(Bloomberg) -- Oracle Corp.’s push into cloud computing is picking up momentum, sparking a fourth straight quarter of revenue gains for the software maker.
The company, which set a record closing high Wednesday for its shares, reported total sales that easily topped analysts’ estimates. Oracle’s cloud businesses grew 58 percent in the fiscal fourth quarter. Meanwhile, new software licenses, a measure that’s tied to the company’s traditional on-premise software offerings, declined 5 percent compared with a drop of 16 percent in the previous period.
Oracle’s long shift to the cloud, which lets customers access services without installing them on their own computers, is now producing more sturdy growth, indicating that the company can compete against rivals such as Salesforce.com Inc. and Microsoft Corp. It benefited in particular with applications that help companies in areas such as human resources, customer relationship management and financials. Sales for that piece of Oracle’s business, which was detailed for the first time in the earnings report, jumped almost 70 percent.
“Everything looks very, very strong,” said Joel Fishbein, an analyst at BTIG. “Oracle is a legitimate and formidable cloud player.”
Shares of Oracle rose as much as 12 percent in extended trading after the earnings were released. Investors have been optimistic this year with the company’s stock increasing 20 percent to a record $46.33 at the close in New York.
“We continue to experience rapid adoption of the Oracle Cloud,” co-Chief Executive Officer Safra Catz said in a statement. “This cloud hyper-growth is expanding our operating margins, and we expect earnings per share growth to accelerate in fiscal 2018.”
Adjusted revenue increased 3 percent to $10.9 billion in the period ended May 31, the company said Wednesday in a statement. On average, analysts had projected $10.5 billion, according to data compiled by Bloomberg. Profit, excluding some costs, was 89 cents a share, topping the estimate of 78 cents. Net income rose 15 percent to $3.2 billion.
During a call with analysts, Catz said she expects adjusted revenue in constant currency to rise 4 percent to 6 percent in the current quarter. She also projected adjusted earnings of 59 cents to 61 cents per share, adding that Oracle should see double-digit growth in earnings per share for the fiscal year.
“Oracle’s finally turned the corner in terms of its cloud momentum,” said Josh Olson, an analyst at Edward Jones. “For years, it’s been kind of struggle. But they’ve, I think, found their footing.”
Oracle executives used the call to tout the interest of customers in its cloud business. Last month, the company said that AT&T Inc., the telecommunications giant, had signed a deal to move thousands of databases to Oracle’s new platforms.
“While it provided no revenue at all in Q4, it’s a very strategic win as a reference to all of our customers about the modernization of databases and the movement of them to the cloud,” co-CEO Mark Hurd said during the call.
Still, the better-than-anticipated performance in the traditional business helped deliver much of the positive news in the quarter, said Pat Walravens, an analyst at JMP Securities.
“The real outperformance came in the part of the business that they’re moving away from,” Walravens said.
--With assistance from Brandon Kochkodin
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