Yahoo Finance Oracle Projects $65 Billion in Sales by 2026 on Cloud Growth
(Bloomberg) -- Oracle Corp. expects to generate about $65 billion in annual revenue by fiscal year 2026, fueled by its cloud infrastructure and business applications business. Shares gained on the news.
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The software giant known for its database technology has worked to expand its cloud infrastructure market share, struggling against Amazon.com Inc. and Microsoft Corp. Executives have said the $28.3 billion acquisition of digital medical records provider Cerner Corp. will build inroads in the health care industry, which has been comparatively slow to adopt cloud technology.
“That’s an organic number -- that’s assuming what we own now,” Chief Executive Officer Safra Catz said of the sales projection. “Honestly, it’s not that aggressive a number because of our growth rates.”
Oracle’s foreast came during its first financial analyst meeting since before the pandemic, held during its annual user conference in Las Vegas. Doug Kehring, Oracle executive vice president, said the company also projects operating margin of 45%, including Cerner, by 2026.
Oracle’s fiscal 2026 target is “some $4 billion above consensus and implies annual growth of about 11%, which we see as an encouraging sign given rising recession risks,” said Anurag Rana, a Bloomberg Intelligence analyst. “Moreover, management envisions reaching this target with 45% operating margin, which is noteworthy given near-term pressure on profitability due to Cerner and a changing revenue mix toward cloud.”
Ahead of the event, Piper Sandler Analyst Brent Bracelin wrote that Oracle’s cloud adoption looks “better than feared,” though currency will continue to be a drag on short term growth. In its most-recent quarter, Oracle sales jumped 18% to $11.4 billion, juiced by the integration of Cerner. Analysts, on average, project Oracle will generate $49.6 billion in sales by the end of the fiscal year in May 2023, according to data compiled by Bloomberg.
Shares jumped as much as 5.5% after closing Wednesday at 66.30. Like other software makers, the company’s stock has been under pressure, falling 24% this year through Wednesday.
--With assistance from Andrew Pollack.
(Updates with comments from CEO in the third paragraph.)
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