Oracle shares rebound: Fiscal Q3 profit misses, Q4 view tops expectations

Database giant Oracle this afternoon reported fiscal Q3 revenue that was in line with Wall Street’s expectations, but profit that missed consensus because of the decline in value of two equity investments. The company forecast this quarter’s revenue and profit higher.

The report sent Oracle shares down about 6% in late trading initially, but the stock recouped most of its losses as the forecast emerged during the company’s forecast.

CEO Safra Catz remarked that the company “delivered over 7% constant currency revenue growth — our highest quarterly organic revenue growth rate since we began our transition to the cloud.”

Added Catz,

This strong top line growth was coupled with a solid non-GAAP constant currency operating profit growth of 4%, but the big story is that our overall revenue growth is being driven by both our rapidly growing Cloud Infrastructure and Cloud Applications businesses. Q3 Cloud Infrastructure revenue was up 47% in constant currency.  Q3 Cloud Applications growth was led by Fusion ERP, which was up 35% in constant currency and NetSuite ERP which was up 29% in constant currency. Total Cloud revenue which includes Cloud Infrastructure and Cloud Applications is now over $11 billion a year.

Also: Oracle beats Q2 results with cloud revenue up 22%

Chairman and CTO Larry Ellison said the company, during the quarter, “completed development of the multi-cloud version of our MySQL HeatWave open-source database.”

Added Ellison.

The MySQL HeatWave database is already running in the Oracle Gen2 Cloud. In a few weeks, MySQL HeatWave will also be available in the Amazon Cloud and the Microsoft Azure Cloud. MySQL HeatWave was designed to compete with Amazon’s version of MySQL called Aurora, Snowflake and other popular cloud databases. What customer and database analysts are saying about Oracle’s new MySQL HeatWave database is simply astonishing.

Revenue in the three months ended in February rose 4%, year over year, to $10.5 billion, yielding a net profit of $1.13 a share.

Analysts had been modeling $10.5 billion and $1.18 per share.

Also: Larry Ellison: Oracle’s cloud ERP biz will be “a lot bigger” than $20B in 5 years

Oracle explained that it lost money on its investments in two startup businesses:

Q3 earnings per share was lowered by $0.05 primarily because of a decline in the share price of revolutionary gene sequencing company Oxford Nanopore, and an operating loss at Ampere, the maker of the world’s fastest ARM Server Chips.  We remain confident that our investments in these two cutting-edge technology companies will deliver very strong returns for Oracle.

Among key metrics of the business, Oracle said its cloud computing software revenue, comprising its Infrastructure as a Service business and its Software as a Service business, rose 24% to $2.8 billion.

As it often does in earnings, Oracle touted customer gains in its Fusion ERP and NetSuite ERP programs. Fusion’s customer count rose 33%, and NetSuite’s, 27%.

Oracle’s Catz customarily offers the company’s forward outlook on the conference call with analysts. That call will begin at 5 pm, Eastern time, and you can catch a webcast of it from the company’s investor relations Web site.

Update: On the company’s conference call following the report, Catz forecast revenue for the current quarter, the company sees revenue of $11.9 billion to $12.13 billion, and EPS in a range of 1.40 cents to $1.40, excluding some costs. That compares to consensus for $11.77 billion and a $1.39 profit per share.

Catz told analysts the company expects to see revenue rise by “double digits” next year.