(Reuters) - Oracle Corp (NYSE:ORCL) forecast lower-than-expected quarterly profit as growth in its cloud-based business fails to make up for weakness in its traditional software offerings.
The company's shares fell nearly 2.7 percent in extended trading on Thursday.
Like rivals SAP SE (DE:SAPG), Amazon.com Inc (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT), Oracle is making an aggressive shift to the cloud as customers increasingly shun the costlier licensing model.
The company in July agreed to buy NetSuite Inc for $9.3 billion to better compete with nimbler rivals such as Workday Inc and Salesforce.com Inc (NYSE:CRM) that specialize in cloud-based offerings.
Total cloud revenue rose 59 percent to $969 million in the first quarter ended Aug. 31.
However, the company's traditional software business, which offers higher margins, continued to suffer. Sales of new software licenses fell 10.5 percent to $1.03 billion.
For the second quarter, the company said it expected adjusted earnings of 59 cents to 62 cents per share and revenue growth of up to 3 percent. The company had reported revenue of about $9 billion for the same period a year earlier.
Analysts were expecting adjusted earnings of 65 cents per share and revenue of $9.26 billion, according to Thomson Reuters I/B/E/S.
The company said its latest quarter was also weighed down by a strong dollar, which reduced revenue from various businesses by 1 to 3 percent.
Effects of currency movements in the quarter were more than the company's expectations due to the surprise Brexit vote in June, co-Chief Executive Safra Catz said on a conference call.
Total revenue edged up 1.7 percent to $8.6 billion. However, it rose 3 percent on a constant currency basis.
Oracle's net income rose to $1.83 billion, or 43 cents per share, from $1.75 billion, or 40 cents per share.
Excluding items, Oracle earned 55 cents per share.
Analysts on average had expected revenue of $8.7 billion and a profit of 58 cents per share.
Oracle's shares closed at $40.86 on Thursday on the New York Stock Exchange. Up to Thursday's close, the stock had risen nearly 12 percent this year.