Software giant Oracle beat expectations by reporting a first-quarter profit that was slightly higher than analyst estimates, but currency exchange rates and the strong U.S. dollar weighed down revenue more than the company had expected.
Oracle shares fell by 77 cents, or more than 2 percent, in after-hours trading after the company announced the news. Profits on a per-share basis were 53 cents compared to a 52-cent consensus view of analysts. Sales at $8.4 billion fell short of analysts’ expectations by more than $100 million and were down 2 percent. After backing out the effect of currencies, the company said, sales would have risen by 7 percent.
The company said it expects a second-quarter profit in the range of 63 cents to 66 cents, straddling the consensus view of 65 cents. It said it expects to post revenue of $9.55 billion, on a constant currency basis, in line with the consensus. Currency effects could push sales down year on year by as much as 2 percent, it said.
Cloud and on-premise software sales fell by 2 percent to $6.5 billion, but rose 6 percent after adjusting for currencies. Hardware sales at $1.1 billion fell 3 percent from the year-ago period, but rose 6 percent factoring out the currency effects.
Oracle founder and CTO Larry Ellison said in a statement that the company is on track to book as much as $2 billion worth of sales of its software-as-a-service and platform-as-a-service products this year, making it the second-largest cloud software company after Salesforce.com. CEO Mark Hurd said Oracle added 612 new cloud software customers.
Ellison said Oracle expects profit margins on cloud software to rise from 40 percent to 60 percent by the fourth quarter and to increase 80 percent within two years.
This article originally appeared on Recode.net.