Oracle (ORCL) Posts Q3 Beat; New Software License Sales Up 7%, Hardware Sales Down 11%

March 20, 2012 4:53 PM EDT
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Price: $87.69 -3.31%

EPS Growth %: +28.3%

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Total revenues: 8.6B

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After jumping more than a percent over the last hour of Tuesday's intraday session, Oracle (Nasdaq: ORCL) shares are continuing higher in post-market trade following a quarterly beat on both the top and bottom lines.

The company said third-quarter sales rose 3 percent from $8.76 billion in the same quarter last year to $9.04 billion. Analysts were expecting revenue of $9.02 billion during the latest quarter.

New Software Licenses sales were up 7 percent to $2.37 billion while sales to the Software License Updates and Product Support segment rose 8 percent to $4.05 billion. Total Hardware Systems revenue fell 11 percent to $1.47 billion. Sales in the Services unit were flat at $1.14 billion.

Sales in the Americas rose 4.4 percent from the third quarter of 2011, sales in Europe, Middle East & Africa fell almost 1 percent, and revenue within Asia Pacific was up about 7 percent.

GAAP net income was up 24 percent from $2.11 billion in the year-ago quarter to about $2.5 billion, or about $0.49 per common share. Adjusted net income rose 13 percent to $3.128 billion, or about $0.62 per share. The Street was looking for earnings of $0.56 per share.

GAAP operating margin was 37 percent, and non-GAAP operating margin was 46 percent.

Cash flow over the last 12 months surged 35 percent to $13.5 billion.

Oracle's Mark Hurd said, "Hardware revenue for our engineered systems grew 139% this quarter and going into Q4, we have a record pipeline. In applications, Fusion in the Cloud is winning with great success against niche HCM cloud vendors in the US and worldwide. Our modular, integrated platform of 100 apps available in the cloud or on-premise is a key differentiator."

Safra Catz, Oracle's President and CFO said, "Oracle is on track to deliver the highest operating margins in our history this year," said Oracle President and CFO, Safra Catz. "Oracle can achieve these record margins as an integrated hardware and software company because we are focusing on high margin systems where hardware and software are engineered to work together."

UPDATE: the company is looking for Q4 sales to be down 2 percent to up 2 percent. EPS are expected to be in the range of 78-83 cents.

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