Oracle cloud revenue misses as competition intensifies
With the shift to remote work, many businesses were pushed to shift operations to the cloud resulting in an increase in demand for offerings by Oracle, Microsoft's Azure and Amazon Web Services.
Business software maker Oracle Corp's cloud division reported quarterly revenue that missed analysts' estimates, on increased competition from Amazon.com Inc and Microsoft Corp for cloud services due to remote working.
Oracle said it expects fourth-quarter revenue to increase between 1% and 3% on a constant currency basis, the midpoint of which implies a revenue of $10.65 billion, according to Reuters calculations. Analysts had expected current-quarter revenue of $10.84 billion, according to IBES data from Refinitiv.
Oracle's shares fell 6.5% to $67.44 in extended trading on Wednesday.
Revenue from Oracle's cloud services and licenses support unit, its largest by revenue, rose 5% to $7.25 billion in the reported quarter, compared with analysts' estimates of $7.27 billion.
"We are opening new regions as fast as we can to support our rapidly growing multi-billion dollar infrastructure business," Oracle Chairman Larry Ellison said.
To compete with cloud services provided by Amazon and Microsoft, Oracle has been setting up more data centers.
"Some say Oracle is 'turning into a cloud giant', but their growth is still pretty small. Despite some notable progress, Oracle's Q3 revenue grew by just 3%. And that's with some notable cloud-driven progress," said Third Bridge analyst Scott Kessler.
The company's revenue rose 3% to $10.09 billion for the third quarter ended Feb. 28, edging past analysts' estimates of $10.07 billion.
On an adjusted basis, Oracle earned $1.16 per share, beating estimates of $1.11.