While it’s a generally a quiet time for companies reporting, tech giant Oracle is one of the exceptions and it reports earnings for the fiscal second quarter of 2018 after the market closes on Thursday, December 14.
Oracle’s cloud division has been a consistent focus among analysts and CEO Safra Catz has attributed the company’s recent earnings and revenue growth to the results in that division. In the first quarter of fiscal 2018, Oracle reported that total cloud revenues grew 51% year-over-year to $1.47 billion, excluding the impacts of foreign exchange.
Within its cloud division, Oracle reported the fastest growth in Software as a Service. Revenue in that division grew 62% year-over-year to $1.07 billion. The other two segments of its cloud division, Platform as a Service and Infrastructure as a Service grew 28% year-over-year to $400 million. For the second quarter of fiscal 2018, management said they expect total cloud revenue growth somewhere in the range of 39% to 43%.
Declines in Oracle’s gross margins have also been a focus among analysts. After “narrowing notably over the past few years,” CFRA analysts have said they expect annual gross margin to stabilize around 81% through fiscal 2020 due to positive trends in cloud offerings and pricing.
Another area that analysts might be looking for more information is on some of the company’s new product offerings and how those launches are going. In early October, Oracle rolled out an autonomous database cloud that uses machine learning to “eliminate the human labor associated with tuning, patching, updating and maintaining the database.” It also launched a blockchain cloud service.
Earnings and Revenue Estimates for Q2 FY18
Oracle is expected to report $0.68 in adjusted earnings per share (EPS), up from $0.61 in the prior-year quarter, on revenue of $9.55 billion, a 5.3% year-over-year increase, according to third-party consensus analyst estimates. Over the past four quarters, ORCL has beat earnings estimates in all of them and beat revenue estimates in three.
Excluding the impacts of foreign exchange, management’s guidance for this quarter is for total revenue growth between 2% and 4% and non-GAAP EPS between $0.64 and $0.68. Including the impact of foreign exchange, CEO Safra Catz indicated that if rates stayed where they were in mid-September when the guidance was issued, that could have a positive impact of up to two cents on non-GAAP EPS, putting it in the $0.66 to $0.70 range.