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Oracle falls 8% after Q2 revenue miss; Jefferies says execution risk is increasing

Published Dec 11, 2023 04:37PM ET Updated Dec 12, 2023 04:48AM ET
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Oracle plunges 9% following Q2 revenue miss
 
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(Updated - December 12, 2023 4:46 AM EST)

Shares of Oracle (NYSE:ORCL) dropped over 8% in pre-market Tuesday after the company posted weaker-than-expected revenue in its fiscal second quarter.

Oracle reported a shortfall in its quarterly revenue, attributed to a challenging economic environment and heightened competition in the cloud computing sector, impacting the demand for its cloud services.

Oracle said its Q2 revenue was $12.9 billion (up 5% year-over-year), missing the consensus estimate of $13.05B. EPS came in at $1.34, compared to the consensus estimate of $1.33.

The company saw a 12% increase in its Cloud services and license support revenue, reaching $9.6B. However, cloud license and on-premise license revenues witnessed a downturn, decreasing 18% to $1.2B.

"Demand for our Cloud Infrastructure and Generative AI services is increasing at an astronomical rate. As a measure of that demand, Oracle's total Remaining Performance Obligations (RPO) climbed to over $65 billion—exceeding annual revenue,” said CEO Safra Catz.

Oracle offered guidance on call that came in line with analyst expectations. Adjusted EPS is seen at $1.37, which was also the consensus.

Oracle guided to +6-8% revenue growth, while the Street was looking for +8%.

"ORCL reported another disappointing quarter with a top-line miss driven by weaker-than-expected OCI revenue. While mgmt highlighted the OCI supply-demand imbalance and large deals in the pipeline, we came away with more questions than answers and believe there is more execution risk en route to FY26 targets," analysts at Jefferies said in a note.

Evercore ISI analysts said the Q2 results were mixed, although guidance "implies acceleration in 2024." The firm cut the price target by $5 to $140 per share.

"We acknowledge that Oracle is likely to remain in ‘show me’ mode in the near-term, but when digging beyond the F2Q revenue shortfall – the guidance and backlog point to a potential reacceleration in revenue in CY24 and we believe the optionality around the public cloud market opportunity represents material upside," they said.

Additional reporting by Senad Karaahmetovic

Oracle falls 8% after Q2 revenue miss; Jefferies says execution risk is increasing
 

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Comments (9)
Stephen chen
Ningboren Dec 11, 2023 10:02PM ET
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Without the help from Trump, this corruptive company would not have won many contracts for its cloud business.
Tre Hsi
Tre Hsi Dec 11, 2023 10:02PM ET
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yes clearly Oracle wasn't making any money before 2017??!!??
Richie Berg
Richie Berg Dec 11, 2023 8:32PM ET
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Oracle is not real economy such as Bitcoin.
Noor Fatima
Noor Fatima Dec 11, 2023 8:21PM ET
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Hare Baklava
Hare_Baklava Dec 11, 2023 8:21PM ET
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hello
Michael Benson
Michael Benson Dec 11, 2023 8:04PM ET
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Alternative investments are gaining in popularity.
Michael Benson
Michael Benson Dec 11, 2023 8:04PM ET
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International trade agreements impact markets around the world.
Stan Smith
Stan Smith Dec 11, 2023 5:22PM ET
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And stocks soar...so I guess its another shrug off so we can just enjoy the Santa Claus rally
jim kean
jim kean Dec 11, 2023 5:20PM ET
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buying opportunity
Empire Destroyer
Empire Destroyer Dec 11, 2023 5:10PM ET
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Tech up though nice
Casador Del Oso
Casador Del Oso Dec 11, 2023 5:02PM ET
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Early 2000s redux.
Siren Pa
Siren Pa Dec 11, 2023 5:00PM ET
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good
 
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