SAN FRANCISCO – Business software maker Oracle Corp. posted a profit on Tuesday that topped Wall Street estimates and forecast solid growth this quarter, and its shares rose 9 percent to their highest level in four years.
The company posted its strongest first-quarter license growth in more than five years, gaining share across all its product lines, and its chief financial officer forecast 22 percent to 24 percent revenue growth for the second quarter.
Kim Caughey, who helps manage more than $900 million in assets at Fort Pitt Capital Group, said the results showed the company is succeeding in keeping customers gained through a string of acquisitions that included PeopleSoft.
“It is one thing to just hold onto the customer,” she said. “It is another thing to get them to buy the next version as well. It looks like they are doing that.”
Net income for the fiscal first quarter rose 29 percent to $670 million, or 13 cents per share, from $519 million, or 10 cents per share, a year ago. Revenue rose nearly 30 percent to $3.59 billion from $2.77 billion.
Excluding items, the company said it posted a per-share profit of 18 cents. Analysts on average were expecting the world’s biggest database software maker to post a per-share profit before items of 16 cents on revenue of $3.47 billion, according to Reuters Estimates.
Total software revenue rose 29 percent to $2.7 billion, led by an 80 percent gain in new license revenue from applications, compared with a Wall Street target for a 66 percent gain. Stripping out its Siebel, Portal and i-flex acquisitions, the company said revenue grew 47 percent.
The Redwood Shores, California-based company said database and middleware new license revenue gained 15 percent while services revenue rose 33 percent to $846 million.
“We exceeded our guidance on every metric and delivered strong revenue growth across all product lines and geographies,” Oracle Chief Financial Officer Safra Catz said in a statement.
The results come as investors are beginning to embrace the company’s decision to spend some $20 billion over the past three years to push into the market for business applications as its core database software market matures.
Oracle shares have gained about 18 percent since June 15 when it first told investors of stronger-than-expected software license revenue for the fiscal fourth quarter. At the same time shares in its major rival, Germany’s SAP AG, have fallen about 5 percent.
Analysts say the two rivals are largely taking share from smaller companies, though Oracle is pegged to grow faster in the applications market in 2006.
According to research firm AMR, SAP’s share of the business applications market is expected to grow to 43 percent in 2006 from 42 percent while Oracle’s share is seen rising to 23 percent from 20 percent.
The next biggest competitor, Sage Group Plc, will shrink to 5 percent from 6 percent in the same period, AMR predicts.
The company’s shares jumped more than 9 percent to $17.65 in electronic trading from a Nasdaq close of $16.13.