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Investment Overview for Oracle (NASDAQ:ORCL)

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Latest Earnings

For Q3 2020 (ended Feb 2019), Total Revenues were $9.8 billion, up 2% y-o-y, and up 4% in constant currency compared to Q3 last year. Cloud Services and License Support revenues were $6.9 billion, while Cloud License and On-Premise License revenues were $1.2 billion. GAAP Operating Income was up 4% to $3.5 billion, and GAAP Operating Margin was 36%. GAAP Net Income was $2.6 billion, and GAAP Earnings Per Share was up 4% to $0.79. The company saw good growth in some business with Fusion ERP revenues growing 37% y-o-y.

Coronavirus and Oil Price war

The World Health Organization (WHO) declared a global health emergency at the end of January in light of the coronavirus spread. Matters were made worse by fears of a price war in the oil industry triggered by an increase in oil production by Saudi Arabia. The companies are affected due to forced lockdown across countries and regions due to the coronavirus. If signs of coronavirus containment aren’t clear by the Q4 earnings timeframe, it’s likely Oracle's stock along with the broader market is going to see a continued drop when results confirm palpable reality.

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Oracle earns money through the sale of enterprise software and associated hardware. The company had launched its Gen 2 cloud and Autonomous database in order to increase the ‘as a service’ component in its offerings.

Cloud services and license support (2019 revenue of $26.7 billion, c.67.6% of total revenue)

Segment revenues are derived from the sale of subscription for Oracle Cloud Services and product upgrades.

Cloud license and on-premise license (2019 revenue of $5.9 billion, c.14.8% of total revenue)

Segment revenues are derived from the sale of software licenses to be used on-premise or in the cloud.

Hardware (2019 revenue of $3.7 billion, c.9.4% of total revenue)

Segment revenues are derived from the sale of hardware products and related software.

Services (2019 revenue of $3.2 billion, c.8.2% of total revenue)

Segment revenues are derived from the sale of consulting and technical support services.

How Does Trefis Modelling Work?

How do we get the historical numbers for this chart?

Trefis has a team of in-house Analysts who gather historical data from company filings and other verifiable sources. When historicals are available, we explain how we got them at the bottom of the Trefis analysis section below.

Who came up with the Trefis forecast for future years?

The Trefis team of in-house Analysts considers a variety of factors when projecting any forecast. The rationale for our projections is explained in the Trefis analysis section below.

How does my dragging the trendline on the chart impact the stock price?

1. We use forecasts for business drivers to calculate forecasted Revenues and Profits for each division of the company.
2. We then use forecasted Profits in a Discounted Cash Flow (DCF) model to obtain the Price Estimate for the company.

See more on: DCF Methodology

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