Friday, September 11, 2020

Oracle Shareholders on Cloud 9 After Q1 Print

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News shaping
the markets today

     

What’s happening: Shares of Oracle Corp gained in extended trading on Thursday after the software giant exceeded revenue and earnings estimates for its fiscal first quarter.

What happened: With a major shift towards remote work trends due to the pandemic, various organisations have decided to continue with the model at least till the end of the year.

The latest trend has significantly benefited cloud firms, including Oracle, which has extended its offerings in this space.

How were the results: Oracle reported growth in both sales and earnings for the first quarter, with both metrics exceeding expectations.

  • Total revenue grew 1.6% to $9.37 billion, surpassing market expectation of $9.19 billion.
  • Quarterly net income came in at $2.25 billion, or 72 cents per share, versus $2.14 billion, or 63 cents per share, in the same quarter last year.
  • Adjusted earnings stood at 93 cents per share, handsomely beating the consensus view of 86 cents per share.

Why it matters: Over the past few years, Oracle has been transitioning from a traditional database software licensing business to a subscription-based model tapping the benefits of cloud computing, which helps firms save huge amounts of money by renting data centres instead of owning and managing one.

The company is also pushing to revamp its business model delivering software through the internet instead of sending it on discs through packages.

Revenue from Oracle’s cloud services and license support rose 2% to $6.95 billion in the first quarter, with sales from cloud license and on-premise license growing 9% to $886 million.

The database software giant also announced cloud deal wins with McDonald's, Xactly, Humana and Albertsons.

At a time when many companies have reduced or eliminated dividend payments, Oracle announced a quarterly dividend of 24 per share.

Management projected revenue growth between 1% and 3% for the current quarter versus the consensus forecast of no growth. The company also guided to adjusted profits between 98 cents and $1.02 per share for the quarter, higher than the consensus projections of 94 cents per share.

How shares responded: Oracle’s shares climbed 4.1% to $59.15 in after-hours trading following the release of quarterly results. The stock has gained around 6% over the past three months.

What to watch: Investors await news of progress in Oracle’s bid for the US business of ByteDance’s TikTok. Markets also look forward to healthier revenue growth post the covid-19 pandemic.

The Markets Today

     

European stocks will be in focus today, after the European Central Bank announced its policy decision.

Context: European stocks closed mostly lower, while the euro recorded gains on Thursday, after the ECB held interest rates unchanged, but issued a slightly positive view for the economy.

Details: The ECB announced plans to keep interest rates and its stimulus program for covid-19 relief unchanged. The central bank lifted the economy’s growth estimate for the year to a contraction of 8%, versus its previous forecast of an 8.7% decline. The ECB left its projections for 2021 and 2022 mostly unchanged.

The pan-European Stoxx 600 index slipped 0.5%, with mining shares leading the decline, shedding 1.5% on Thursday. Travel and leisure stocks bucked the trend to record a 0.7% gain.

The euro settled at $1.1816 versus the US dollar on Thursday, after breaching the $1.19 mark earlier in the session.

Shares of Wm Morrison Supermarkets nosedived around 5% on Thursday after the company posting a 25% decline in adjusted pre-tax profits for the first half of the year. Games Workshop’s shares climbed around 12% after the company reported an upbeat trading performance for the quarter ending August 30.

London’s FTSE 100 and the German DAX 30 slipped 0.2% each on Thursday, while Italy’s FTSE MIB Index gained 0.3%.

What to watch: Various countries in the Eurozone will be releasing economic data today. Markets will also monitor the latest developments in the Brexit deal.

Investors will also keep an eye on the meetings of Eurogroup and the Economic and Financial Affairs Council.

Other Markets: US indices trading closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.45%, 1.76% and 1.99%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Spain's industrial production and consumer prices, Turkey's current account, South Africa's SACCI business confidence index, Mexico’s industrial production, Canada’s capacity utilization, Russia’s balance of trade, China's outstanding yuan loan growth and money supply M2 as well as the US consumer price inflation rate and Baker Hughes crude oil rigs.