December 14, 2021 8:00 AM
 — 
3
 min

Strong results coupled with announcement of new $ 10 billion buyback program

buy

Oracle, one of the world's largest software companies, posted a net loss in the second quarter of fiscal 2022 ending November 30, but adjusted earnings and revenues rose above analysts' expectations. Oracle's revenue increased 6% year-on-year to $ 10.4 billion, up from $ 9.8 billion in the same period last year. The indicator grew the most since 2018, while the market expected revenue to grow to $ 10.2 billion.

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Net loss for the quarter was $ 1.25 billion, or $ 0.46 per share, compared with net income of $ 2.44 billion a year earlier. The company explained that it showed a loss following a court settlement in a long-standing case involving former CEO Mark Heard. However, adjusted earnings were up 14% year-on-year to $ 1.21 per share, better than the market forecast of $ 1.11 per share. The company expects revenue growth in the next fiscal quarter by 3-5%. Adjusted earnings are forecast at $ 1.14-1.18 per share versus market guidance of $ 1.16.

The growth in the volume of structured and unstructured data, as well as the growing need to use analytics to obtain information, are the main drivers of demand for new databases. We believe that, despite increasing competition, Oracle will maintain its leading position in the market for the foreseeable future. Oracle's new product, called a stand-alone database, has the potential to accelerate sales as businesses can more conveniently move mission-critical applications to the cloud.

Oracle has made significant strides and now has much better opportunities for long-term growth in the SaaS segment. Oracle is developing its own cloud computing platform and implementing automation technologies that we believe can help it grow its market share over time. Oracle may not be known as one of the earliest leaders in cloud computing, but its persistent development efforts and a large amount of IT infrastructure provide the company with a unique opportunity to grow.

In the past quarter, the company bought back its own shares for $ 7 billion. Over the past 10 years, the company bought out 47% of the shares in circulation. Oracle management said the company is launching a new $ 10 billion buyback program. We are raising our target price for the company's stock from $ 96 to $ 115.

Founded in 1977 and headquartered in Redwood Shores, CA, Oracle Corporation offers a comprehensive and fully integrated stack of applications, platform services and engineered systems. Gartner estimates that ORCL is the second largest vendor in the Enterprise Software market with 9% market share. It has more than 400,000 customers, including300,000+ customers for its flagship Oracle database offering, deployed across a variety of industries. ORCL has had growing success in pushing into the cloud computing market over the last few years, but the model shift has put pressure on revenue growth and margins.

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