Oracle Misses on Earnings as Investments Drag Down Quarterly Profit

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  • Oracle met expectations for revenue but fell short on earnings for the fiscal third quarter.
  • The database software maker said declines in two investments hurt its income.

Oracle reported fiscal third-quarter earnings on Thursday that trailed analysts' expectations. The stock initially slid 6% in extended trading before rebounding.

Here's how the company did:

  • Earnings: $1.13 per share, adjusted, vs. $1.18 per share as expected by analysts, according to Refinitiv.
  • Revenue: $10.51 billion, vs. $10.51 billion as expected by analysts, according to Refinitiv.

Oracle's revenue increased 4% from a year earlier in the quarter, which ended Feb. 28, according to a statement. Net income declined 54% to $2.32 billion.

Net income dropped due to two investments. The company said profit was hurt by the tumbling share price of gene-sequencing company Oxford Nanopore and an operating loss at Arm server chip maker Ampere Computing, a private company.

"We remain confident that our investments in these two cutting-edge technology companies will deliver very strong returns for Oracle," Oracle said.

The company's short-term deferred revenue, at $7.87 billion, came in below the StreetAccount consensus of $8.01 billion.

Supply shortages persist for Oracle, which sells hardware equipment for companies to deploy in data centers. "We couldn't meet every need as quickly as we would have liked," Safra Catz, Oracle's CEO, said on a conference call with analysts.

In the quarter Oracle announced its intent to acquire Cerner, a developer of software for managing health records, for $28.3 billion in cash.

Oracle said it expects $1.35 to $1.39 in adjusted earnings per share and 3% to 5% revenue growth in the fiscal fourth quarter. Analysts polled by Refinitiv had been looking for $1.38 per share and $11.76 billion in revenue, which works out to 4.8% revenue growth. The guidance does not include any contribution from Cerner, although the deal could end up closing in the quarter, Catz said.

Prior to the after-hours move, Oracle stock was down 12% so far in 2022. The S&P 500 index has dropped about 11% over the same period.

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