Oracle Heads To $39 On Social Marketing Push And Share Buyback
Oracle (NASDAQ:ORCL) announced impressive Q4 result with non-GAAP total revenues up 1% y-o-y to $11.0 billion mainly driven by a surge in new software license revenue which was up 7% y-o-y to $4.0 billion while hardware systems products revenues were down 16% y-o-y to $977 million. Operating income was up 5% y-o-y to $5.5 billion and net income was up 7% y-o-y to $4.1 billion. It reported earnings per share of $0.82 which was up 10% y-o-y. Operating cash flow for fiscal year 2012 was $13.7 billion, up 23% compared to last year. It also announced that it is adding $10 billion to its stock repurchase program. [1]
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Cloud Computing And Big Data Analytics Driving Revenues
Revenues from Cloud computing, SaaS and Big Data Analytics such as Oracle Big Data Appliance product group and the SPARC SuperCluster were the biggest growth stories for Q4. Oracles diversification into these businesses is already driving its topline as well as margins. Oracle President, Mark Hurd had this to say:
Relevant ArticlesOur engineered systems business is now operating at well over a billion dollar revenue run rate, for the year, the Exadata, Exalogic, Exalytics, SPARC SuperCluster and the Oracle Big Data Appliance product group grew over 100% year-over-year.”
What To Expect In 2013
We expect the main drivers for Q1 2013 to be Cloud SaaS, Social Media Marketing and Big Data Analytics. Exadata, a database machine gaining popularity for deploying private clouds and Exalogic saw triple-digit bookings growth including deals with PayPal, Deutsche Bank, Telefonica, Facebook and at SAP’s largest oil and gas customer in Europe.
Exalytics is an in-memory analytics competitor to SAP’s HANA, is reportedly ramping up faster than Exalogic. It is Exalytics’ second quarter since the product was released and it showed unit bookings more than twice Exalogic and 10x those of Exadata in their second quarters, respectively with customers such as Toshiba, Sodexo and Thomson Reuters. [2]
“The development of Oracle Cloud is strategic to increasing the size and profitability of Oracle’s software business. Our Oracle Cloud SaaS business is nearly at a billion dollar revenue run rate, the same size as our engineered systems hardware business. The combination of engineered systems and the Oracle Cloud will drive Oracle’s growth in FY 2013.”
Marketing On Social Media To Drive Sales
Oracle has purchased two companies in the social media space recently; Vitrue a software and analytics provider for big Business to Consumer (B2C) businesses that helps manage media engagements across its social properties on YouTube, Twitter and Facebook and Collective Intellect which offers cloud-based applications to help analyze social conversations and turn them into intelligence, marketing campaigns, customer service, and sales leads. This technology is likely to be integrated into current Oracle operations to complement its SaaS offerings and cloud solutions.
Revenues from social media services is currently very low for Oracle, but as IT spending grows and marketing budgets begin to include social media software expenditures, we can expect high growth from this division in the future.
We currently have a $39 Trefis price estimate for Oracle, which is significantly higher than its current market price.
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Notes:- Oracle SEC Filings, www.sec.gov, June 18, 2012 [↩]
- Oracle Earnings Call Transcript, www.seekingalpha.com, June 19, 2012 [↩]