Oracle rises on second-quarter earnings beat

Key Points
  • Oracle's revenue was flat year over year.
  • The company paid almost $20 billion for stock buybacks in the past two quarters. 
Mark Hurd, CEO of Oracle.
Mark Neuling | CNBC

Oracle stock rose as much as 5 percent on Monday after the company reported better-than-expected earnings for the second quarter of its 2019 fiscal year.

Here are the big numbers:

  • Earnings: 80 cents per share vs. 78 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $9.57 billion vs. $9.52 billion as expected by analysts, according to Refinitiv.

Oracle's overall revenue was flat year over year, according to a statement.

Oracle's biggest business segment, cloud services and license support, produced $6.64 billion in revenue, barely above the $6.63 billion consensus estimate of analysts polled by FactSet.

The company's cloud license and on-premise license segment revenue totaled $1.22 billion, higher than the $1.19 billion FactSet consensus estimate.

Hardware revenue was $891 million, $1 million under the FactSet estimate, and Oracle's $817 million services revenue was below the estimate by $2 million.

In its fiscal second quarter, which ended on Nov. 30, Oracle announced new business from Chegg and Western Digital, and president of product development Thomas Kurian left the company after 22 years and took the job running Google's cloud business.

"Our sense is that Mr. Kurian became frustrated while at Oracle with the growth of its public cloud business relative to other larger cloud vendors, such as AWS, Google Cloud and Microsoft Azure," JMP Securities analysts Patrick Walravens and Mathew Spencer wrote in a note distributed to clients on Friday.

On Monday's conference call with analysts, Oracle cofounder and chief technology officer Larry Ellison talked about the potential for the company's public cloud.

"If we did nothing but run Oracle applications in the Oracle public cloud, and Oracle ISV [independent software vendor] applications, all we did was move Cerner over and all of these other guys over, and all of the existing Oracle applications, we'd be more than 10 times bigger than Amazon," Ellison said. "...But of course, we're ambitious to do more than that."

With respect to guidance, for the fiscal third quarter, Oracle CEO Safra Catz said on the call that she expects the company to report between 83 cents and 85 cents, excluding certain items. Analysts were expecting 84 cents in earnings per share, excluding certain items, for that period, according to Refinitiv. Catz said that she expects 2 percent to 4 percent revenue growth in constant currency in the fiscal third quarter, and that she has increased her estimate for constant currency earnings per share growth for the full fiscal year.

In the past two quarters Oracle paid almost $20 billion for stock repurchases.

"With roughly $20 billion of buyback ammo left during 2Q, we view this as a level for ORCL to offset FX headwinds as well as to limit downside in shares, as all signs have pointed to the company viewing its stock as undervalued during the quarter," Nomura Instinet analysts Christopher Eberle and Charles Rogers wrote in a note distributed to clients on Wednesday.

Oracle stock is down 3 percent since the beginning of 2018.

WATCH: Options traders prophesy big moves ahead for this cloud stock

Options traders prophesy big moves ahead for this cloud stock