Oracle Corp. (ORCL) shares surged higher Tuesday after the cloud-focused software group posted stronger-than-expected fourth quarter earnings and said robust demand would help offset strong-dollar headwinds as it kicks off its new fiscal year.
Oracle said overall revenues rose 5%, topping $11.84 billion, over its fiscal fourth quarter, which ended in March, helping adjusted earnings rise 7% to $1.54 per share. Both tallies topped Wall Street forecasts.
Cloud services revenues were up 3% to $7.61 billion, Oracle said, slowing slightly from the prior quarter, while overall cloud revenues, including new sales rose 22% to $2.9 billion.
Currency headwinds, however, accelerated sharply over the quarter as the U.S. dollar moved towards a 20-year high against a basket of its global peers. With the dollar index holding at similar levels on foreign currency markets, those pressures are likely to continue into the current quarter.
Still, Oracle said it sees revenues rising by as much as 18%, thanks in part to its recently-closed $28.3 billion purchase of Kansas City, Missouri-based Cerner (CERN), the second-largest designer of software used by doctors and hospitals to mange and store medical records.
"We feel very optimistic about our business momentum. And we also recognize that there is increasing macro uncertainty right now," CEO Safra Catz told investors on a conference call late Monday.
"Our fundamental principle is to grow EPS while accelerating cloud revenue growth," he added." Given our increasing confidence in organic revenue growth, we will continue to prudently invest back in the business and you can already see the returns in our performance."
Oracle shares were marked 8.4% higher in late morning trading Tuesday to change hands at $69.43 each, a move that would trim the stock's year-to-date decline to around 22%.
"On the positive side, Oracle has a couple really interesting things going on in its business, including a ramping cloud business that achieved a $11.6 billion runrate in the fourth quarter and its acquisition of Cerner, a healthcare IT business that Oracle will improve in part by moving it to Oracle cloud infrastructure and other platform technology," said JMP Securities analyst Patrick Walravens, who carries a 'market perform' rating on the stock.
"On the cautious side, the macroeconomic environment is quite uncertain and it will be important to monitor the integration of the Cerner acquisition, the largest in Oracle’s history, as the company's track record with its acquisitions is a bit mixed," he added.
