Shares of Oracle Corporation (ORCL) fell nearly 8% in after-hours trading on Tuesday, after the company reported disappointing results for its cloud business. Despite posting higher-than-expected profits for the quarter, the company’s cloud revenue fell short of analysts’ expectations, leading to concerns about its ability to compete with rivals like Amazon and Microsoft.
For the quarter ending February 28th, Oracle reported earnings per share of $1.16, beating analysts’ estimates of $1.11. However, the company’s cloud revenue came in at $6.9 billion, missing expectations of $7.03 billion.
Oracle has been aggressively promoting its cloud offerings in recent years, hoping to catch up with Amazon and Microsoft, which dominate the market. However, the company has faced stiff competition and struggled to win market share.
What steps is Oracle taking to boost the business?
In an effort to boost its cloud business, Oracle has been acquiring companies and investing heavily in research and development. The company has also been shifting its focus from traditional software licensing to cloud-based subscriptions, which provide a more predictable revenue stream.
Despite these efforts, Oracle’s cloud business has failed to live up to expectations. In the previous quarter, the company’s cloud revenue growth slowed to just 3%, compared to 44% growth for Microsoft’s Azure cloud platform.
The disappointing results have led some analysts to question Oracle’s ability to compete in the cloud market. The company’s traditional strength in enterprise software has not translated well to the cloud, where agility and flexibility are key.
What does the CEO have to say?
Oracle’s CEO, Safra Catz, acknowledged the challenges facing the company in the cloud market but remained optimistic about its long-term prospects. “We are well-positioned to benefit from the secular trends of customers moving to the cloud and choosing best-of-breed SaaS solutions,” she said in a statement.
Despite the setback in its cloud business, Oracle’s overall performance was strong. The company’s total revenue for the quarter was $10.1 billion, up 3% from the same period last year. Its earnings per share also beat expectations, driven by strong growth in its licensing and support business.
In addition, Oracle’s board of directors approved a $20 billion share buyback program, indicating confidence in the company’s long-term prospects.
Despite the positive news, however, investors were spooked by the cloud revenue miss and the stock fell sharply in after-hours trading. The drop erased all of the gains the stock had made so far this year.
What’s the plan ahead?
The disappointing results for Oracle’s cloud business come amid increasing competition in the cloud market. Amazon and Microsoft continue to dominate the space, while newer players like Google and Alibaba are also making inroads.
Oracle will need to step up its game if it hopes to catch up with its rivals. The company will need to focus on improving its cloud offerings, investing in new technologies, and expanding its customer base if it hopes to compete in the highly competitive cloud market.