Table of Contents

• 1. Adobe (ADBE) — Brief Earnings Snapshot (Review …

  • a. Results

  • b. Guidance & Valuation

  • c. Balance Sheet

• 2. Oracle (ORCL) – Detailed Earnings Review

  • a. Oracle 101

  • b. Demand

  • c. Profits

  • d. Balance Sheet

  • e. Guidance & Valuation

  • f. Earnings Call Review

  • f. Take

• 3. MongoDB (MDB) – Detailed Earnings Review

  • a. MongoDB 101

  • b. Demand

  • c. Profits & Margins

  • d. Guidance & Valuation

  • e. Balance Sheet

  • f. Call & Release

  • f. Take

• 4. Alphabet (GOOGL) – Willow

• 5. Uber – Cruise & a Timely CFO Interview

  • a. Cruise

  • b. CFO Prashanth Mahendra-Rajah Interview

  • c. Closing Remarks

• 6. Duolingo (DUOL) & SoFi (SOFI) – Downgrades

1. Adobe (ADBE) — Brief Earnings Snapshot (Review Saturday)

a. Results

• Beat revenue estimate by 1.3% & beat guidance by 1.5%.

• Digital media revenue beat guidance by 1.1%; digital experience revenue beat guidance by 2.2%.

• Beat EBIT estimates by 2.8%.

• Beat $3.67 GAAP EPS estimates by $0.12 & beat guidance by $0.18.

• Beat $4.67 EPS estimates by $0.14 & beat guidance by $0.13.

• Beat operating cash flow (OCF) estimates by 10.6%.

b. Guidance & Valuation

• Annual revenue guidance missed by 1.6%.

• Annual $3.87 GAAP EPS guidance missed by $0.03.

• Annual $20.35 EPS guidance missed by $0.18.

• Q1 guidance missed on revenue and was roughly in line on EPS.

EPS is expected to compound at a 13% clip during the next two years.

c. Balance Sheet

• $7.9 billion in cash & equivalents.

• $5.6 billion in total debt.

• Diluted share count fell by 1.2% Y/Y.

2. Oracle (ORCL) – Detailed Earnings Review

a. Oracle 101

Oracle provides a slew of software and hardware tools for on-premise and cloud environments… with an understandable focus on a continued shift towards cloud deployments. It has 3 main segments that tie very closely together. 

Oracle Cloud Infrastructure (OCI) is its fully managed business for infrastructure services (virtual machines, storage, managed high-performance compute data centers etc.). This segment also includes platform services to build apps in its safe, controlled environment (serverless and container-based).

Strategic software as a service (SaaS) includes Oracle NetSuite. This is a set of applications for enterprise resource planning (ERP), customer relationship management (CRM), human capital management (HCM), e-commerce and more. It’s hard at work on launching more industry-specific software apps across areas like Healthcare. It has a more customizable, feature-rich version of this product suite called Oracle Fusion geared towards larger customers.

The last segment is Oracle Database (OD). Creating valuable apps from GenAI infrastructure requires great models and great data products to properly season those models. That’s where its Oracle Database (OD) product comes in. It provides a not only structured query language (NoSQL) database for unstructured data, which is highly important in the age of GenAI. Oracle closely integrates with the 3 big hyperscalers to allow its OD database products to run anywhere. This also means that customers can migrate their on-premise databases to the cloud via OCI or through any of these hyperscalers, diminishing the friction associated with using OD. Oracle believes that this data cloud interoperability provides inherent cost advantages with data transferring. Cost benefits are estimated to be “several times cheaper” for model training than any competitive product, according to leadership.

Oracle is (re)-emerging as a digital infrastructure titan. While the company did take longer to roll out its high-performance compute product suite, that has since achieved fantastic traction. The results you see below are the byproduct of it taking its fair share of this infrastructure boom.

b. Demand

• Slightly missed revenue estimates & slightly missed guidance.

  • Beat 8% foreign exchange neutral (FXN) revenue growth guidance by generating 9% FXN growth, meaning the revenue miss was FX-related.

• Cloud Services & License Support revenue missed by 0.5% and grew by 12% Y/Y FXN. This includes OCI, OD and strategic SaaS apps. 

  • Cloud License revenue beat by 2%; hardware revenue beat by 1%; services revenue beat by 0.4%.

• Oracle also reports “cloud revenue” which includes all infrastructure and software services. It met 24% FXN cloud revenue growth guidance.

  • Cloud revenue was held back by 2 points from exiting its advertising business.

• Remaining Performance Obligations (RPO) FXN growth was 50% Y/Y. Rapid growth is thanks to rising interest in large, long-term contracts, and it thinks this growth will keep accelerating.

  • Short-term deferred revenue (part of RPO) beat by 1% and rose by 8% Y/Y.

  • Cloud-based RPO rose by 80% Y/Y and is now 75% of total RPO. 

• “All segments exceeded internal forecasts,” per CEO Safra Catz.

c. Profits

• Slightly missed EBIT estimates. Operating expense growth lagged revenue growth.

• Met EPS estimates & met EPS guidance.

  • Tax rate was 20% vs. 19% expected, which hit EPS by $0.02 vs. its guidance.

  • EPS rose by 10% Y/Y (10% FXN growth).

• Beat $1.07 GAAP EPS estimates by $0.03.

  • GAAP EPS rose by 24% Y/Y (23% FXN growth).

• Free cash flow (FCF) is very lumpy on a quarterly basis. This is a CapEx-intensive business model; expense timing affects this item a lot. FCF for the quarter was -$2.7 billion vs. -$1.7 billion expected.

  • Trailing 12-month FCF was $9.54 billion vs. $10.10 billion Y/Y. This is a better timeline to focus on for the metric.

d. Balance Sheet

• $11.3 billion in cash & equivalents.

• $88 billion in total debt.

• Dividends rose 1.4% Y/Y this year.

• Diluted share count rose 1.8% Y/Y.

e. Guidance & Valuation

• For Q3, it guided to 8% Y/Y revenue growth vs. 10.3% Y/Y growth expected. It also guided to 10% Y/Y FXN growth, with a material FX headwind expected for next quarter.

  • It expects 24% Y/Y cloud growth (26% Y/Y FXN growth).

• For Q3, it guided to $1.49 in non-GAAP EPS, which missed by $0.08. This includes a $0.03 FX headwind vs. a $0.03 FX tailwind last quarter. This also includes a $0.05 hit from previous investment losses.

• Reiterated expectations for 10%+ revenue growth for the year, which beat 9.7% Y/Y growth estimates. Also reiterated expectations for 50%+ Y/Y cloud growth.

• Reiterated expectations for doubling Y/Y CapEx in 2024 vs. 2023 to support OCI demand.

Oracle added that its pipeline growth is actually above the 50% RPO growth while its win rates are rising. Meta was the big win for this quarter to collaborate on Llama and AI agents; all of those bookings and the RPO benefit will come in Q3, not for this Q2 report. This will lead to a Q3 RPO “spike.”

EPS is expected to compound at a 13% clip for the next two years.

f. Earnings Call Review

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