Oracle expands buyback plan, raises Dividend by 33% as earnings strengthen

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Oracle

the stock is declining although the enterprise software industry has reported better-than-expected financial results, while also announcing an extensive share buyback program and a 33% dividend increase.

Revenue for the third fiscal quarter, ending February 28, was $ 10.09 billion, up 3% from a year earlier, in line with the company’s forecast of 2% to 4% growth, and slightly ahead of the Street consensus at $ 10.07 billion. Adjusted earnings were $ 1.16 per share, 20% higher, and ahead of the company’s earnings forecast of $ 1.09 to $ 1.13 per share.

According to generally accepted accounting principles, operating income was $ 3.9 billion, an increase of 10%. Non-GAAP, or adjusted operating income, was $ 4.8 billion, which also increased by 10%. GAAP’s net income was $ 5 billion, or $ 1.68 per share, including a tax benefit of $ 2.3 billion from the transfer of certain assets between subsidiaries.

Oracle also announced a $ 20 billion expansion of its stock buying program, raising its quarterly dividend rate to 32 cents, from 24 cents. The move gives the stock a return of about 1.8%.

Oracle said it would continue to see strong sales growth in cloud-based applications, with Fusion ERP (financial software for large enterprises) at 30% and NetSuite ERP (for smaller enterprises) at 24%. Total subscription revenue increased by 5%. Oracle’s sales revenue is now 72% of total revenue.

The company also said it is again seeing more than 100% growth in its Oracle Cloud Infrastructure business, which competes with public cloud leaders.

Amazon.com

(AMZN),

Microsoft

(MSFT) and Alphabet (GOOG).

“We are opening up new regions as fast as we can to support our fast-growing $ 1 billion infrastructure industry,” said Larry Ellison, chairman and founder of Oracle, in a statement. “On the application front, analysts continue to rank Oracle as the best number one in cloud ERP.” He said Oracle had signed contracts totaling hundreds of millions of dollars to move some more large companies from SAP ERP to Oracle Fusion.

The company said revenue from “cloud service and licensing support” rose 5% in the quarter to $ 7.25 billion, while “cloud licensing and local licensing” revenue, the traditional $ 1.28 billion, 4 % is higher. The turnover in the hardware business was $ 820 million, a decrease of 4%, while the services at $ 737 million was a decrease of 5%.

CEO Safra Catz said in a call with investors on Wednesday afternoon that the company expects revenue to rise by between 5% and 7% in the quarter in May, or between 1% and 3% in constant currency.

She said Oracle expects non-GAAP earnings for the quarter from $ 1.28 to $ 1.32 per share, or between $ 1.20 and $ 1.24 per share in constant currency. The Wall Street consensus was $ 1.20 per share. Catz said the company will spend aggressively in the quarter to expand its Oracle Cloud capacity in preparation for the expected strong demand in fiscal 2022.

At a notable moment, Ellison read a list of more than 100 companies that he said had moved some or all of their financial applications from SAP’s ERP software to Oracle’s Fusion ERP, including

First solar power,

Cemex,

Western Digital,

and many others.

In the late trading session, Oracle shares fell 6% to $ 67.80. The stock has outperformed the market over the past few weeks. Even with the weak point of Wednesday afternoon, the stock is about 10% higher than a recent Barron’s cover story about the company.

Write to Eric J. Savitz at [email protected]