Changes in US stocks | Second-quarter profits were “fat” and cloud business growth fell short of expectations, Oracle (ORCL.US) plummeted by more than 13% before the market

The Zhitong Finance App learned that on Thursday, Oracle (ORCL.US) plummeted by more than 13% before the market to $193.84. According to the news, in the second fiscal quarter ending November 30, the company's total revenue increased 14% to US$16.1 billion, which is basically the same as the average market forecast. Earnings per share excluding selected items were $2.26, exceeding average market expectations. Among them, cloud computing sales increased 34% to US$7.98 billion, and revenue from the much-publicized infrastructure business increased 68% to US$4.08 billion. Both figures were slightly lower than analysts' expectations. The company said the profit growth benefited from the sale of its holdings in chipmaker Ampere Computing, and the deal generated pre-tax revenue of $2.7 billion in the current period. According to a statement issued on Wednesday, in the quarter ending November 30, the “remaining performance obligation” index, which measures the size of orders, soared to $523 billion, an increase of more than fivefold.

Oracle's negative earnings data instantly sparked discussion on Wall Street. Although earnings per share under non-GAAP standards greatly exceeded expectations and the backlog of 523 billion US dollars of cloud computing orders reached a record high, real profits were boosted by one-time revenue of 2.7 billion US dollars, and the profit margin and cash flow of the core business were pressured.

The increase in Oracle cloud computing orders cannot hide anxiety about actual profit conversion, and the cloud business growth rate fell short of expectations, and free cash flow was negative. This series of negative factors caused Oracle's stock price to plummet after the financial report. UBS and Bank of America chose to quickly lower Oracle's target price after the financial report was announced, and Damar placed Oracle's stock rating on a “careful review”, highlighting that the market's focus on Oracle's profit quality (in particular, profit sources focusing too much on AIOpen raised concerns) and the actual fulfillment of backlog orders.