The News: Oracle’s Q2 revenue rose to $12.27 billion for the second quarter of fiscal year 2023, up 18 percent from $10.36 billion in the same quarter one year ago, as the company beat analyst estimates on revenue and earnings per share. Oracle had a solid quarter as its cloud infrastructure and cloud application revenue segments continued to grow by double digits. Oracle reported its Q2 FY2023 financials on December 12. Read the full Oracle Press Release.
Oracle Q2 Revenue Up 18% to $12.27B, Beating Estimates
Analyst Take: Oracle’s Q2 FY2023 earnings figures continue the company’s steady progress over the last several quarters, even as challenging macroeconomic conditions remain across the global marketplace.
Leading the way was a healthy rise in Oracle’s cloud services revenue to $3.8 billion, which is up 43 percent from $2.6 billion one year ago.
These are solid numbers in late 2023 as Oracle beat analyst consensus estimates on revenue and earnings per share and continues to see cloud momentum coupled with a robust and predictable revenue base. Pair that with a sturdy balance sheet and we see a lot to like in a nice quarter for Oracle.
Here are the Oracle Q2 FY2023 earnings results by the numbers:
- Q2 FY2023 revenue of $12.27 billion, up 18 percent from $10.36 billion for the same quarter one year ago. The $12.27 billion in revenue beat analyst consensus estimates of $12.05 billion, according to Yahoo Finance.
- Q2 FY2023 diluted non-GAAP earnings per share at $1.21, unchanged from one year ago. The $1.21 share price beat analyst consensus estimates of $1.18 per share from Yahoo Finance.
- Q2 FY2023 non-GAAP operating income of $5.08 billion, up five percent from $4.85 billion one year ago.
- Q2 FY2023 operating cash flow of $15 billion, up 47 percent from $10.2 billion one year ago.
- Q2 FY2023 non-GAAP net income of $3.31 billion, down two percent from $3.38 billion one year ago.
Oracle’s Q2 earnings figures are a bright spot in today’s tech marketplace as the world continues to deal with macroeconomic issues including inflation, supply chain woes, the Covid-19 pandemic, foreign exchange rate turmoil, and more. As we saw in Oracle’s previous earnings periods, the company is continuing to see strength in its cloud Infrastructure-as-a-Service (IaaS) and SaaS business segments, even as the market has battered other technology firms. For Oracle, these trends have been driving its continuing success in the global marketplace.
This was the second consecutive quarter that saw Oracle report revenue from its Cerner electronic healthcare records division, which it acquired in June of 2022 for $28.4 billion. For Q2, Cerner contributed $1.5 billion in revenue to Oracle.
Oracle Q2 Revenue by Business Segment
Here are Oracle’s revenue figures for Q2 FY2023 by business segment:
- Q2 FY2023 cloud services revenue (IaaS plus SaaS) of $3.8 billion, up 43 percent from $2.6 billion one year ago. This includes $1 billion in cloud infrastructure IaaS revenue, which is up 53 percent from one year ago, and $2.8 billion in cloud application SaaS revenue, which is up 40 percent from one year ago.
- Q2 FY2023 license support revenue of $4.78 billion, down two percent from $4.88 billion one year ago.
- Q2 FY2023 cloud license and on-premises license revenue of $1.4 billion, up 16 percent from $1.23 billion one year ago.
- Q2 FY2023 hardware revenue of $850 million, up 10.8 percent from $767 million one year ago.
- Q2 FY2023 services revenue of $1.39 billion, up 73.5 percent from $802 million one year ago.
Oracle’s Q2 figures by segment are also impressive as the company continues its growth despite lingering challenges that are affecting the market overall. Oracle’s work to maintain this growth will not be easy, but we again see this as outstanding progress that comes from meeting customer needs with products and services that are providing value to Oracle’s customers around the world.
Oracle also reported that its Oracle Fusion Cloud SaaS ERP revenue for Q2 was $600 million, which was up 23 percent from a year ago, and that its NetSuite Cloud ERP SaaS revenue was $600 million, up 25 percent from one year ago,
Healthcare Growth Will Be Critical, Says Oracle
Oracle’s acquisition of electronic healthcare records vendor Cerner is being seen by Oracle as important for continuing future earnings growth, according to a statement from Oracle Chairman and CTO, Larry Ellison. That growth will come from transforming and bolstering national healthcare systems, including automating clinical trials to shorten the development time for new vaccines and drugs, which are critical tasks to combat future pandemics. These technology transformations will benefit Oracle as it continues to broaden its services in the electronic medical records industry, putting it on the front lines of those fights.
Our Outlook for Oracle
While significant, Oracle’s healthy cloud revenue growth still has lots of catching up to do to get to the level of its competitors like Amazon’s AWS, Microsoft Azure, and Google Cloud. Compared to AWS revenue of about $20 billion a quarter, Oracle’s $1 billion in cloud infrastructure revenue still has a long way to go.
But that is not a complaint or a negative for Oracle, however. As customers continue to see what Oracle offers them, they are increasing their spending with the company and choosing Oracle over the giants, which is notable. We will keep watching with interest as this market growth continues for the company.
Oracle’s Q2 progress is impressive, and its newfound capabilities from the Cerner acquisition give the company interesting opportunities in the growing and critical healthcare marketplace, which may give it a leg up on its huge competitors.
We have said before – if Oracle can leverage the great depths, data, red tape and infrastructure of the massive healthcare market on a path to streamline and improve it, it would be huge. Oracle made that $28.4 billion Cerner bet for a reason, and we believe that its payoffs may be right around the corner in this competitive marketplace.
It will be interesting to watch Oracle as it follows its business path into the third and fourth quarters. We expect that Oracle’s business and sales performance through fiscal year 2023 will continue the successes it has been seeing, aided by its strong executive leadership team and its broad and powerful products and services.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.