(Bloomberg) — Oracle Corp. gave an upbeat forecast for its cloud-computing business, helping its shares recover from a decline in extended trading after the company reported disappointing quarterly profit and slowing growth in its corporate finance applications.
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Chief Executive Officer Safra Catz said on a conference call that cloud revenue would “exit” the fiscal year growing at a percentage rate in the mid-20s. Total revenue in the current quarter will gain as much as 5%, she said. Analysts, on average, projected a sales increase of 5% to about $11.8 billion.
Oracle has been trying for years to expand its cloud business and gain ground in the fast-growing market, which is led by Amazon.com Inc., Microsoft Corp. and Alphabet Inc.’s Google. Cloud revenue rose 24% to $2.8 billion in the fiscal third quarter, which ended Feb. 28, the Austin, Texas-based company said Thursday in a statement.
Sales from Oracle’s enterprise resource planning tools, Fusion ERP and NetSuite, rose 33% and 27% respectively, both slower than in the previous quarter, as demand leveled off for upgrades to back-office software that helps manage functions like accounting and procurement.
In December, Oracle said it had agreed to acquire health information technology vendor Cerner Corp. for about $28.3 billion. Investors are eager to hear how the purchase will support Oracle’s ambitions in the health care industry, apart from moving data from Cerner — which previously struck a partnership with Amazon Web Services — to Oracle’s own data centers.
“Besides the big name and the access, what else is there for Oracle? Everyone is waiting to see,” said Trevor White, an analyst at Nucleus Research.
Executives, on the conference call after the results were released, declined to comment on the Cerner acquisition. The sales forecast assumed the deal won’t close in the current period ending in May, they said.
Oracle shares were little changed in extended trading after falling as much as 8%. The stock closed at $76.65 in New York and has declined 16% since the Cerner deal was announced.
Oracle reported fiscal third-quarter earnings, excluding some items, were $1.13 a share. Analysts, on average, estimated $1.18 a share, according to data compiled by Bloomberg. Oracle said profit was lowered by 5 cents a share because of a stock price decline at gene-sequencing company Oxford Nanopore Technologies and an operating loss at Ampere, a maker of server chips.
“We remain confident that our investments in these two cutting-edge technology companies will deliver very strong returns for Oracle,” the company said in the statement.
Total revenue rose 4.2% to $10.5 billion in the quarter, in line with analysts’ estimates.
Catz said fourth-quarter adjusted earnings would be $1.40 to $1.44 a share on a constant currency basis.
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