Oracle (ORCL) earnings Q2 2023

Oracle shares rose as much as 4% in extended trading on Monday after the software company reported results for the fiscal second quarter that topped analysts’ estimates. But it provided a lighter earnings forecast than analysts had predicted.

Here’s how the company did:

• Earnings: $1.21 per share, adjusted, vs. $1.18 per share as expected by analysts, according to Refinitiv.
• Revenue: $12.28 billion, vs. $12.05 billion as expected by analysts, according to Refinitiv.

With respect to guidance, Oracle CEO Safra Catz said on a conference call that she expects $1.17 to $1.21 in adjusted earnings per share and 17% to 19% revenue growth for the fiscal third quarter. Analysts polled by Refinitiv had expected $1.24 per share and $12.34 billion in revenue, which implies 17.3% growth.

Oracle’s total revenue grew 18% year over year in the fiscal second quarter, which ended on Nov. 30, according to a statement. Health care software company Cerner, which Oracle acquired for $28 billion in June, contributed $1.5 billion in revenue.

Without the impact from foreign-exchange rates, Oracle’s adjusted earnings would have been 9 cents higher, the company said. Revenue for the quarter was over $200 million above the high end of its guidance range, Catz said in the statement. She cited strength in cloud infrastructure and cloud-based applications.

“We really have it coming from all areas,” she said on Monday’s call.

Net income was $1.74 billion, compared with a net loss of $1.25 billion in the year-ago quarter. Last year’s loss came in connection to a payment for a judgment tied to Mark Hurd, who previously served as co-CEO alongside Catz. Hurd died in 2019.

Oracle widened its adjusted operating margin to 41% from 39% in the previous quarter.

Catz said Oracle isn’t done integrating Cerner.

“We are already having some level of savings but ultimately just so that you understand, our expectation is we will run them at typical Oracle margins,” she said. “So we’ve got quite a way to go. And I think over the next couple of quarters you’ll see continued improvement as we’ve done some of our operational integration and simultaneously I think they continue to over-perform for us.”

The company’s cloud services and license support segment posted $8.6 billion in revenue, up 14% and higher than the $8.56 billion consensus among analysts polled by StreetAccount. Revenue from cloud infrastructure jumped 53% to $1 billion.

Revenue from cloud and on-premises licenses, at $1.44 billion, exceeded the $1.24 billion StreetAccount consensus.

In the quarter Oracle announced Alloy, a means for partners to run the company’s cloud services in their own data centers. Separately, the U.S. Securities and Exchange Commission fined Oracle $23 million over alleged violations of the Foreign Corrupt Practices Act.

Oracle said it was aiming for $65 billion in organic revenue, including Cerner’s contribution, in the 2026 fiscal year, with a 45% adjusted operating margin.

Prior to the after-hours move, shares of Oracle are down about 7% for the year, while the S&P 500 index has tumbled 15% over the same period.

WATCH: Two takes on the software space with Baird’s Will Power and Mighty Capital’s SC Moatti