Oracle reports in-line Q1 earnings; CEO Mark Hurd to take leave of absence

Software giant Oracle Corporation (NYSE: ORCL) reported strong earnings growth for the first quarter as the thriving cloud business lifted margins. The bottom-line matched analysts’ estimates, while revenues missed. The company also said that CEO Mark Hurd will take a leave of absence due to health issues, sending the stock slightly lower Wednesday evening.

First-quarter earnings, excluding one-off items, rose 14% from last year to $0.81 per share, which was in line with analysts’ forecast. Unadjusted profit dropped to $2.14 billion from $2.27 billion in the first quarter of 2018. Reported earnings, on a per-share basis, moved up to $0.63 from last year’s $0.57.

Supported by the stable demand for the company’s cloud and license support products, which account for about three-fourths of the total revenues, the top-line came in at $9.2 billion during the quarter, broadly unchanged from last year but slightly below the market’s estimates.

New Services

The cloud ERP businesses, including Fusion ERP and NetSuite ERP, expanded 33% during the three-month period. The management will be announcing a new range of Autonomous Cloud Services at the Open World conference to be held next week, to complement the Oracle Autonomous Database.

“Autonomy is the defining attribute of a Generation 2 Cloud. Next week at our OpenWorld conference, we will announce more Autonomous Cloud Services to complement the Oracle Autonomous Database. The Autonomous Database is the most successful new product in Oracle’s history. We added more than 500 new Autonomous Database cloud customers in Q1, and we expect to more than double that in Q2,” said Oracle CTO Larry Ellison.

Outlook

With its low-margin hardware businesses getting smaller and high-margin cloud business growing steadily, the company expects earnings and cash flow to expand consistently in the future. The board has declared a quarterly cash dividend of $0.24 per share, which will be paid on October 24, 2019, to stockholders of record on October 10, 2019.

CEO to Take Leave

In a separate release, Oracle said CEO Mak Hurd has decided to take a leave of absence due to health-related reasons. Safra Catz, the other CEO, and chief technology officer Larry Ellison will take over Hurd’s responsibilities during his absence.

Related: Oracle Q4 2019 Earnings Conference Call Transcript

Oracle’s shares opened Thursday’s trading session lower and continued to lose in the early part of the session. After reaching an all-time high in July, the stock entered into a downward spiral in the following weeks, before regaining momentum this month.

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