Oracle announced its Q3 fiscal 2023 results. Revenue rose 18% to $12.4 billion (up 21% in constant currency).
Total Cloud revenue rose 45% to $4.1 billion (48% in constant currency). NetSuite revenues rose 23% to $0.7 billion.
- Q3 GAAP Earnings per Share $0.68, Non-GAAP Earnings per Share $1.22
- Q3 Cloud Infrastructure (IaaS) Revenue $1.2 billion, up 55% in USD, up 57% in constant currency
- Q3 Cloud Application (SaaS) Revenue $2.9 billion, up 42% in USD, up 44% in constant currency
- Q3 Fusion Cloud ERP (SaaS) Revenue $0.7 billion, up 25% in USD, up 28% in constant currency
- Operating income fell 18% year over year to $2.3
Safra Catz, Oracle CEO, commented, “Oracle’s non-GAAP earnings per share growth hit the high end of our guidance—up 13% in constant currency to $1.22. Our strong quarterly earnings growth was driven by 48% constant currency growth for the total revenue of our two cloud businesses, infrastructure and applications. Oracle’s cloud businesses now exceed $16 billion in annualized revenue.
“We remain the overwhelming market leader in Cloud ERP with approximately 10,000 Fusion ERP customers and over 34,000 NetSuite ERP customers. Our technically advanced and highly differentiated Gen2 infrastructure business continues to be in a hypergrowth phase—up 65% in Q3 in constant currency.”
During the quarter, Oracle saw numerous customer wins and go-lives. Caesars entertainment went live with an expansion of their Oracle Fusion Cloud HCM payroll system, adding 14,000 more employees and replacing three legacy payroll systems. Jac in the Box, one of the largest hamburgers chains in the US, selected Oracle Fusion Cloud ERP, EPM, and ERP Analytics to modernize their systems.
Despite hitting the upper end of the forecast, it was below analyst expectations, and the share price fell 5.53% after the market closed, ending at 82.07%.
Cerner emerging stronger
Cerner provided $1.5 billion in revenue during the quarter. Oracle has increased the margin by 5% for the healthcare vendor. Oracle Chairman and CTO, Larry Ellison, commented, “Since June of last year, when we acquired Cerner, that business has increased its healthcare contract base by approximately $5 billion.
“We have signed a diverse set of new and expanding domestic and international customers, including the US Department of Defense, the US Department of Veterans Affairs, Hospital Groups in a dozen US States, multiple hospitals in the United Kingdom, multiple Provinces of Canada, the Australian Defense Forces, multiple hospitals in Puerto Rico and multiple countries in the Middle East.
“While we are pleased with this early success of the Cerner business, we expect the signing of new healthcare contracts to accelerate over the next few quarters.”
Importantly Cerner is also powering other Oracle sales. Ellison commented, “The overall Oracle Healthcare application portfolio is actually much broader, covering virtually the entire healthcare ecosystem.
“Hospitals are also buying the Oracle Fusion ERP system to manage their revenue cycle and from insurance companies to patient billing, plus their medical supply chain from ordering to inventory. Hospitals are buying Fusion HCM to manage their complex, high-value workforce of doctors, nurses, and technicians. Pharmaceutical companies are buying Oracle Clinical One to manage clinical trials.” (Source The Motley Fool)
Ellison was also keen to announce that Oracle had won a deal against BlueRock Therapeutics, a wholly owned subsidiary of Bayer AG, a German-owned company. He also pointed out a competitive win for Oracle HCM against Workday at Ascension Health.
Enterprise Times: What does this mean
While the analysts’ expectations may have seen a fall in the Oracle Share price, it may not last long. The company has had strong growth and is now seeing the benefits from the Cerner Acquisition. It has made that business more profitable and opened up new opportunities for its EHR solution. Oracle Fusion Apps are also seeing the benefit of healthcare organisations wanting to simplify their software supply chain.
This is a solid set of results from Oracle. However, a deeper analysis of the number might warrant a few questions. NetSuite growth is down 4% from 27% a year ago. Operating income also fell, though this was partly due to costs from the Cerner acquisition. Catz noted, “As we drive Cerner profitability to Oracle standards and continue to benefit from economies of scale in the cloud, we will not only continue to grow operating income, but we will also grow the operating margin percentages.” (Source The Motley Fool)
