Oracle beats Q4 expectations as cloud applications gain momentum

Oracle posted better-than-expected top and bottom-line results, thanks partly to the strong revenue growth rates of its ERP and HCM applications.
Written by Stephanie Condon, Senior Writer

Oracle on Tuesday published its fourth-quarter financial results, with better-than-expected top and bottom-line results. In addition, the database giant reported an accelerating growth rate among cloud applications.

"Clearly, our strategy to develop cloud applications with cloud infrastructure is now beginning to drive top-line growth," Oracle co-founder and CTO Larry Ellison said on a conference call Tuesday. 

The company, he said, aims to build upon its strong ERP foundation and expand into manufacturing, CRM and industry-specific applications. 

Oracle's non-GAAP net income in Q4 was up 20% to $4.5 billion, with non-GAAP earnings per share reaching $1.54. Total quarterly revenues were up 8% year-over-year to $11.2 billion.

Analysts were expecting earnings of $1.31 per share on revenue of $11.04 billion. 

For the full fiscal year 2021, non-GAAP earnings per share were up 21% to $4.67. The fiscal year 2021 total revenues were up 4% year-over-year to $40.5 billion. 

"Our Q4 performance was absolutely outstanding with total revenue beating guidance by nearly $200 million, and non-GAAP earnings per share beating guidance by $0.24," Oracle CEO Safra Catz said in a statement. "Our multi-billion dollar Fusion and NetSuite cloud applications businesses saw dramatic increases in their already rapid revenue growth rates."

As Catz noted, Fusion ERP was up 30% in Q3 and up 46% in Q4. Fusion HCM was up 23% in Q3 and up 35% in Q4. NetSuite ERP was up 24% in Q3 and up 26% in Q4. 

Oracle Cloud Infrastructure (OCI) consumption revenue in Q4 was up 103%. About half the workloads on OCI are Oracle Database while the other half is everything else, Ellison said. 

"The accelerating growth rates of both our applications and infrastructure cloud businesses this year drove earnings per share growth up to 21% in FY21," Catz said. "That is the fourth consecutive year of double-digit earnings per share growth at Oracle Corporation." 

On the conference call, Catz said that Oracle plans to invest back in the business at a greater rate "so we can further accelerate the top line." The company plans to roughly double its cloud Capex spend in FY22 to about $4 billion, she said. 

"We believe that now is the right time to increase our investment to capture market share," Catz said. "We are confident that the increased return in the cloud business more than justifies this increased investment, and our margins will expand over time."

By segment, cloud services and license support revenues in Q4 were up 8%, reaching $7.4 billion. Within that category, applications cloud services and license support brought in $3.04 billion, up 11%, while infrastructure cloud services and license support brought in $4.35 billion, up 6%.

Cloud services and license support revenues were up 5% to $28.7 billion for the full year. 

Cloud license and on-premise license revenues were up 9% to $2.1 billion. Hardware brought in $882 million, down 2%. Services brought in $812 million, up 11%.

For the full year, cloud license and on-premise license revenues were up 5% to $5.4 billion.

Oracle's board of directors declared a quarterly cash dividend of 32 cents per share of outstanding common stock.

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