(Bloomberg) — Oracle Corp . reported sales in line with estimates, touting strides made in its move to the cloud and future benefits from its acquisition of health records provider Cerner.
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Sales rose 18 percent to $11.4 billion in the first quarter of the fiscal year, meeting the average estimate of analysts, according to data compiled by Bloomberg. Earnings, excluding certain items, were $1.03 per share. Oracle said currency fluctuations cut earnings by 8 cents per share. Analysts had expected $1.06 per share.
Cloud revenue — the highly-watched segment that Oracle is trying to expand — rose 45 percent to $3.6 billion in the period ended Aug. 31, the Austin, Texas-based company said in a statement on Monday . Growth was 19% last quarter, before the Cerner deal closed.
Oracle, known for its database technology, sells business software applications for the cloud and offers customers the ability to store and compute information through the company’s data centers. The infrastructure business, however, lags far behind Amazon.com Inc. and Microsoft Corp., the leaders in the public cloud sector. Oracle executives say the acquisition of Cerner will give the company inroads into the healthcare industry, which has been relatively slow to adopt cloud technology.
“The company’s application and infrastructure cloud businesses now account for more than 30% of total revenue,” CEO Safra Catz said in the statement. “As our cloud business becomes an increasingly larger percentage of our overall business, we expect our organic currency revenue growth rate to reach double digits with corresponding earnings per share growth.”
Oracle completed its acquisition of Cerner in June, and Catz said the digital medical records provider produced its best quarter of revenue ever.
“We expect Cerner to do even better in the coming quarters as we develop a brand new suite of cloud services for healthcare,” he said.
Oracle’s earnings may be constrained by the Cerner deal and increased sales and marketing spending, Bloomberg Intelligence analyst Anurag Rana wrote ahead of the release. “We expect management to limit new hires over the next 12 months or undertake restructuring to improve the margin structure,” Rana wrote.
Sales of its Fusion app for managing corporate finances rose 33% in the period, compared with 20% in the previous quarter. Revenue from NetSuite’s business planning tools, aimed at small and medium-sized businesses, grew 27% year-over-year.
In June, TikTok announced that all traffic in the US was being moved to Oracle’s cloud servers. The popular short video platform, owned by ByteDance Ltd. based in China, is working to convince US regulators that Chinese authorities cannot access user data.
Oracle shares were little changed in extended trading after closing at $77.15 in New York. The stock is down 12% this year.
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