Oracle Surpassed Expectations for Earnings and Sales

Oracle Corp. once more demonstrated its ability to reach great results. The company exceeded expectations for earnings as well as sales in its fiscal year. However, shares fell as executives revealed plans to spend more money developing Oracle’s cloud business.

Shares dropped more than 4% in after-hours trading, with the decline growing during the company’s earnings conference call. The software provider’s stock has been soaring of late, gaining 31.9% in the past six months, with the S&P 500 raising 15.2% in that time. Its shares closed at an all-time high of $84.61 on June 8 and finished Tuesday’s session at $81.60.

On Tuesday, it reported fourth-quarter earnings of $4.03 billion or $1.37 a share, on sales of $11.23 billion, up from $10.44 billion a year ago. After adjusting for stock-based compensation as well as other effects, the company reported earnings of $1.53 a share, up from $1.20 share in 2020.

For the full fiscal year, the company totaled $40.48 billion in sales, up 3.6% from its previous fiscal year. Its revenue declined 1.1% and 0.8% in the past two years, respectively. Sales fell four times in the past six years overall. The growth rate for the 2021 fiscal year is the second-best for the company since the end of the 2012 fiscal year.

Earnings also increased for the full year. Nonetheless, much of the gains in earnings per share came from massive share repurchases. Oracle repurchased $20.9 billion in stock as the coronavirus pandemic raged in the past 12 months. In total, it spent more than $76 billion in the past three fiscal years purchasing its own stock.

Oracle and plans for the future

Chief Executive Safra Catz made interesting comments regarding the new fiscal year. She predicted that revenue growth will continue but said the company will begin funneling more money into its cloud business. Oracle expects to push $4 billion into capital expenditures to increase its competition with Amazon.com Inc.

Safra Catz expects revenue for fiscal 2022 to grow faster compared to fiscal 2021. The company is going to invest in the business at a greater rate so Oracle can further accelerate the top line. She outlined what that investment will look like in the first quarter. Catz predicted earnings of 93 cents to 98 cents a share after Oracle produced 93 cents a share in the first quarter of the recently completed year.