(Bloomberg) — Oracle Corp. reported sales in line with estimates, touting the strides made by its transition to the cloud and the future benefits from the acquisition of health records provider Cerner.
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Sales increased 18% to $11.4 billion in the fiscal first quarter, meeting analysts’ average estimate, according to data compiled by Bloomberg. Profit, excluding some items, was $1.03 a share. Oracle said currency fluctuations reduced the earnings by 8 cents a share. Analysts projected $1.06 a share.
Cloud revenue — the highly watched segment that Oracle has been trying to expand — rose 45% to $3.6 billion in the period ended Aug. 31, the Austin, Texas-based company said Monday in a statement. Growth was 19% last quarter, before the Cerner deal closed.
Oracle, known for its database technology, sells business software applications for the cloud as well as offering customers the ability to store and compute information through the company’s data centers. The infrastructure business, however, trails far behind Amazon.com Inc. and Microsoft Corp., the leaders in the public cloud sector. Oracle executives say the Cerner acquisition will give the company inroads in the health care industry, which has been comparatively slow to adopt cloud technology.
“The company’s application and infrastructure cloud businesses now account for over 30% of total revenue,” Chief Executive Officer Safra Catz said in the statement. “As our cloud businesses become a larger-and-larger percentage of our overall business, we expect our constant currency organic revenue growth rate to hit double-digits with a corresponding increase in earnings per share.”
Oracle completed its acquisition of Cerner in June and Catz said the digital medical records provider produced its best revenue quarter ever.
“We expect Cerner to do even better in the coming quarters as we develop an all-new suite of health care cloud services,” she said.
Oracle’s profits may be constrained by the Cerner deal and increased spending on sales and marketing, wrote Bloomberg Intelligence analyst Anurag Rana ahead of the release. “We anticipate management to curtail new hirings over the next 12 months or undertake restructuring to improve the margin structure,” Rana wrote.
Sales of the Fusion application for managing corporate finances rose 33% in the period, compared with 20% last quarter. Revenue from NetSuite’s enterprise planning tools, targeted to small- and mid-sized businesses, increased 27%, the same as the previous period.
In June, TikTok announced that all US traffic is being moved to Oracle’s cloud servers. The popular short-video platform, owned by China-based ByteDance Ltd., is working to convince US regulators that user data can’t be accessed by Chinese authorities.
Oracle shares were little changed in extended trading after closing at $77.15 in New York. The stock has slipped 12% this year.
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