CONFERENCE CALL | ORCL: Multiple Ways to Win with Maintenance Strength and Cloud Valuation
October 31, 2017 8:00 AM PDT / 11:00 AM EDT
Two months into our launch, Oracle has been by far the most controversial stock in our coverage universe. We underestimated the negative sentiment that still exists after several tough years while we weren't following Oracle. However, we think that controversy represents and opportunity for investors.
We've done some detailed work on the earnings, cashflow and value drivers. We argue that ORCL is getting close to no value for its Cloud business in the current stock and that maintenance can alone drive the stock higher. While Oracle will likely fall short of its $20B Cloud target organically in FY22, we think the risk of a large acquisition is low near term, and the Cloud should be revalued much higher. We'd like to invite you to a conference call Tuesday October 31st at 11am Eastern to discuss:
1) The organic growth trajectory of the Cloud business and what that implies for long term Cloud targets.
2) What ORCL could buy, how much they might pay, how this impacts the model and the cap structure
3) How maintenance revenue can sustainably grow and how Bring Your Own License can drive maintenance.
4) How maintenance alone should support and drive the stock, representing roughly 90% of EPS.
5) What the drivers of earnings and cashflow are, and how we derive stock value from each source.
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