Oracle slips after revealing muted guidance and weak cloud sales growth
- Oracle stock dropped on Wednesday after the company's fourth-quarter earnings release.
- Oracle posted muted guidance and weaker than expected cloud sales growth in the quarter.
- Despite the fall in the share price, the company did beat both top and bottom line analyst estimates.
Shares of Oracle slipped on Wednesday after the company revealed muted guidance and weaker than expected cloud sales growth in its fourth-quarter 2021 report.
The Austin, Texas-based tech giant did manage to beat both top and bottom line analyst estimates in its most recent quarter. Adjusted earnings per share rose to $1.54 compared to analyst estimates for $1.31 per share, while revenues hit $11.23 billion, an 8% year-over-year jump, topping analyst estimates of $11.04 billion.
Weak guidance that shows a slower than expected growth rate is hurting shares on Wednesday, however.
CEO Safra Catz said the company expects $0.94 to $0.98 in adjusted earnings per share and 3% to 5% revenue growth in the fiscal first quarter of 2022.
Oracle's all-important cloud services and license support segment generated $7.39 billion in revenue in the fourth quarter, but the 4% jump on a constant currency basis was less than investors had hoped for.
The company also guided for cloud service and license support revenue growth for the first quarter to stay the same at 4%.
Wedbush's managing director of equity research, Dan Ives, told Insider via email that "cloud growth is the key to the story and it was underwhelming."
Ives believes Oracle is "losing the cloud war" to competitors Microsoft and Amazon and said guidance for the quarter was "nothing to write home about."
Analysts at Barclays also aren't keen on Oracle's growth prospects after a run-up in share prices over the past year.
In May, Barclays lowered its rating on the company to a hold equivalent, arguing a "growth acceleration" is needed for any further outperformance, per CNBC.
Oracle stock traded down 6.56% as of 10:36 a.m. ET on Wednesday.
