 33 per cent last quarter. Revenue from NetSuite’s enterprise planning tools, targeted to small- and midsize businesses, increased 25 per cent, compared with 27 per cent last quarter. BLOOMBERG