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By Jim Finkle
BOSTON (Reuters)—Oracle Corp, the world's third-largest software maker, reported on Wednesday that quarterly profit jumped 27 percent, beating Wall Street estimates, on strong new software license revenue.
Net income increased to $2.04 billion, or 39 cents per share, in Oracle's fiscal fourth quarter ended May 31, which is its strongest quarter each year. It reported net income of $1.60 billion, or 31 cents, a year earlier.
The company, founded and led by billionaire Larry Ellison, had a profit of 47 cents a share, excluding items, beating the average analyst target of 44 cents.
Shares of Oracle rose 1.6 percent to $22.90 in after-hours trading after closing at $22.55 on Nasdaq.
Growth accelerated in the United States, with new software sales up 22 percent versus 15 percent in the prior quarter.
New license sales of Oracle's business management software, which competes with SAP AG, bounced back after a disappointing fiscal third quarter, jumping 36 percent versus a year earlier.
"Applications rebounded pretty healthily," said Sanford Bernstein analyst Charles Di Bona. "IT spending isn't really falling apart at this point."
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Executives were expected to discuss Oracle's outlook on a conference call later Wednesday.
Sales of new software licenses climbed 27 percent to $3.14 billion from $2.48 billion.
New software licenses are a key indicator of future financial results for software makers because customers also sign maintenance contracts that typically cost 20 percent of the product price per year. Customers may also expand the number of workers using a program that they have already purchased.
"These are strong results and evidence that Oracle's hard-charging sales culture and ever more diversified product line-up is paying off," said Andy Meidler, an analyst at Edward Jones.
"Oracle and the rest of technology is an economically sensitive area. We think that software in particular is an area that should see strength, given its productivity enhancing ability."
Revenue after adjustments rose 24 percent from a year earlier to $7.28 billion, beating the average analyst estimate of $6.93 billion.
David Garrity, director of Research at Dinosaur Research, said that no one expected the results to be as strong as they were.
"Larry (Ellison) is just going to have to buy a bigger boat," he said.
(Additional reporting by Eric Auchard and Duncan Martell, editing by Richard Chang/Jeffrey Benkoe)
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