The US software giant Oracle did less business than expected in the second quarter.
Overall sales climbed by five percent year-on-year to 12.9 billion US dollars (12 billion euros), as SAP’s arch-rival announced on Monday in Austin (Texas). In the three months to the end of November, analysts expected an average of $13.1 billion in revenue. In the important cloud business with software and computing services over the network, the pace of growth slowed for the second time in a row. There were significant price losses for the shares on Tuesday.
Analyst Karl Keirstead from the Swiss bank UBS emphasized that it was now the second quarter in a row in which Oracle had not met growth expectations in the cloud business. The company once again blamed the speed of infrastructure expansion, which was disappointing and difficult to understand. The question arises as to what is taking so long to expand capacity.
When it comes to software for corporate management, the Americans compete particularly with SAP from Walldorf. Software applications from the cloud at Oracle only increased by 15 percent this time. With computing power on the internet, however, revenues increased by a good half, but the business is still smaller than the cloud programs and also brought in less than expected. Here, Oracle wants to take on the big tech companies Amazon, Microsoft and Google. There were significant declines in the software licensing business, as was the case recently with our German competitor.
The bottom line was that Oracle increased net income by almost 44 percent to $2.5 billion because costs increased less than revenue and tax expenses decreased. CEO Safra Catz spoke of “astronomical” growing demand for cloud computing power and AI services. The Oracle founder and head of the board of directors and head of technology Larry Ellison referred to the rapid expansion and construction of cloud data centers.
Oracle with a disappointing quarter
A price slide at Oracle left investors in its competitor SAP unaffected on Tuesday. Because the US software giant Oracle achieved less sales than expected in the second quarter, its shares fell by 12.46 percent to $ 100.79 in US trading on the NYSE. Meanwhile, SAP shares fell a marginal 0.01 percent to 147.32 euros via XETRA.
Oracle was unable to dampen the generally good mood in the European technology sector on Tuesday. In the wake of the US stock exchange Nasdaq, which had overshadowed the broader market in New York the evening before, the European sector index Stoxx Europe 600 Technology rose by 0.6 percent on Tuesday. It remained at its highest level since the beginning of 2022.
In the important cloud business with software and computing services that are served over the network, the pace of growth at Oracle slowed for the second time in a row. However, the market was saying that Oracle had disappointed in an area that was of little importance to SAP. Therefore, conclusions for the Walldorfer’s business are only possible to a limited extent.
Karl Keirstead from the Swiss bank UBS emphasized that it was now the second quarter in a row in which Oracle had not met growth expectations in the cloud business. The company once again blamed the speed of infrastructure expansion, which was disappointing and difficult to understand. The question arises as to what is taking so long to expand capacity.
Brent Thill from the analysis firm Jefferies added that after a seasonally weak first quarter, he had actually expected a significant increase in sales development, which would have been consistent with the signals from other industry companies. On the other hand, there was another disappointing quarter with a decline in sales. Even though Oracle’s management points out that supply and demand are currently not in balance and larger deals are on the horizon, the development raises more questions and provides answers. He therefore considers the goals set for 2026 to be risky.
While SAP shares have been at record levels for days, the world looks bleaker for Oracle investors. The shares were already ten percent away from the record set in early summer at $127.54. This discount to the record now threatens to almost double. The $100 mark, at which the Oracle price stabilized in October, is of critical importance.
AUSTIN / NEW YORK / FRANKFURT (dpa-AFX)
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