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Oracle Highlights Zoom Video as Top Cloud Computing Customer

By Anders Bylund – Updated Sep 11, 2020 at 2:26PM

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The database giant crushed Wall Street's targets in Q1 and expects further growth in the next period.

Database and enterprise software giant Oracle (ORCL -0.90%) reported results for the first quarter of fiscal year 2021 on Thursday, Sept. 10. The company posted modest increase in revenue and a 15% bottom-line jump, returning to growth after a 6% revenue dip in the fourth quarter.

Investors were quick to embrace Oracle's report, driving share prices as much as 8% higher in the Friday session's early trading.

Oracle's first-quarter results by the numbers

Metric

Q1 2021

Q1 2020

Change

Analyst Consensus

Revenue

$9.37 billion

$9.22 billion

1.6%

$9.2 billion

GAAP net income (loss)

$2.25 billion

$2.14 billion

5.1%

N/A

Adjusted earnings (loss) per diluted share

$0.93

$0.81

15%

$0.86

Data source: Oracle. GAAP = generally accepted accounting principles.

Oracle beat Wall Street's expectations across the board and followed up with second-quarter guidance that exceeded analysts' current consensus estimate. Software license sales rose 9% year over year while support service revenue fell 8%.

How Oracle is winning cloud computing clients today

On the earnings call, Oracle chairman Larry Ellison noted that his company's cloud computing services are turning heads in the market, thanks to industry-leading customer satisfaction ratings and a unique combination of offerings under one roof. In particular, Ellison likes Oracle's positioning against sector leader Amazon (AMZN -1.44%) Web Services.

"Customers are picking Oracle cloud infrastructure and the Oracle autonomous database for a few very basic and very obvious reasons: much better security, much better reliability, much better performance, and dramatically lower cost -- much, much lower cost than AWS," he said.

A man and a woman smile across the table while pointing at a shared laptop.

Image source: Getty Images.

Ellison's favorite customer

The apple of Ellison's eye at the moment is videoconferencing expert Zoom Video Communications (ZM -4.03%). The company will begin using Oracle's cloud services starting in the fourth quarter of fiscal 2020. Zoom's service fees more than doubled in Q1 due to exponential growth in the company's video-meeting platform. Oracle was able to support that raging growth without breaking a sweat.

"Zoom is a great example because it proves that the Oracle Cloud is secure, reliable, high-performance, and economical," Ellison said.

Ellison is a master of turning earnings calls into promotional events, and this was a classic example of his skill in that area. Highlighting that particular customer in this earnings report could inspire other prospective cloud computing clients to give Oracle's solutions a closer look. If Oracle Cloud is good enough for the hottest growth company of 2020, maybe it can beat Amazon and others for other purposes, too.

Editors' Note: This article has been updated to clarify Zoom's cloud computing relationships.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and Zoom Video Communications and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

Stocks Mentioned

Oracle Stock Quote
Oracle
ORCL
$83.35 (-0.90%) $0.76
Amazon.com Stock Quote
Amazon.com
AMZN
$94.13 (-1.44%) $-1.37
Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$74.31 (-4.03%) $-3.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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