Oracle Q3 Profit Drops On Strong US Dollar, But Beats Street

(RTTNews) - Business software giant Oracle Corp. (ORCL), Tuesday reported a drop in profit for the third quarter, as revenues declined reflecting strong U.S. dollar. Nevertheless, earnings for the quarter trumped Wall Street estimates, while revenues fell short of expectations, sending shares up by about 4 percent in the after-hours trading.

Redwood Shores, California-based Oracle's third-quarter profit dropped to $2.14 billion or $0.50 per share from $2.50 billion or $0.56 per share last year.

Adjusted earnings for the quarter dropped to $0.64 per share from $0.68 per share last year. Analysts polled by Thomson Reuters expected earnings of $0.62 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter dropped 3 percent to $9.01 billion from $9.33 billion last year. Analysts had a consensus revenue estimate of $9.12 billion for the quarter.

Oracle noted that strong U.S. dollar impacted its earnings per share by $0.04, while revenues were up 1 percent on a constant currency basis.

Oracle' revenue growth has slowed down in the last few quarters, raising investor concern about the company's ability to transition from its traditional approach of licensing software to the so called cloud computing method.

Oracle's total cloud and On-Premise software revenues fell 1 percent year-over-year to $7.08 billion, while hardware revenues slipped 13 percent to $1.14 billion. Total services revenues dropped 7 percent to $793 million.

"Our Cloud SaaS and PaaS revenue growth rate accelerated to 61% in constant currency in Q3," said Oracle CEO, Safra Catz. "This dramatic revenue increase drove our non-GAAP SaaS and PaaS gross margins up to 51% in Q3 as compared with 43% in Q2. Our cloud business is now in a hyper-growth phase. Our gross margins are climbing toward our target of 80%. These two factors will ignite substantial EPS and cash flow growth over Oracle's next few quarters."

Oracle also declared a quarterly cash dividend of $0.15 per share, payable on April 28 to shareholders of April 14. Oracle also authorized buyback of up to an additional $10 billion of stock.

ORCL closed Tuesday's trading at $38.74, up $0.04 or 0.10%, on the Nasdaq. The stock further rose $1.63 or 4.21% in the after-hours trade.