Oracle (ORCL) earnings Q1 2022

Oracle shares fell as much as 3% in extended trading on Monday after the enterprise software maker reported fiscal first-quarter revenue that came in under analysts’ expectations.

Here’s how the company did:

• Earnings: $1.03 per share, adjusted, vs. 97 cents per share as expected by analysts, according to Refinitiv.
• Revenue: $9.73 billion, vs. $9.77 billion as expected by analysts, according to Refinitiv.

Revenue increased by 4% year over year in the quarter, which ended on Aug. 31, according to a statement. In the previous quarter Oracle’s revenue had gone up 8%.

With respect to guidance Oracle CEO Safra Catz said she sees fiscal second-quarter earnings of $1.09 to $1.13 in earnings per share on 3% to 5% revenue growth.. Analysts polled by Refinitiv are expecting fiscal second-quarter adjusted earnings of $1.08 per share and $10.25 billion in revenue, which works out to almost 5% revenue growth.

“Cloud is fundamentally a more profitable business compared to on-premise, and as we look ahead to next year, we expect company operating margins will be the same or better than pre-pandemic levels,” Catz said. Oracle does not disclose revenue or operating income from cloud infrastructure or cloud applications.

Oracle’s largest business segment, cloud services and license support, generated $7.37 billion in revenue, which is up 6% and below the StreetAccount consensus estimate of $7.41 billion.

The cloud license and on-premises license segment contributed $813 million in revenue, down 8% and lower than the $859.7 million consensus. Oracle’s hardware unit had $763 million in revenue, down 6% and less than the $778.5 million estimate.

Oracle boosted its capital expenditures above $1 billion, compared with $436 million in the year-ago quarter. The investment comes after executives signaled they wanted to have the infrastructure necessary to meet expected cloud demand. Cloud infrastructure and cloud applications now represent 25% of total revenue, Oracle said in the statement.

In the quarter Oracle announced a support rewards program designed to encourage customers to adopt its public cloud services, and S&P Global Ratings lowered its rating on Oracle and its debt to BBB+.

Oracle shares have risen 37% since the start of the year, while the S&P 500 index is up about 19% over the same period.

WATCH: Bulls bet on Fluor. Plus, an update on Oracle calls