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What to Expect Ahead of Oracle's (ORCL) Q2 Earnings?

Zacks Equity Research
·5-min read

Oracle ORCL is scheduled to release second-quarter fiscal 2022 results on Dec 9.

Oracle expects non-GAAP earnings per share growth rate on a year-over-year basis in the range of 2-6% at USD and at cc and amount to $1.09-$1.13 per share. The Zacks Consensus Estimate for earnings has been stable in the past 30 days at $1.11, suggesting growth of 4.7% from the year-ago quarter’s reported figure.

For second-quarter fiscal 2022, Oracle expects total revenue growth rate on a year-over-year basis in the range of 3-5% at USD and at cc. The Zacks Consensus Estimate is pegged at $10.21 billion, indicating an increase of 4.2% on a year-over-year basis.

The company has a trailing four-quarter earnings surprise of 8.6%, on average.

Oracle Corporation Price and EPS Surprise

Oracle Corporation Price and EPS Surprise
Oracle Corporation Price and EPS Surprise

Oracle Corporation price-eps-surprise | Oracle Corporation Quote

Factors to Watch Out Ahead of Q2

Accelerated digital transformation along with the continuation of remote work and mainstream adoption of hybrid/flexible work model is likely to have driven demand for Oracle Cloud Infrastructure (OCI) services as well as the company’s other cloud-based applications.

In the last reported quarter, Oracle’s Cloud services and license support revenues (nearly 76% of total revenues) increased 6% year over year (up 5% at cc) to $7.371 billion.

Strength in Oracle’s software-as-a-service (SaaS), infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) products are likely to have positively favored revenue performance. In the last reported quarter, management noted that the company’s IaaS and SaaS business now accounted for 25% of total quarterly revenues with an annual run rate of $10 billion.

Continued momentum in back-office cloud-based Fusion Human Capital Management (“HCM”) solutions along with NetSuite Enterprise Resource Planning (“ERP”) and Fusion ERP applications is expected to have favored its quarterly performance.

The migration of several large-scale SAP clients to Oracle Fusion ERP cloud and increasing deal wins in several verticals especially banking and healthcare may have acted as tailwind for the company’s ERP business.

NetSuite ERP and Fusion ERP cloud revenues were up 28% and 32%, respectively, in the first quarter of fiscal 2022.

The robust adoption of Oracle’s next-generation autonomous database and Oracle Dedicated Region Cloud, supported by machine learning (ML) and Artificial Intelligence (AI) capabilities, might have benefited the top line performance. Autonomous database in Gen2 public cloud infrastructure is witnessing healthy traction.

In August 2021, Oracle introduced the MySQL Autopilot feature for its MySQL Heatwave service at no added costs to the Heatwave clients. MySQL Heatwave is an in-memory query accelerator belonging to Oracle’s MySQL Database service. Heatwave is likely to have witnessed healthy uptake in the fiscal second quarter and is expected to have favored the top line.

Oracle’s latest Exadata Cloud@Customer service offering is gaining considerable traction among on-premises clients. Higher customer acquisitions, including independent software vendors (ISVs), is also likely to have positively contributed to the top line.

Strength in the Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) solution, integrated with new capabilities that help companies foster innovation and improve decision making, is expected to contribute to top-line growth in the about-to-be-reported quarter.

Higher expenses on product development, especially increased investment toward cloud platform, might have dented fiscal second-quarter performance. Intense competition in the cloud computing market from the likes of Amazon Web Services, Azure platform and Google Cloud might have also limited margin expansion.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Oracle this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Oracle has an Earnings ESP of +0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings this season.

AutoZone AZO has an Earnings ESP of +3.76% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoZone is set to report first-quarter fiscal 2022 results on Dec 7. The Zacks Consensus Estimate for earnings is pegged at $20.83 per share, which suggests an increase of 11.9% from the prior-year quarter’s reported figure.

Shares of AutoZone have rallied 61% in the past year compared with the Zacks Automotive- Retail and Wholesale -parts industry’s rise of 48.6%.

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Lululemon Athletica LULU has an Earnings ESP of +1.37% and a Zacks Rank of 2 at present.

Lululemon Athletica is scheduled to release third-quarter fiscal 2021 results on Dec 9. The Zacks Consensus Estimate for earnings is pegged at $1.39 per share, which suggests an increase of 19.8% from the prior-year quarter’s levels.

Shares of Lululemon Athletica have surged 17.3% in the past year compared with the Zacks Textile Apparel industry’s rise of 14.3%.

Casey’s General Stores CASY has an Earnings ESP of +1.72% and a Zacks Rank of 2.

Casey’s General Stores is scheduled to release second-quarter fiscal 2022 results on Dec 7. The Zacks Consensus Estimate for earnings is pegged at $2.92 per share, indicating a decline of 2.7% from the year-ago quarter’s tally.

Shares of Casey General Stores have rallied 4.2% in the past year compared with the Zacks Retail-Convenience Stores industry’s rise of 7.1%.


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Oracle Corporation (ORCL) : Free Stock Analysis Report

AutoZone, Inc. (AZO) : Free Stock Analysis Report

lululemon athletica inc. (LULU) : Free Stock Analysis Report

Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report

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