Oracle Builds on NetSuite with Next Technik Acquisition

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Oracle (NYSE: ORCL) reported its second quarter results that failed to impress the market. The weaker than expected performance and outlook sent the stock falling 9% in the after-hours trading session.

Oracle’s Financials

Revenue for the first quarter grew 5% to $12.94 billion, below analyst estimates of $13.05 billion. Adjusted EPS of $1.34 was better than the market’s forecast of $1.32.

Oracle’s revenue from cloud services and license support revenues grew 12% to $9.64 billion, missing the consensus of $9.71 billion. Revenue from cloud and on-premises licenses fell 18% to $1.18 billion, slightly lower than the estimate of $1.21 billion. Services revenues at $1.37 billion also missed the forecast of $1.40 billion. Cloud infrastructure revenues grew 52% to $1.6 billion.

Oracle projected the second-quarter revenue growth to be 6%-8%, compared with the analyst estimates of 7.6%. Oracle also expects adjusted profit of $1.35-$1.39 per share, compared with estimates of $1.37.

Oracle’s Growth Focus

Oracle recently announced that its database software will now be available on Microsoft’s Azure public cloud. The company will also turn on 20 data centers connected with Azure in the next few months. It is in the process of expanding 66 of its existing cloud?datacenters, and?building 100 new cloud datacenters to meet the increasing demand.

The first Oracle?Database@Azure?service is now available in the Microsoft Azure East US region. Exadata Database Service is the first of several planned Oracle database services to run on Oracle Cloud Infrastructure (OCI) in Azure datacenters. Oracle Exadata Database Service simplifies cloud migration of mission critical workloads. The new service delivers performance, scale, and workload availability advantages of the Oracle Database alongside Azure services such as the Azure OpenAI Service for generative AI applications.

Oracle will continue to launch this service in additional regions in the current year including Germany Central, Australia East, France Central, Canada Central, Brazil South, Japan East, UK South, Central US, and?South Central?US. The service will provide customers with the flexibility to move their Oracle databases to the cloud along with additional capabilities such as improved level of Oracle database performance, streamlined migration to the cloud, compatibility with migration tools like Oracle Zero Downtime Migration, consistency with on-premises deployments of Oracle Database and Oracle Exadata, unified customer support from Oracle and Microsoft, and simplified purchasing via the Azure Marketplace.

Oracle’s Next Technik Acquisition

Last quarter, Oracle also announced the acquisition of the Australian player, Next Technik, for its NetSuite organization. Next Technik is a leading provider of field service management solutions for NetSuite customers. Its services help improve field-to-office communications and customer satisfaction with its inventory and asset management capabilities. Field Service Management by NetSuite replaces manual processes commonly used by field service organizations. By streamlining the?collection of data in the field and making it immediately available in NetSuite, the solution will help organizations reduce operational costs, improve decision-making, and increase profitability. Terms of the acquisition were not disclosed. Prior to the acquisition, Next Technik was a privately held organization. Its financial and funding details are not reported.

Oracle’s stock is trading at $114.82 with a market capitalization of $315.41 billion. It was trading at a 52-week high of $127.54 in June. The stock hit a 52-week low of $82.04 in March last year.?

Disclosure:?All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

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