Oracle Posts 11% Decline In Profit In Q3FY13

Oracle Financial Services Software (OFSSL), a majority-owned subsidiary of Oracle, announced its results for the quarter ending December 2012 yesterday (Jan 29). OFSSL is a global leader in providing IT solutions to the financial services industry.

The numbers were largely subdued, following which the stock prices touched an intraday low of Rs 3160.80 per share, marking a drop of 2.15%. The revenues for OFSSL grew by 4.52% to Rs 852.75 crore as compared to the previous year corresponding quarter. The net profit took a big hit, declining by 11.46% to Rs 268.29 crore YoY.

OFSSL is primarily a products company, and derives as much as 73.23% of its total consolidated revenues from this segment. The segment witnessed moderate growth of 3.33% YoY, thus weighing down the overall results of the company. The Services and BPO segments, on the other hand, saw robust growth, its revenues having increased by 6.86% and 17.27% respectively.

In terms of geographies, OFSSL’s revenues are well-distributed among North America, EMEA and Asia Pacific. The regions contribute to 36%, 32% and 32% of the company’s total revenues respectively. Since the revenues are not skewed towards any particular region, OFSSL is relatively safer to area-specific economic conditions and downturns.

In the quarter under review, the new customer wins for OFSSL were also uniformly distributed across geographies. In all, it added 11 customers for products and signed license fees of USD 13 million. Overall, the deal pipeline of OFSSL looks robust. New product launches have also chipped in towards growth. During the period, it introduced two complementary products – Oracle Financial Services Governance & Compliance Management and Oracle Financial Services Operational Risk Analytics.

While revenue growth for OFSSL has remained intact, there seems to be tremendous pressure on the company’s bottomline. Going ahead, the visibility in terms of deals and new launches ensure better revenues. However, the maintenance of margins looks uncertain.