Oracle (ORCL 51.85, +5.52) has spiked 11.9% after beating fourth quarter earnings expectations and issuing upbeat guidance. The pre-market jump puts Oracle on track to begin the cash session at a fresh record high.
The software company reported above-consensus fourth quarter earnings of $0.89 per share on a 3.3% year-over-year increase in revenue to $10.94 billion, which also exceeded expectations.
Oracle is an established company, which has spent the past couple years realigning its approach with an industry that has become more reliant on the use of cloud-based services. Operating in the cloud reduces the business user's hardware requirements like computing power and storage capacity, but it requires users to transfer their data to a third-party host.
Cloud software as a service revenue grew 9.0% year-over-year to $964 million while Cloud platform as a service and infrastructure as a service revenue increased 4.0% to $397 million. Altogether, total cloud revenue increased 13.0% year-over-year to $1.36 billion. On-premise software revenue declined 0.8% year-over-year to $7.52 billion. On-premise software revenue made up 69.0% of the total, down from 72.0% one year ago.
Oracle CEO Safra Catz noted that the company has benefited from a rapid adoption of its cloud platform, which has expanded operating margins and is expected to lead to earnings growth in fiscal year 2018.
The company recorded $855 million in new annually recurring cloud revenue, which pushed the total for the fiscal year past $2 billion. The company expects its full-year total to grow significantly in fiscal year 2018.
Looking ahead, Oracle expects first quarter earnings between $0.59 and $0.61 per share, which is ahead of current market expectations. Furthermore, the company expects double-digit earnings growth for the fiscal year. First quarter revenue is expected to be up between 4.0% and 6.0%, which is also ahead of market expectations. Oracle expects its cloud business to grow between 48.0% and 52.0% year-over-year during the first quarter.