Oracle (ORCL Quick QuoteORCL - Free Report) reported second-quarter fiscal 2024 non-GAAP earnings of $1.34 per share, which beat the Zacks Consensus Estimate by 1.52% and increased 10.7% year over year. At constant currency (cc), earnings increased 9% year over year.

Revenues increased 5% (up 4% at cc) year over year to $12.9 billion but missed the Zacks Consensus Estimate by 0.84%.

Uncertain economy and competition in the cloud computing market weighed on demand for its cloud offerings, sending the company’s shares down more than 7% in extended trading. Sticky inflation and high borrowing costs have forced firms to cut back on expenditure, hurting companies like Oracle that depend on enterprise spending.

Revenues from the Americas jumped 3.6% year over year to $8.06 billion and accounted for 62.3% of total revenues. Europe/Middle East/Africa climbed 9.5% year over year to $3.17 billion and contributed 24.5% of total revenues. The remaining revenues came from Asia Pacific, which gained 6.9% year over year to $1.7 billion.

Top-Line Details

Cloud services and license support revenues increased 12% year over year (11% at cc) to $9.63 billion, driven by robust demand for cloud applications, autonomous databases and Gen 2 cloud infrastructure services.

Cloud license and on-premise license revenues declined 18% year over year (down 19% at cc) to $1.17 billion.

Cloud revenues (IaaS plus SaaS), including Cerner, came in at $4.8 billion, up 35% year over year (24% at cc), which was higher than the 30% jump in the previous quarter.

Cloud Infrastructure (IaaS) revenues came in at $1.6 billion, up 52% year over year (50% at cc).

Cloud Application (SaaS) revenues of $3.2 billion increased 15% year over year (14% at cc).

Fusion Cloud ERP (SaaS) revenues came in at $0.8 billion, up 21% year over year (19% at cc). NetSuite Cloud ERP (SaaS) revenues of $0.8 billion increased 21% year over year (20% at cc).

Hardware revenues were $756 million, down 11% year over year (down 12% at cc). Services revenues decreased 2% (down 3% at cc) to $1.36 billion.

For the second quarter of fiscal 2024, Cerner contributed $0.7 billion to total revenues.

Application subscription revenues, which include product support, were $4.5 billion, up 11% year over year. SaaS cloud revenues were $3.2 billion, up 14% on a year-over-year basis.

Infrastructure subscription revenues, which include license support, were $5.2 billion, up 12%. Infrastructure cloud services revenues were up 50%. Excluding legacy hosting services, Gen 2 infrastructure cloud services revenues grew 55%, with annualized revenues of $6 billion.

Oracle Cloud Infrastructure consumption revenues increased 71%. Exadata Cloud Services revenues surged 40% and Autonomous Database revenues were up 26%.

Operating Details

The non-GAAP total operating expenses increased 3% year over year (2% at cc) to $7.4 billion.

The non-GAAP operating income was $5.53 billion, up 9% year over year (up 7% at cc). The non-GAAP operating margin was 43%, which expanded 135 basis points on a year-over-year basis.

Balance Sheet & Cash Flow

As of Nov 30, 2023, Oracle had cash & cash equivalents and marketable securities of $8.69 billion compared with $12.08 billion as of Aug 31, 2023.

Operating cash flow and free cash flow amounted to $17.03 billion and $10.1 billion, respectively.

Remaining performance obligation (RPO) was $65 billion, with the portion excluding Cerner, which increased 11% at cc. Roughly 48% of total RPO is expected to be recognized as revenues over the next 12 months.

The company repurchased four million shares for a total of $450 million and paid out dividends of $4.1 billion over the last 12 months.

Guidance

For the third quarter of fiscal 2024, total revenues, including Cerner, are expected to grow from 6% to 8%. Total revenues, excluding Cerner, are expected to grow from 8% to 10%. Total cloud revenues, excluding Cerner, are expected to grow from 26% to 28%.

The company expects non-GAAP earnings to grow between 10% and 14%. Oracle expects earnings per share in the range of $1.35-$1.39.

Zacks Rank & Stocks to Consider

Oracle carries a Zacks Rank #3 (Hold). Shares of ORCL have gained 40.8% year to date.

Some better-ranked stocks from the broader technology sector are CrowdStrike (CRWD Quick QuoteCRWD - Free Report) , GoDaddy (GDDY Quick QuoteGDDY - Free Report) and Logitech International (LOGI Quick QuoteLOGI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for CrowdStrike's fourth-quarter 2024 earnings has been revised northward by 5 cents per share in the past 30 days. For fiscal 2024, earnings estimates have been revised 10 cents upward to $2.92 per share in the past 30 days.

CRWD’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 16.56%. Shares of CRWD have rallied 130.4% year to date.

The Zacks Consensus Estimate for GoDaddy's fourth-quarter 2023 earnings has been revised 3 cents upward to $1.05 per share in the past 30 days. For fiscal 2023, earnings estimates have increased 6 cents to $2.72 per share in the past 30 days.

GDDY's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missed the same on one occasion and matched in the remaining one, the average negative surprise being 0.6%. Shares of GDDY have gained 39.4% year to date.

The Zacks Consensus Estimate for Logitech’s third-quarter fiscal 2024 earnings has been revised 2 cents northward to $1.12 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by a penny to $3.43 in the past 30 days.

LOGI's earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same on one occasion, the average surprise being 30.41%. Shares of LOGI have surged 43.1% year to date.