Oracle (NYSE: ORCL) is scheduled to report its fiscal Q3 2023 results on Thursday, March 9. We expect Oracle to top the consensus estimates of revenues and earnings. The technology giant surpassed the street expectations in the last quarter, with revenues increasing 18% y-o-y to $12.28 billion. It was mainly driven by growth in cloud services & license support and services categories. Notably, the services segment benefited from the acquisition of healthcare software company Cerner. We expect the Q3 results to be on similar lines (Note – Oracle’s FY’22 ended on May 31, 2022. Q3 FY’23 refers to the quarter that ended on February 28, 2023).
Our forecast indicates that Oracle’s valuation is $90 per share, which is at the same level as the current market price. Our interactive dashboard analysis on Oracle’s Earnings Preview has more details.
(1) Revenues likely to remain just above the consensus estimates
Oracle’s revenues grew 18% y-o-y to $23.7 billion in the first two-quarters of FY2023. The growth was primarily due to a 14% growth in the cloud & license revenues, followed by a 74% jump in the services segments.
- The cloud & license business grew 14% to $19.35 billion in the first six months of FY2023. Notably, the cloud & license category (includes cloud services & license support, and cloud license & on-premise license sub-segments), generates around 85% of the total revenues. We expect the same trend to continue in the third-quarter results.
- The hardware revenues increased 5% y-o-y. We expect the segment revenues to follow the same trajectory.
- The services revenues rose by 74% y-o-y in the first half. It was partly because of inorganic growth. We expect the same trend to continue in Q3.
- Overall, we forecast Oracle’s revenues to remain around $49.5 billion for FY2023.
Trefis estimates Oracle’s fiscal Q3 2023 revenues to be around $12.51 billion, just above the $12.42 billion consensus estimate.
(2) EPS to marginally beat the consensus estimates
Oracle Q3 FY2023 adjusted earnings per share (Non-GAAP EPS) is expected to be $1.22 per Trefis analysis, almost 2% above the consensus estimate of $1.20. The net income increased from $1.2 billion to $3.3 billion over the first six months of FY2023. It was primarily due to revenue growth and lower operating expenses as a % of revenues. We expect the same trend to continue in Q3. Overall, Oracle is likely to report an annual GAAP EPS of $3.72 in FY2023.
(3) Stock price estimate is at the same level as the current market price
We arrive at Oracle’s valuation, using a GAAP EPS estimate of around $3.72 and a P/E multiple of just above 24x in fiscal 2023. This translates into a price of $90, which is at par with the current market price.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
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 Month-to-date and year-to-date as of 3/7/2023
 Cumulative total returns since the end of 2016