Oracle Corp Shares Down

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Oracle Corp Shares Down

Oracle Corp (ORCL) Shares Down By 9% After Soft Guidance

Oracle Corporation (ORCL) shares lost 9% of its value during the premarket trading session. The reason behind this downside momentum can be tracked down to the recent future outlook the company has offered for the recent quarter.

The recent outlook by Oracle for the current quarter is not up to the market expectations. In addition, the Q1 revenue of Oracle Corp also missed the expectations narrowly.

According to calculations, the recent fall in Oracle share prices has wiped out around $30 billion in market value. At the same time, other rival companies like SAP SE also lost their value as the Oracle share decline weighed heavily on them.

Q2 Revenue Forecast Is 5 - 7%

During the Q2, the Oracle management forecasted the total revenue to grow by 5 - 7%. However, the analysts were citing a revenue growth near 8.2%. In addition, the projected revenue by Oracle was around $1.30 - $1.34, while the forecast was $1.33.

Furthermore, the outlook for the health records division of Oracle was also weaker than the expectations. The reason behind weak growth in this sector is that Oracle is moving its customers from the license-based model to cloud subscriptions.

As a result of this transition, the growth rate in this sector is facing headwinds in the near term. After the results, the analysts at Goldman Sachs said that the guidance was based on lofty expectations.

Oracle is in the market of selling technology & software related to the database and thus is in competition with Microsoft, Amazon, & Azure. However, the company is facing headwinds as the tech spending has gone through a slowdown.

On a YoY basis, the license support & cloud services jumped by 13% which was equal to around $9.5 billion. In addition, the revenue from the license and the cloud license went down by 11% to around $809 million.

In short, Oracle is facing headwinds in the short term as it moves customers toward the cloud subscription. So, over the longer run, the company is expected to recover some of that lost revenue and be back to its original form.

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