Oracle Corp. (ORCL) said Wednesday after the markets closed that its third quarter earnings fell about 1% from last year, as a stronger U.S. dollar ate into the company's sales and profit. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations. The company also declared its first-ever dividend.
The world's largest business software company reported GAAP net income for the third quarter of $1.33 billion or $0.26 per share, compared to $1.34 billion or $0.26 per share for the year-ago quarter and $1.30 billion or $0.25 per share for the previous sequential quarter.
Excluding acquisition costs, employee stock options expense, amortization of intangible assets and other items, non-GAAP net income for the third quarter was $1.78 billion or $0.35 per share, compared to $1.59 billion or $0.30 per share in the prior year quarter and $1.75 billion or $0.34 per share in the prior quarter.
On average, 22 analysts polled by Thomson Reuters expected the company to earn $0.32 per share for the third quarter. Analysts' estimates typically exclude special items.
The company said a stronger dollar reduced both GAAP and non-GAAP earnings per share by $0.05.
In December, the software maker said it expects third quarter earnings to range between $0.22 and $0.24 per share, or $0.26 and $0.27 per share adjusted for currency, and non-GAAP earnings in the range of $0.31 to $0.33 per share, or a currency-adjusted $0.34 to $0.36 per share.
GAAP operating margin for the third quarter was 36%, compared to 35% in the third quarter of last year and 35% in the second quarter.
Non-GAAP operating margin for the third quarter was 46%, compared to 41% in the third quarter of last year and 46% in the second quarter.
Redwood Shores, California-based Oracle said total GAAP revenues for the third quarter increased 2% to $5.45 billion from $5.35 billion a year ago, while non-GAAP revenue also increased 2% to $5.50 billion from $5.37 billion last year. Sequentially, third quarter GAAP and non-GAAP revenue both fell 3%. Twenty-two analysts had a consensus revenue estimate of $5.45 billion for the third quarter.
As Oracle generates a substantial portion of its sales from outside the U.S., its results were severely impacted by the strengthening of the US dollar compared to foreign currencies. In constant currencies, second quarter GAAP revenue rose 11%, GAAP net income increased 14% and GAAP EPS grew 18%. Also in constant currency, non-GAAP revenue rose 12%, non-GAAP net income increased 24% and non-GAAP EPS grew 29%.
Oracle said total GAAP software revenues for the third quarter rose 5% year-over-year to $4.4 billion. GAAP new software license revenues for the quarter fell 6% from a year earlier to $1.5 billion.
"If you look past the effect of exchange rates, our new software license revenues for this quarter were higher than our new software license revenues for Q3 of last year," said Oracle President Charles Phillips. "Achieving constant currency growth in new software license sales in this very challenging economy shows that we continue to beat our competitors in both technology and applications."
Third quarter GAAP software license updates and product support revenues increased 11% year over year to $2.9 billion, while service revenues declined 8% to 1.0 billion.
For the first nine months of the fiscal year, the company reported GAAP net income of $3.70 billion or $0.72 per share, compared to $3.48 billion or $0.67 per share for the same period last year.
Non-GAAP net income for the nine-month period was $5.07 billion or $0.98 per share, compare to $4.37 billion or $0.84 per share in the prior year period.
GAAP revenue for the nine-month period increased 8% to $16.39 billion from $15.19 billion in last year's nine-month period, while non-GAAP revenue grew 8% to $16.61 billion from $15.33 billion in the year-ago period.
Oracle also announced that its Board of Directors plans to pay a quarterly cash dividend of $0.05 per share, or $0.20 per share annually, on its common stock. The board declared the first cash dividend of $0.05 per share to be paid on May 8 to shareholders of record on April 8.
Safra Catz, Oracle's President, said,. "We generated $8.0 billion in free cash flow over the last twelve months and we are running our business at record operating margins. We have always been committed to rewarding our stockholders' investments in Oracle and the Board has decided that it is the right time to declare a dividend for our stockholders."
Large technology companies have already felt the impact of the ongoing economic crisis, as a protracted economic slump and the financial market turmoil have forced corporates to reign in their technology spending.
Most recently, research firm IDC revamped its worldwide IT spending forecast and projected a growth rate of 0.5% in 2009, down from a November estimate of 2.6% growth.
Oracle, which employs 33,526 employees in the Americas and 86,657 globally as of November, reportedly reduced about 500 jobs in its North American sales and consulting businesses in January.
Oracle continues to carry out its strategy of acquisition-driven growth. Since the end of 2004, Oracle has spent more than $35 billion on more than 30 acquisitions. In January 2005, the company completed its $11.1 billion purchase of PeopleSoft after a prolonged takeover battle. Besides PeopleSoft, Oracle has also swallowed up Siebel Systems Inc. for $6.1 billion. Some other deals included MetaSolv Software Inc., Stellent Inc. and Hyperion Solutions Corp.
In April last year, Oracle closed its $8.5 billion acquisition of BEA Systems Inc. The acquisition will significantly enhance and extend Oracle's Fusion middleware software suite. Oracle expects the acquisition to be accretive to its earnings by at least $0.01 to $0.02 on a non-GAAP basis in its first full year after closing.
Among the recent deals, Oracle last month agreed to buy mValent, a provider of application configuration management solutions. Financial details of the transaction were not disclosed. The deal is expected to close in the first half of 2009.
Oracle shares, which have traded in a range of $13.80 to $23.62 over the past year, closed Wednesday's regular trading session at $15.83, up 43 cents or 2.79%. The stock is currently gaining 95 cents or 6.00% in after hours trading.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.